TMK Energy jumps 30% on MOU with Chinese energy giant PetroChina

Thu 11 Aug 22, 11:55am (AEDT)
Traditional yurts set up on Mongolian grassland
Source: Unsplash

Key Points

  • TMK is partnering with a PetroChina subsidiary to fast-track development of the Gurvantes XXXV CSG project
  • Gurvantes maiden well program, the Snow Leopard wells, has so far had a 100% success rate
  • First big deliverable will be a review of technical data around the project, towards a binding development proposal from PetroChina

ASX-listed energy smallcap TMK Energy (ASX:TMK) has seen its share price jump 30% in morning trade as the company announces its memorandum of understanding (MOU) with Daqing Tamsag, a subsidiary of state-owned Chinese energy giant PetroChina. 

While the agreement does not lock PetroChina into any exclusivity, the value impact of interest from the heavyweight is clear in TMK’s share price movements today. 

Ultimately, the agreement is the first step in PetroChina’s valuation and assessment of the project. If Gurvantes XXXV is deemed a desirable asset, PetroChina will move towards an investment in the project. 

That investment, should it go ahead, will come as a significant driver for the project’s development. 

Dual gas sales into Mongolia, China markets

Worth noting is TMK Energy intends to sell cleaner natural gas energy to Mongolia, but also to China, which is relatively closeby. 

Shareholders should note the project is located in the Gobi Desert, which poses an obvious implication for required infrastructure (read: pipelines). 

This is exactly the kind of thing PetroChina would be best placed to facilitate. 

Petrochina’s Daqing Tamsag has been active in Mongolia since 2005 and owns a number of petroleum titles in Dornod Province. Not the South Gobi by any means, but still within the jurisdiction, giving it expertise and local knowledge, as well as relationships with regulatory entities. 

With those blocks in Dornod, PetroChina extracts crude oil for sale in the Chinese market. 

And clearly, now the heavyweight is looking at doing the same with gas. 

Snow Leopard-3 in the flesh (source: TMK Energy)
Snow Leopard-3 in the flesh (source: TMK Energy)

PetroChina no doubt lured by existing success at Gurvantes

In late June, TMK noted its Snow Leopard-3 well at the project had intersected two levels of gassy coal seams, the third well in the program to do so. 

What this means, is right now, TMK Energy is sitting on a 100% success rate across its early drilling activities. 

In other words: every single well the company has spud along a 6km strike has been a positive hit.

The coal formations are located in the Narrin Sukhait region of the Gobi desert, which are adequately proven by now to boast an extensive underground system. 

Millidarcies worth a party

The project also boasts desirable geotechnical credentials. 

Testing downhole in SL-2 confirmed a millidarcy metre value of 1,090, ultimately meaning the gas molecules underground want to flow and get out. 

A millidarcy metre is a mathematical unit used to measure the porousness of rock types.

Loose gravel can have millidarcy metres in the upper thousands, whereas solid granite has a millidarcy metre value <1.0.

TMK Energy partners with Talon Energy (ASX:TPD) at Gurvantes.

Projected growth of CSG (shale) energy into Chinese markets through to 2040 (Source: U.S. Energy Information Administration, International Energy Outlook 2017, China Development and Reform Commission, China Customs)
Projected growth of CSG (shale) energy into Chinese markets through to 2040 (Source: U.S. Energy Information Administration, International Energy Outlook 2017, China Development and Reform Commission, China Customs)
Disclaimer: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. TMK Energy was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice.


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Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication.

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