Mongolia CBM Acreage Awarded to Oz Firm

Elixir Petroleum said September 20 that Golden Horde, a fellow Australian company that it is set to acquire, has been allocated coalbed methane (CBM) acreage in Mongolia.

Golden Horde informed Elixir it had executed the production sharing contract - relating to Nomgon IX CBM, close to the Chinese border - with Mongolia's Mineral Resources and Petroleum Authority.

According to Elixir, Golden Horde will start initial exploration activities almost immediately, consisting of field mapping prior to the onset of winter, together with reprocessing of existing gravity data over the area. “This work will assist in determining the exact location of the proposed early Q2 2019 seismic acquisition program, the Q3/Q4 2019 proposed initial drilling programme and the preparation of an initial Prospective Resources Report of the Nomgon IX CBM PSC area,” said Elixir.

Elixir managing director Dougal Ferguson said things had progressed quickly since the Mongolian cabinet approved the award of the contract, and that Golden Horde can start the detailed planning process for its 2019 exploration programme once the production sharing contract is actually signed: "The next few months will be busy for Elixir with not only the Alaskan and Mongolian acquisitions expected to close, but also the commencement of exploration activities on both these projects leading into a very active 2019 programme."

Work is to be funded via the convertible loan facility put in place between the two companies to allow the initial work programme to commence whilst Elixir awaits its final shareholder approval, which it will seek in early November 2018. Completion of its Golden Horde acquisition is scheduled by mid-November 2018.

The Nomgon IX CBM will be the first unconventional production sharing contract issued pursuant to the country’s updated Petroleum Law, passed by parliament in 2014. It covers an area of over 7mn acres adjacent to the Chinese border and is well-placed for future gas sales into the extensive northern China gas transmission and distribution network, Elixir said. In addition to supplying gas to China, the Australian company hopes that Mongolian government’s desire to replace coal with cleaner-burning gas in power and heat generation will create a local market too.