TMK Energy sews up funding for pilot CSG production wells after partner commits to farm-in

Funding for TMK’s planned pilot well program at its Gurvantes XXXV coal seam gas project in Mongolia is now in place after partner Talon Energy exercised its farm-in option.

Talon will fund 100% of the pilot production wells to a cap of US$3.15m ($4.63m) under Stage 2 of the farm-in, in return for a 33% stake in the project.

It will also pay TMK Energy (ASX:TMK) a US$809,333 bonus payment following an independent assessment of an initial best estimate (2C) Contingent Resource estimate of 1.2 trillion cubic feet (Tcf) of gas.

“We are pleased to formally welcome Talon as our partner in the Gurvantes XXXV Project. Talon has been involved in the Gurvantes XXXV Project since February 2021, and the positive election to become a partner in our project is a great endorsement and a reflection of the value that has been created during the last two years,” chief executive officer Brendan Stats said.

“We now look forward to the next stage of the project, the Pilot Well Program, which aims to flow gas to surface over an extended production test, to demonstrate the productivity of the reservoir and demonstrate the commercial viability of the project.”

He added that the pilot and bonus payments ensure that the company can proceed with the next important phase of the project.

Pilot well program

Drilling of the pilot wells is forecast to begin mid to late of the first quarter in 2023 with surface facilities build out and commissioning expected to be completed in the second quarter.

Based on available data and the experiences of other operators, the company is confident that gas can be produced to surface shortly after full commissioning.

TMK is currently in the final stages of assessing tenders for the long lead times and major contracts such as drilling.

The pilot well program is expected to consist of three production wells drilled in close proximity to the Snow Leopard-02 (SL-02) well, which returned spectacular results.

This article was developed in collaboration with TMK Energy (ASX:TMK), a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.