DURBAN - Renergen's share price rose to an all-time high of R17.72 on the JSE after the emerging domestic natural gas and helium producer reported a drilling success at its Virginia project and said drilling had progressed through the Karoo Supergroup.
Renergen said it had successfully intersected gas charged sandstones and fractures as predicted in the pre-drill prognosis.
It said the gas was intersected after having drilled 50m into the sandstone.
The group’s share price gained as much as 70.2 percent to R17.72 a share yesterday in early trade, up from Friday’s closing price of R10. It closed at R12.50.
The group said the team on site had been flaring the gas for initial flow testing, which reached a flow rate of 850 000 standard cubic feet a day with the valves partially closed in order to keep conditions on site safe.
“When fully closed, the well reaches around 12 bar of pressure.
"More crucially, the gas composition is 12 percent helium, with methane of more than 75 percent based on a preliminary laboratory analysis of the sampled gas flow.”
The group said on current plans, the well would be drilled a further 1 200m horizontally in January into the sandstone to maximise the productive reservoir intersection, which should in turn maximise flow potential.
“The reservoir size and deliverability will ultimately determine the extent of any reserve, which will in turn determine the size of Phase II of the Virginia Gas Project,” the group said.
Chief executive Stefano Marani said the discovery had all the indications of being a game changer and significantly bigger and better than they originally thought.
“Obviously lots more testing is required to determine the size of the reservoir, but what is key to understand is that this sandstone play has not been factored into any previous reports, so this is basically a new discovery for us. With a 12 percent helium concentration and these flow rates, this has the potential to become a globally significant helium resource."