Free State gas company Renergen on Tuesday announced what it described as a “spectacular” find in an exploration well, which suggests it may be sitting on a lot more gas than previously thought.
How much of that gas is highly-valuable helium is not yet known, though; equipment at the labs it normally uses to analyse gas samples is down for maintenance, the company said.
That did not deter investors, who sent its share price up by more than 10% on the day. That brings total gains since the beginning of January to well over 60%.
Renergen said the drilling site, P007, was a “true exploration well” intended to scout for a possible phase 2 expansion, and is outside its phase 1 production area, which it is currently building out. But at 400 metres down it hit gas flowing at more than 200,000 cubic feet per day, “higher than almost all other existing wells” in its exploration area.
In a statement, CEO Stefano Marani dubbed the find “spectacular” and said it would have “a meaningful impact on our resource base.” Analysis of the composition of the gas is expected only in coming weeks.
Renergen, the only on-shore gas producer in SA, is setting up liquefied natural gas (LNG) pumps along the Johannesburg-Durban trucking route to offer a discounted alternative to diesel for specially-adapted vehicles.
But its strategic impact on global markets is expected to come from the high concentration of extremely scarce helium it has recorded. Its potential to supply a meaningful fraction of global demand for helium saw the US government invest R600 million in the company in 2019.
Compiled by Phillip de Wet