Talon Petroleum Secures Option on Mongolian Exploration Block
ASX-listed Talon Petroleum Ltd. has executed a binding offer letter with privately-held Mongolian company Telmen Resource JSC to secure an option to acquire a 33% participating interest in the proposed Gurvantes XXXV Production Sharing Agreement (PSA) located in the South Gobi basin in Mongolia.
Under the terms of the agreement, Talon will pay an initial cash consideration of US$350,000, and fund 100% of the cost of the initial work program over the PSA up to an amount of US$1.5 million. In addition, upon independent certification of 2C contingent resource of 1.5 Tcf, Talon shall pay an additional a sum of US$1 million to Telmen. Talon also has a preferential right to increase its participating interest by matching any third party offer for a 3-year period.
The Gurvantes XXXV PSA covers an area of 8,400 sq. km located in the western South Gobi basin, situated less than 20 km from the Chinese-Mongolian border. Given the proximity of the PSA to several large-scale mining operations and the extensive northern China gas transmission and distribution network, it is ideally placed for future gas sales to satisfy Mongolian and Chinese energy requirements.
The 2021 work exploration program on the block on the includes exploration drilling, an optional 2D seismic program, booking of first contingent resource, concept study, and a detailed design of 2022 pilot well program, for a total estimated expenditure of US$1.5 million.
“Talon is very pleased to be entering into this farm-in transaction with Telmen. This is one of the best CBM/CSG opportunities I have seen and Gurvantes XXXV represents an exceptional opportunity for the Company and its shareholders, with Talon to be at the forefront of what is an exciting emerging CBM industry in Mongolia. The farm-in provides additional portfolio and risk diversity as well as being complementary to Talon’s current onshore gas assets in the Perth Basin,” said David Casey, Managing Director of Talon.
Perth-based Talon is also engaged in exploration and development operations in the UK North Sea and the Perth basin in Australia.
Telmen Resource is currently focused on its flagship South Gobi Natural Gas Project in Mongolia. The company is part of the Telmen Group of companies owned and controlled by Mongolian businessman Tsetsen Zantav, and operates across the property development, construction, media and natural resources industries in Mongolia, Russia and China.
The transaction is subject to customary closing conditions, including formal issuance of the PSA by the Mongolian government, execution of legally binding farm-out and joint operating agreements, execution of all transfer documentation required to transfer the 33% interest, and final approval of shareholders and board of directors of Talon.