All this talk of when results are due got me thinking about an article I read from Next Oil Rush (S3 Consortium) on 7/5/21. They make mention of three weeks until the Cracker-1S results. As most of us know, Next Oil Rush seem to be close to the company, with their ear to the ground so to speak.
‘Cracker-1S is an exploration well - We are hoping that in the next 3 or so weeks EXR will announce that Cracker-1S hit a coal intersect (100m would be incredible) and the coals have been tested and are gassy.
Next step would be a few appraisal wells around Cracker-1S to see just how big the discovery might be...’
Thursday the 27th marks three weeks since spudding. My thoughts are an announcement sometime next week, I won’t comment on their 100m seam piece as I don’t want to jinx it
However, based on past announcements the company does not make mention of expected drilling timeframes, as there can be so many variables in play in this industry.
When considering drilling timeframes, note that core holes in Tavan Tolgoi to the east were drilled between 500-900 metres deep and came up with gas shows in all 16 seams, most of the main shows were between 460-715 metres. This bodes well for us as we could be drilling down to these depths, noting the CBM window is generally down to 1,000m.
Looking at the seismic provided for Cracker IMO it appears to have depth to it, but it’s hard to tell without scale. Here it is from the announcement on 17/3/21 (P.13) for easy reference:
In an investor presentation on 15/7/20 (P.9), the seismic line on the gravity map that covered Cracker was encouragingly described as ‘investigating large depocentre west of Tavan Tolgoi’.
Also I’ve noted that Cracker is strategically situated about 20km north-east of Dalanzadgad (just outside our PSC). It’s the regional capital of Umnogovi province that the announcement on 7/5/21 makes mention of: ‘its favourable location for access to such infrastructure as larger capacity electricity lines and the regional capital.’
As we wait for Cracker, there is another prospect that really interests me. The announcement on 28/4/21 made mention of it within the north-east section of our block. It may have been largely glossed over by investors at this stage, but I think it warrants reiteration:
‘In another part of the 30,000 square kilometre PSC, Company is pleased to announce the completion of the first line in its 2021 2D Seismic Program. The line, which was acquired in the far North-East of the block shows “coal-like” reflectors from near surface to ~1,000m.
The line covers a new sub-basin that had not yet been explored in the block. Along trend there is evidence of coal in the CBM depth window in the region East of the PSC area.’
Elixir could be drilling this ‘unnamed of yet’ prospect now with that second rig. Note, the comment at the top of the image - the new acceleration strategy is looking at running seismic and drilling shortly afterward when sweet spots are identified.
I understand that lockdown in Mongolia finished over a week ago so logistics should be better now. There has been a gradual easing of restrictions over the past few weeks. Noting encouragingly that vaccination rates are very high in the country to date - 1.7 million of their target 2.06 million (over the age of 18 being eligible).
There appears to be an element of impatience that has crept into the forum, it’s common when there are perceived/actual delays.
Just keep in mind that that there are enormous amounts of coal in the area and we are cashed up. Tavan Tolgoi is one of the world’s largest operating coal mines and our very large PSC completely surrounds it. To note some of our basins are as large as this coal mine's area excluded from our PSC. We know there are coals at depth with gas in Tavan Tolgoi. This polluting open-cut coal mine is potentially surrounded underneath by multi-TCFs of cleaner CBM gas, it makes perfect economic and environmental sense to try to tap into these resources.
We were given Mongolia’s first unconventional oil and gas PSC by the Government in September 2018. The ground that Neil helped us secure is highly coveted, ERCE independently validated the world class CBM potential of it. We followed this up with Mongolia’s first gas discovery in February 2020. This success story is playing out in the Gobi Desert on the border with China, there has and will be hiccups along the way. Keep the size of the prize in mind.
If Elixir can prove up even part of the high-graded Permian depocentres around Tavan Tolgoi, then we could see a 5-Disallowed (1.5 billion to 3 billion market cap) from these levels IMO. We have a number of drilling chances at it.
All IMO & DYOR. Safe drilling to the team in Mongolia. Keep the faith. Management and the board have my full support. GLTAH with Cracker news, I have everything crossed.
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