‘Kinetiko Energy Ltd (ASX: KKO) has seen its share price plunge 28% after the first of a five-well drilling program failed to find commercial gas quantities.
The Perth-based explorer is developing an energy solution for South Africa focused on commercialising its 100% owned advanced shallow conventional gas projects in the Mpumalanga Province. At press time KKO as priced at 6.8c.
Drilling at well 271-23PT commenced on Friday, 27 September and was completed ahead of schedule on 16 October 2025. This is the first well in the Company’s five-well production test program aimed at identifying development sites for future gas well clusters as part of the development of its 100% owned conventional shallow gas assets.
Kinetiko Executive-Chairman Adam Sierakowski commented:
“While the results from 271-23PT were disappointing, our strategy remains focused on exploring and identifying the most commercially viable production test wells. Geological risks are inherent in such programs, but the consistent gas saturations encountered in all 13 previous test wells highlight this result as an anomaly. With the low cost and rapid drilling of shallow conventional wells, we can quickly move forward with the following production test well, which will spud this week.”
Observations from Well 271-23PT
“Well 271-23PT was located 5km East of the Majuba power station. It was positioned adjacent to a core well where logging results established the intersection of 131.5m of gassy sandstone pay zones and the coals had some of the highest gas content of nearly 13 m3/tonne results correlating with the core well, the production test well lacked sufficient compartment size to hold commercial volumes of gas.
“A choke test at terminal depth did not produce commercial gas quantities. Following the introduction of water into the well and additional testing, it was determined that
the well intersected a very small, well-sealed compartment.
“The shallow nature of the target geology has delivered greater water and gas saturations in each of the previous 13 test wells drilled by the Company over the past decade. As such, this result is assessed as an anomaly. Exploration has confirmed the consistent, widespread existence of gas-bearing porous sandstones throughout Kinetiko’s exploration rights, and the Company remains robustly confident in its targeted remaining four production test wells intersecting commercial gas.
Kinetiko’s exploration advantage lies in the low cost of drilling shallow conventional wells, allowing the company to use test drilling as an efficient method for discovering commercial onshore gas. The 271-23PT drilling was completed without incident and below budget, costing less than AUD$500,000.
“This has enabled the Company to build a multi-well exploration program at a fraction of the cost compared to traditional onshore gas exploration and development and supports the Company’s strategy to conduct expansive drilling programs in strategic locations to maximise the potential of commercial fields being developed.
The Company will continue to monitor well 271-23PT to gather further data, providing valuable informationthat will inform future drilling efforts to optimise production from the wells and potentially re-working well 271-23PT.
“The remaining four production test wells are strategically located near key infrastructure, including gas pipelines and transmission lines, positioning Kinetiko as a potential supplier to South Africa’s energy market. The program will flow-test each well for an extended period to gather critical data on flow rates, reservoir pressure, and depletion curves.”
“Based on prior reserves, Kinetiko anticipates exceeding flow rate targets of 50,000 SCF/day for each additional well, and with drilling progressing rapidly, the company remains poised to unlock significant onshore gas resources in South Africa.”
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