Botala Energy Ltd. announced the logging results of the Serowe-7 well which intersected 35m of coal seams. Coals were encountered at 394m, which is 2m higher than the Serowe-1 well located approx. 1 km to the North-West. Serowe-7 was drilled to a Target Depth (TD) of 510m and then logged using Nuclear Magnetic Resonance (NMR) technology to determine adsorbed and free gas concentrations, and indications of permeability of the targeted coal seams. Results of the NMR are expected to be available within two weeks.

The objectives of drilling the Serowe-7 well were: Test for the presence of the lower Morupule formation which for mechanical reasons was not intersected in the Serowe 1 well. This formation was successfully intersected in the Serowe-7 well. Confirm the regional thickness of the primary target, the Serowe coal seam, which has exceeded the results of the Serowe-1 well which previously intersected 21m of coal seam.

Locate a second flow-testing well site to target an additional commercial production well. The logging results have increased the area and extent of the three coal seams known to Botala and importantly has increased the company's confidence in predicting the presence of dolerites in the coal seams using the AMT technology. The well will now undergo reaming to increase its hole size from 6 to 10 inches in preparation for a decision to proceed with a second flow-testing programme at Serowe-7. Serowe-3 flow-testing is ongoing with the water level currently at 114m above the top coals and being drawn down by 2-3m per day.

The average water flow has increased to 75bbls/day1 (approx. 9m3/day) showing a continued improvement in the permeability of the coal seams and increasing the overall drainage area of the well. Careful control of the water level drawdown when approaching the reamed coal sections is crucial as large pressure drops can compromise permeability and cause sand/fines production, hole instability and pump failure.

Maintaining water production for as long as possible results in draining a larger radius away from the well which ensures sustained gas production over time.