TMK Energy Announces Drilling Contract for Lucky Fox Project Expansion
TMK ENERGY LIMITED (TMK) Share Update September 2024 Tuesday 24th
TMK Energy Signs Drilling Contract for Three New Wells at Lucky Fox Project
TMK Energy Limited (ASX: TMK) has announced the signing of a significant drilling contract with Major Drilling Group to expand the Lucky Fox Pilot Well Project with three additional production wells.
Instant Summary:
- Drilling contract signed with Major Drilling Group.
- Three additional production wells to be drilled at the Lucky Fox Pilot Well Project.
- Site preparations completed and equipment ready for deployment.
- Drilling rig mobilization from Ulaanbaatar to Gurvantes XXXV site within the next week.
- Turnkey solution approximately 28% lower in cost than previous wells.
- Objective to prove commercial gas production rates from the upper coal seam.
Contract Details and Preparations
TMK Energy Limited has entered into a contract with Major Drilling Group, a major international Canadian-listed drilling company. This contract involves drilling up to three additional production wells at the Lucky Fox Pilot Well Project. Major Drilling Group previously completed TMK's successful 2023 initial three-well pilot program on time and under budget.
Site preparations have been completed, including the inspection of drilling pads and sumps. All necessary equipment, such as casing, wellheads, production tubing, and pumps, is paid for and on location, ready for deployment. The drilling rig is set to be mobilized from Ulaanbaatar to the Gurvantes XXXV site within the next week, with drilling expected to commence within two weeks following mobilization and rigging up activities.
Cost Efficiency and Project Expansion
The new drilling contract offers a fixed price ('turnkey') solution that is approximately 28% lower than the all-in drilling and completion costs for the previous wells (Lucky Fox 1, 2, and 3). The 2024 program aims to drill up to three additional production wells within the existing Pilot Well Program in the Narrin Sukhait area, adding to the three wells drilled in 2023.
The existing wells have successfully reduced reservoir pressure over the past 12 months and continue to perform well with minimal downtime. The additional wells are expected to increase pumping capacity, reaching critical desorption pressures faster and accelerating gas production rates from the Pilot Well complex.
Technological Enhancements and Future Goals
In addition to drilling new wells, TMK Energy plans to install Distributed Temperature Sensing (DTS) technology as part of the completion process. This technology will provide valuable data on which zones within the ~70 meters of the upper coal seam are most productive for gas and water.
The goal of the program is to demonstrate that commercial rates of gas can be produced from the upper coal seam at this location. The company has been active in procuring and importing all long lead items, which are now paid for and on location. Final pad preparations and surface equipment site preparations have been completed, with the final stage being the mobilization of the drilling rig to the site.
CEO's Statement
TMK Energy's interim CEO, Mr. Dougal Ferguson, expressed gratitude to shareholders and stakeholders for their patience and support. He acknowledged the delays due to environmental approvals, funding initiatives, and logistical challenges but emphasized the importance of this drilling contract for the company's future.
Mr. Ferguson stated, 'Signing of this drilling contract is an important step for the Company and the Gurvantes XXXV Project, which has transformed from an exploration concept three years ago into a potential gas-producing project of great significance to both TMK and Mongolia. We look forward to further demonstrating the significance of this already discovered resource over the course of the next few months.'
This announcement is likely to have a positive impact on TMK Energy's stock as it demonstrates significant progress in their drilling program. The cost-efficient turnkey solution and the potential for increased gas production rates are expected to boost investor confidence. The installation of advanced technology like DTS further underscores the company's commitment to maximizing productivity and efficiency.
Investor Reaction:
Analysts are likely to react positively to this announcement, noting the cost savings and the potential for increased gas production. The successful completion of previous wells by Major Drilling Group adds credibility to the project. However, some caution may remain due to past delays and logistical challenges.
Conclusion:
Investors should keep an eye on the progress of the drilling activities and the implementation of DTS technology. The successful execution of this program could significantly enhance TMK Energy's production capabilities and market position. Stay informed on further developments to make well-informed investment decisions.