Highlights
• Production well management resulted in temporary reduced rates of gas flow
• Successful well management was undertaken to protect well integrity and to increase
flow rates smoothly
• During the well management process the aggregate flow rate was deliberately
maintained to around 700m3 per day increasing to 1,542m3 per day by month end and
continues to increase
• Volume of gas produced continues to approach the required volume to enable
displacement of diesel fuel currently powering site operations
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Jade Gas Holdings Limited (Jade or the Company) is pleased to provide its monthly operations
update on gas production activities at the Red Lake Gas Field in the South Gobi region of Mongolia.
Operations Summary
As communicated previously (see ASX Announcement 22 December 2025), production was suspended on
Hz-01 well for an unplanned event associated with a generator switch over for maintenance. This downtime
event resulted in production engineers reducing the gas flow rates below 700m3 per day while maintaining
the casing pressure to protect the integrity of the well. Careful and successful management of operations
were undertaken to stabilize the water levels for several days to keep the downhole pump running
smoothly. This allowed production engineers to increase flow rates in a careful and deliberate manner
primarily to protect well integrity and return flow rates to previously reported base lines. At month end,
measurements recovered to an aggregate flow of 1,542m3 per day. Flow rates continue to move towards a
point where the gas produced from the wells can be utilised at site to power operations, effectively
displacing imported diesel consumption.
The Company is currently upgrading its power infrastructure by adding automatic redundant capability to
power equipment supplying site operations to provide additional surety on future production operations
from these wells. The installation process is expected to be completed within the next few weeks. Work also
continues on transitioning the primary source of power for site operations from diesel to gas produced from
current production wells once desired levels are reached. This is expected to be achieved within this quarter.
Confirming longer term sustainable flow rates to enable completion of the Field Development Plan (PDO)
and an Economic Study remain on track. In addition to the PDO and Economic Study, an appraisal report,
and a resource and reserve evaluation will also be completed and submitted to the Mongolian regulator for
review and approval.
Commenting on the progress this month, Jade MD and CEO Chris Newport, said:
“We continue to track toward achieving commercial gas flow which importantly will enable the completion
of study work to confirm the high-margin economics underpinning the proposed Red Lake gas operation.
Successful well production management to Hz-01 was addressed with the experienced production team
of DWK and although flow rates reduced to under 700m3 per day, we have since brought flow rates back
above 1,500m3 per day. DWK believe that slight changes to the production philosophy of this well will lead
to a larger zone of depletion around the well and importantly increased gas flow rate in the longer term.”
1. Production Metrics
Water produced from both wells is trucked to the nearby Tavan Tolgoi coal mine (operated by Erdenes Tavan
Tolgoi) for beneficial use in their operations.
2. Reservoir and Technical Progress
• Operating Philosophy: The wells are being operated in line with best-practice operations for lateral
wells in the Qinshui Basin in China, the analogue field for Red Lake.
3. Well and Drilling Activities
• RL001-3b-Hz-01 was fully operational during the month of December with 98.92% uptime.
• RL001-3b-Hz-02 was fully operational during the month of December with 99.87% uptime.
4. Forward Outlook
a. Upcoming Activities: Pumping operations will continue to remove water in order to maintain the
lowest possible flowing bottom-hole pressure. Once commercial flow rates are reached the appraisal
plan and resource and reserve estimate for the Mongolian regulator can be completed which will
inform the finalisation of the full field development (Plan for Development and Operations).
b. Additional Seismic: The need for additional 2D or 3D seismic surveys to be conducted over part of
the Red Lake field during 2026 remains under consideration. The mine operator’s (Erdenes Tavan
Tolgoi JSC) corehole program in the area is underway, and data shared under the Co-operation
Agreement with ETT will further assist the team in the understanding of seam correlation, which will
inform the requirement and/or design of a seismic acquisition plan for 2026.
c. Infrastructure: The assessment of appropriate longer-term production infrastructure requirements
is ongoing. The Company has met with several providers of mid-stream gas processing and
liquefaction equipment which is suitable for the Red Lake field development. Studies in this area are
intended to inform overall production and processing costs, which form part of the economic
assessment for reserves.
d. Market: Progressed discussions with several parties as confidence in the resource builds.
Authorised for release by the Board of Jade Gas Holdings Ltd.