TMK Energy set to spud pilot well in Mongolian Gobi

Wed 15 Feb 23, 11:53am (AEST)
A Snow Leopard on alert in light rain in a forest setting
Source: Unsplash

Key Points

  • TMK Energy’s pilot gas program on-site its Mongolian acreage is now on-track to being constructed with rigs secured
  • The company’s project partner, Talon Energy, will pay US$3.5m in costs to fund the eight week construction schedule
  • Partnership intends to collect gas produced at the pilot facility for possible sales or use on-site

ASX-listed energy smallcap TMK Energy (ASX:TMK) confirmed its procurement of a drill rig for the Pilot Well Program facility on-site the company’s Mongolian Gurvantes XXXV coal seam gas  project on Wednesday. 

TMK Energy partners with Talon Energy (ASX:TPD) on the project. Talon executed its option to earn-in to 33% last December

Talon will primarily fund the approximately US$3.5m pilot well program costs under that earn-in agreement, the program is expected to take eight weeks to complete. 

The partnership will also identify ways to collect the gas produced by the pilot for sales or use on-site rather than directly flaring off the gas. 

Most pilot wells are intended to demonstrate that economic-scale deposits are present, with the gas often just burned directly at surface. 

“In 2022 we certified a large gas resource (1.2 TCF 2C Contingent Resource) and the aim of the 2023 Pilot Well Program is to demonstrate that this resource can produce gas to surface at commercial rates,” TMK Energy CEO Brendan Stats said.

A story of three wells 

Three wells will underpin the pilot program overall. Mongolian company Major Drilling Group has been contracted to complete the works. 

TMK’s geological data suggests early gas breakthrough and higher production rates than the average of other CSG wells naturally. This comes from a model designed by international energy engineering giant Schlumberger.

Coal seam gas, as distinct from other types of natural gas, is tapped using hydraulic fracture stimulation. Also known as “fracking,” this is a decades-old technology.

Snow Leopard a roaring success 

The results of its initial Snow Leopard exploration run at Gurvantes underscores the chance of a solid operation. 

The three pilot program wells will be located near the Snow Leopard-2 well. 

Last year, the company boasted a 100% success rate in drilling for gas, hitting the commodity down all holes spud (“spudding” refers to the perforation of a well for the first time, which is sometimes also called a “wildcat.”)

The Snow Leopard program ultimately provided TMK with a maiden gas reserves estimate of more than 1 trillion cubic feet (as a best estimate). 

“The much anticipated “proof of concept” Pilot Well Program will be followed by a planned 2023 exploration program,” Stats added. 

TMK's one year charts show the trademark 'blockiness' of an illiquid stock
TMK's one year charts show the trademark 'blockiness' of an illiquid stock
Disclaimer: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. TMK 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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