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.
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.
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.
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.
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.
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