TMK Energy Raises $4.75M, Doubles Production Capacity with Three New Wells

Operational Milestone Achieved

TMK Energy Limited (ASX: TMK) has marked a significant step forward in its Mongolian Coal Seam Gas (CSG) ambitions by successfully drilling, completing, and commissioning three additional pilot production wells, LF-04, LF-05, and LF-06, at its 100%-owned Gurvantes XXXV project. This achievement, delivered safely, on time, and within budget, effectively doubles the production capacity of its initial pilot well project at Nariin Sukhait.

The expanded well network is already producing gas, with early data indicating positive reservoir connectivity and permeability. The installation of Distributed Temperature Sensing (DTS) technology in two of the new wells is providing valuable insights into gas and water contributions within the thick coal seams, critical for optimising production strategies.

Early Commercialisation and Strategic Partnerships

In a pioneering move for Mongolia’s nascent CSG industry, TMK Energy has executed a binding Memorandum of Understanding (MoU) with Jens Energie LLC (JEL) to supply early-stage gas from the pilot wells for power generation. Under the agreement, TMK must demonstrate a minimum daily production of 5,000 cubic meters of gas by June 30, 2025, with potential sales scaling up to 15,000 cubic meters per day over an initial two-year term.

This partnership not only validates the commercial potential of TMK’s gas production but also aligns with Mongolia’s growing energy demand, offering a cleaner alternative to traditional fuels. JEL’s role in securing necessary approvals to generate and distribute electricity locally allows TMK to focus on ramping up gas output.

Financial Position and Cost Management

To support its aggressive development program, TMK raised approximately $4.75 million through placements and a rights issue during the quarter. These funds primarily financed the 2024 drilling campaign and provide working capital to pursue commercial gas flows. The company also implemented cost reduction measures, including a voluntary deferral of 50% of board and senior management fees, expected to save around $250,000 over six months.

Despite the capital raise, TMK’s cash reserves at quarter-end stood at $1.99 million, with an estimated funding runway of just under three-quarters of a year based on current expenditure. The company has no immediate plans for further capital raises but remains open to partnerships or additional funding as needed.

Looking Ahead: Commercial Viability and Growth Potential

TMK’s immediate focus is on reaching the critical desorption pressure in the pilot wells, expected by late Q1 or early Q2 2025. Achieving this milestone is essential to unlocking higher gas flow rates and validating the commercial viability of the substantial contingent resources identified at Gurvantes XXXV.

CEO Dougal Ferguson emphasised the transformative nature of the 2024 drilling campaign, highlighting TMK’s position as a first mover in Mongolia’s CSG sector. The company’s strategic execution and operational discipline set the stage for significant growth in 2025 as it moves closer to commercial gas production and broader market engagement.