Ann: June 2021 - Investor Presentation, page-3

Here's my Summary of the company:

Kinetiko Energy Limited (ASX Code: KKO) is an Australian company in the energy exploration business, solely focused on advanced sandstone gas and coal bed methane (CBM) discovery and commercialisation in an energy challenged Republic of South Africa.

Latest investor presentation (June 2021): http://wcsecure.weblink.com.au/pdf/KKO/02386546.pdf

Current Share Price: 11c

Market Cap: $64.69M

SOI: 588,170,705 *

*will come back to this later

Key Points:

* Elephant-scale 4.9Tcf prospective gas resource over known coal sequences

( Independently certified 2C gas resource of 4.9 TCF )

* Pilot Gas Production Flow Rates >332 Mscf/day & Offtake Agreements pending

* Proven and highly prospective Permian Age Coal Fields

* Project area covers 7,000km2 with 4,604km2 of granted exploration rights

* Only 15% of total land package explored

* 100% ownership - pending offtakes

* In the Same Petroleum system as IVZ, ReconAfrica, RLT (appears to be resource rich)

* Rapidly developing and supportive political support for clean energy supply in South Africa

* Multiple downstream market opportunities

* Low valuation in comparison to peers equating to huge opportunity

* Significant Southern African energy shortage means overwhelming gas demand

Overview:

Kinetiko Energy is a gas and coal bed methane (CBM) exploration company seeking to supply South Africa’s significant unmet energy demand. The company has a (previously 49%) 100% interest in 5 permits covering ~4,600 km2 , with (previously 2.4 tcf) 4.9tcf of net 2C contingent resources.

Kinetiko will commence selling gas by restarting existing wells, followed by a 3rd party-funded 20-well pilot program, delivering production of ~1-2 TJ/d by year end.

Successful demonstration should lead to a 300 well project commencing in late 2022, delivering production of ~12 TJ/d, with later expansion to 100+ TJ/d.

Old Research Report by K1 Capital (2020) valued KKO at $0.39/sh, with upside to $0.88/sh on project derisking. This is based off old info (they have nearly doubled the resource size, from 2.4tcf to 4.9 tcf) - and also, went from 49% ownership to 100% ownership - which the company claims to be a significant derisking of the project. The valuation now would be significantly different than in 2020.

Old Research Report by K1 Capital (2020): https://www.kinetiko.com.au/wp-content/uploads/2020/11/KKO20201119-Research-Report-final.pdf

6 Month Roadmap / Timeline / Milestones

COMPLETED: Pilot well workover program in preparation of pilot gas to CNG production completed

COMPLETED: Successful Production flow test - WELL KA 03PTR. Pilot well production test confirms commercial scalability Avg gas flow rates 190 MSCFD

WE ARE HERE: Potential offtakers - Advanced stages of negotiations with potential off takers No further costs to take well KA-03PT into production

NEXT: Maiden Gas reserves - Move current certified gas resources of 4.9TCF (2C) into first certified reserves

NEXT: Exploration and resources growth - Significant approved exploration work program over 24 months Focus to grow resources and deliver maiden reserves

NEXT: Pilot field development - Secure South African institutional funding for 20 well production gas field with ability to scale

What i like about KKO

I like the resource size being elephant scale - with the potential to increase further with planned exploration. I like the upcoming 24 month exploration program (this is pretty much the same as EXR with hundreds of wells to drill over years - low risk play IMO with massive upside potential). EXR is currently valued at $250M as a comparison, and theyre just getting started. I like the fact that they hit gas on first drill and already achieved gas flow.

What i am not sure about / negatives

100% ownership - ofcourse this is a positive thing. But it does come with its downside.

KKO has executed a binding terms sheet with Badimo to acquire the remaining 51% of Afro Energy (Pty) Ltd, making KKO the 100% owner of all South African exploration rights and production approvals. Consideration to acquire is the issue 595,577,619 KKO shares.
The acquisition significantly de-risks the development of the South African projects and brings together all the experience and expertise of the historic joint venture parties and will streamline the exploration and development of nearly 7,000km2 of the geologically and infrastructure rich land position which hosts a 4.9Tcf (2C) resource.

So the SOI will be ~$1B , and also causing dilution

Proposed issue date: Thursday August 19, 2021

Some positive comments from HC users about the ordeal:

Also, there is $6.5m worth of those issued shares that have offset the value of the buy out in order to recoup the money spent by KKO over the past decade where the JV partner had not contributed equally. These shares will be sold to third parties at their discretion, putting more money back into the business, not diluting the SP.

It looks like one of the main hand-brakes on this project over the years has been Badimo being unable or unwilling to stump up with 51% of the exploration costs.
As Badimo Chair admits "... direct investment was previously notavailable to Badimo...".

KKO Chair states "...the parties were obligated tocontribute various amounts toward the operational activities being agreed and approved in South Africa.This mechanism has at times been inefficient and caused delays in exploration and developmentprograms."

It seems that KKO has had to sole fund exploration to keep the project moving, albeit at a snails pace and booking 51% of expenditure as a loan to Badimo.

This should mean the hand-brake is off & pedal to the metal drilling for reserves.
Looking forward to some announcements on a big summer drilling programme funded by farm-in.

Overall i think this play has serious upside potential - and from what i can see, the board have been progressing through milestones and doing all the right things. The resource size is massive, and has the potential to keep increasing as they keep exploring (only 15% of the land has been explored thus far). As of now, KKO is pending offtakes, with No further costs to take well KA-03PT into production. So KKO will not only be an explorer, but a producer. This is significant IMO - because not many explorers ever make it to being producers. Actually selling the current resources will help the company with cash flow - while they are investigating both debt and equity opportunities to secure future capital. I believe once de-risked further, KKO will be significantly re-rated.