EXR Trading 2021, page-6406

I like your thinking/approach, it is good to ponder about possible downsides. I hope the following will help in you decision making.

A failed production test is only material if it fails due to permeability and/or gas content. A failure through inappropriate completion of wells can be remedied quick smart. we already know that the gas content, saturation is present, so lack of gas bearing coals seems unlikely.

Remains permeability, connected reservoir to the wells. as you may be aware, permeability in coal is a function of naturally existing fractures. Question is to what extent are the fractures, which is part of the test to find out, developed. We also know from previous wells, fractures are present. So when pilot wells encounter less than desired fractures.... one fraccs it (not sure anymore if that was the correct spelling, anyway).

The political and environmental situation Mongolia does not exclude fraccing, ie there ain't no knittin nana's or lock the gate enthusiasts (the last time I saw pictures of the area there where very few gates anyway). A recent example can be found in the low production rates at CTP's CBM project in Queensland. They will add more wells to get the pressure low enough to get gas flowing at higher rates. In Queensland there are more issues with being allowed to frac, considerably more involved in that process than in Mongolia I assume.

So, in a nutshell, a low productivity pilot test is not the end of the world, just part of the learning curve, hence the name pilot test. A lot can be done to try to enhance production and data gathering. Sure, it doesn't look good in the monthly report but it is still not the end of the world

(Forgot to mention one other alternative, reaming the hole across the coals, ie make the hole a lot bigger, mechanically, thus increasing the inflow area, a lot of CBM wells have this as a standard procedure)