TMK eyes agreement upgrade with PetroChina at Mongolian gas project; Oct 31 resource estimate to precede pilot plant

TMK Energy (ASX: TMK) shares were up 5.88% at the close today after announcing the completion of its initial exploration drilling program at the Gurvantes XXXV coal seam gas (CSG) project within the South Gobi Basin in Mongolia.

Within an update to the market today, management advises that all five exploration wells delivered thick coal intersections with high gas contents.

The final exploration well, Snow Leopard 5R, intersected 69 metres of coal, included 41 metres in the upper coal seam and 28 metres in the lower coal seam.

Management also noted that preliminary results from drill stem testing, completed over the upper seam of the well, indicated the highest permeability recorded in the project area to date.

The company has now embarked on pilot well program planning and the initial contingent resource assessment is expected to be completed late October.

New data

CEO Brendan Stats advised investors that the company had acquired new data with which to progress these activities.

Of note are samples from SL-02 and SL-03 which are currently undergoing adsorption isotherm analysis in Brisbane, with results due in coming weeks.

“The project is gaining significant momentum and we are working hard to expedite the next stages, being to produce gas to surface and begin to prove up the vast area we have under license,” Stats said.

“In conjunction with operations, we look forward to progressing commercial arrangements with our partner (Talon) and further delineating a commercial agreement with PetroChina pursuant to our existing MOU.”

Focus shift

With drilling and testing for the 2022 exploration program now complete, management notes the focus will now shift to the advancement of the Pilot Well Program.

Detailed planning logistics are now required to deliver the proof-of-concept stage of the Project - which will be to produce first gas to surface.

TMK's share price over three months.

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