TMK Energy (ASX: TMK) has recorded the second-highest monthly gas production rate at its Gurvantes XXXV pilot project in Mongolia as it prepares for new drilling and advances discussions over the use of natural gas in the country’s power generation sector.
Average daily gas production reached 663 cubic metres per day (m3/day) in April 2026, representing a 13% increase over February and sitting behind only the record rate achieved in March.
The result came despite the necessary curtailment of higher March production rates at the Lucky Fox-07 well, where pump speeds and fluid levels continue to be managed to return the well toward higher rates without compromising performance.
TMK has also completed an independent technical review (ITR) covering its upcoming pilot well drilling plans, current reservoir management plan (RMP) and new initiatives for implementation.
April Production Holds Strong
Daily gas production continues to rise on a steady trend line after the curtailment of the significant production increase achieved in March.
Lucky Fox-07 has continued to increase its gas rate since that curtailment, while the broader well field has operated under the existing RMP that has delivered a steady increase in gas rates and relatively stable water rates over the past nine months.
Water production remained steady at approximately 490 barrels per day, consistent with prior months.
Short-term power outages continued to frustrate continuous production, while a recent mechanical pump failure at Lucky Fox-03 negatively affected gas production later in April.
Technical Review Supports Optimisation
The April ITR—which marked TMK’s third independent technical peer review—assessed the upcoming drilling program and current RMP.
The review involved existing and previous management, as well as independent experts with coal seam gas (CSG) project experience in Australia and internationally.
The ITR was generally supportive of the current RMP, while also identifying new ideas and well optimisation techniques for implementation across new and existing wells.
TMK has placed particular emphasis on replicating the Lucky Fox-07 performance through the new pilot production wells or some of the existing wells from Lucky Fox-01 to Lucky Fox-06.
New Wells Planned for Q3
New pilot production wells are expected to commence drilling in Q3 2026 as TMK positions the project for higher gas production in coming months.
The drilling program will coincide with efforts to return Lucky Fox-07 to higher gas rates and potentially lift performance from other existing wells.
A permanent uninterrupted power solution has become a priority as the company seeks to use gas from the pilot project for site power generation.
The initiative follows last month’s memorandum of understanding with Mongolian regulator MRPAM, which allows TMK to use pilot project gas for its own power generation needs.
Beneficial Gas Use Prioritised
Beneficial use of gas has been elevated to a priority project to improve power supply reliability at the pilot project and demonstrate proof of concept to government, regulators, and other stakeholders.
Excess power could also be delivered to local users, providing an additional demonstration of how gas from Gurvantes XXXV could contribute to Mongolia’s energy system.
Chief executive officer Dougal Ferguson said TMK had made significant progress during his recent 10-day visit to Mongolia.
“Our immediate focus is the upcoming pilot well drilling program, as well as the important need to have the beneficial use of gas initiative in place as soon as possible—to not only reduce the flaring of gas, but also to lock in our own permanent power supply for the pilot project.”
“Both these projects are key to allowing us to rapidly increase gas production from the current rates to what we predict will be much higher gas production rates in the near future.
Mongolia Energy Talks
High-level discussions have commenced with government and private consortiums over the potential use of natural gas in Mongolia’s power generation sector.
Mongolia’s increasingly energy-short power system has created a stronger incentive for potential gas-based power solutions.
“Although discussions remain preliminary at this stage, it demonstrates the attention that our project is attracting from both political and private stakeholders in the energy market in Mongolia,” Mr Ferguson said.
“TMK continues to engage with the Australian Embassy and Austrade to promote the company and Australian CSG expertise and investment in Mongolia.”
Australian Ambassador to Mongolia Leo Zeng and Deputy Head of Mission Andrew Berryman met with TMK during Mr Ferguson’s visit to gain a better understanding of the project and provide guidance.
The engagement forms part of TMK’s broader effort to position Gurvantes XXXV as a potential solution to the country’s increasing energy supply shortages.
