Renergen Limited (ASX:RLT) Managing Director and CEO, Stefano Marani provides an update on recent drilling results at the company's Virginia Gas Project in South Africa, what’s planned for this year and the potential to bring forward a second production well.
Ortenzia Borre: Hello, I'm Ortenzia Borre for the Finance News Network. And joining me today is CEO and Managing Director of Renergen (ASX:RLT), Stefano Marani. Stefano, welcome to FNN.
Stefano Marani: Thank you. Thank you for having me.
Ortenzia Borre: Now Renergen (ASX:RLT) is an emerging natural gas and helium producer in South Africa. Tell me, how's the progress going?
Stefano Marani: So far so good. We're on track, on budget, we're meeting all of our milestones. Yeah, we've had some really good drilling results. So all in all, things are going particularly well right now.
Ortenzia Borre: Can you tell me a little bit more about those results?
Stefano Marani: Sure. So, we had told the market prior to the end of the year last year that we're about to start drilling into a prospective area, which was a large sandstone trap that we discovered covering approximately 90 square kilometers. And the sandstone is somewhere in the region of a hundred meters thick. We've now drilled into the sandstone and around the 9th of December or so, we had quite a significant gas strike by our standards. We've been exploring this. We've continued to drill and so far the results have been very promising. We'd obviously made some announcements in December 2019. There's a little bit more work to be done but at this stage the drilling is progressing very nicely and the results are extremely promising.
Ortenzia Borre: Could you talk me through what you're targeting for phase one production?
Stefano Marani: We are looking at phase one coming online or at least first gas going into the plant in July 2021. That's what we've been telling the market, and so far we are meeting all of those milestones to achieve that objective. Phase one will see us bringing online a pilot plant. That pilot plant will see us selling around 2,500 gigajoules of LNG per day, which in maths terms is about 50, 55 tons of LNG. And in helium, we'll be selling 350 kilograms of helium per day.
Ortenzia Borre: Now are you still on budget and target for meeting your timeline?
Stefano Marani: Yes. So at this stage, nothing beyond our control has cropped up. And the one thing that I would urge viewers to do is take a look at our website. There is on the website a specific section which we've put up, which allows people to track the milestones and the progress. So yes, we're sticking our necks out on the line, but above all else, it is important for us to be accountable to shareholders. So any shareholder at any single point in time can go into the website, look at the milestones, you can see the progress and whether we're ahead, on, or behind schedule.
Ortenzia Borre: Now you mentioned your recent drill results may bring forward the phase two production well, can you tell us a little bit about this?
Stefano Marani: Yes. Let's say that at this stage the drilling was a lot more promising than we anticipated. I can't give exact figures at this stage because we are still in the exploration phase, and we are still drilling. But what this has done, I suppose the biggest surprise over here is that when we were drilling previously, we had announced that in 2016 in the first dwell that we drilled, we struck around 11 per cent helium. What transpired this time was that we drilled towards the bottom of the sandstone, and we intersected a fault underneath the sandstone. And that's been producing a 12 per cent helium, which is a very promising sign for us. So things are going well. We have a little bit more work to do. There's probably another, I would call it, three weeks for this next section of the well, and then another three weeks after that for the final section, where we can then prepare the well for production. But all in all it's going very well.
Ortenzia Borre: That sounds fantastic. Now is there anything else that you'd like to add?
Stefano Marani: Yeah, I'd say watch the space. We're obviously still in the throes of signing up additional off-take agreements on the LNG. We're working through our roll-out strategy for LNG across the country in terms of filling stations. And then in addition to that, the drill results from this as well as a new drilling campaign, which is about to get underway. That will all be coming through in the news as and when those results come through, and we've got tangible data to be able to report to shareholders.
Ortenzia Borre: Thank you so much for joining us today on FNN.
Stefano Marani: Thank you. Really appreciate that.