TMK Energy Boosts Gas Production at Gurvantes Project

Rapid Production Success: LF-07 Well Hits 100m³ Daily Gas Output

TMK Energy Limited (ASX: TMK) has announced significant production achievements from its LF-07 pilot production well at the Gurvantes XXXV Coal Seam Gas Project in Mongolia. The well, which began producing gas on 30 August, has rapidly become one of the project's top performers, achieving daily gas flow rates exceeding 100m³ within just six days of operation.

Most impressively, these results were achieved while operating the well at minimum pump speeds, suggesting substantial potential for increased production as operations mature. TMK Energy owns 100% of the Gurvantes XXXV Project, providing shareholders with full exposure to its success.

"The increase in gas flows recorded from LF-07 since the well was brought on production is a very positive sign, especially as we have been producing the well at minimum pump speeds since it was commissioned. To become one of the Pilot Well Project's best gas producers in such a short time confirms the well was ideally located," said Dougal Ferguson, TMK Energy's Chief Executive Officer.

Project-Wide Production Doubling

The success extends beyond the single well, with TMK reporting that total gas production across all seven pilot wells has doubled in the mere two weeks following the completion of drilling and workover operations. This comprehensive improvement across the pilot project suggests the company's drilling program and reservoir management approach are delivering effective results.

The performance indicators have been so encouraging that Ferguson stated: "Based on current rates and trends of gas production, we expect this to lead to new record monthly gas production numbers in the near future."

Optimising Production: The Critical Desorption Pressure Strategy

Understanding Critical Desorption Pressure

Coal seam gas (CSG) production relies on a fundamental concept called critical desorption pressure. This is the pressure threshold at which gas molecules begin to release (desorb) from the coal matrix and flow into the well. Initially, coal seams are saturated with water that creates pressure keeping the gas attached to the coal. By pumping out water, operators reduce this pressure until reaching the critical point where gas begins flowing freely.

For investors, understanding this concept is crucial because it explains why CSG wells often show increasing gas production over time, unlike conventional gas wells which typically peak early and decline. The path to optimal production requires patience as pressure is systematically reduced across the reservoir.

As TMK Energy continues pumping operations at the Gurvantes project, reservoir pressure will further reduce, potentially leading to increasing gas production rates as the reservoir pressure approaches the target critical desorption pressure.

Data-Driven Development Approach

TMK Energy is taking a methodical approach to developing the Gurvantes XXXV Project. After collecting essential data from LF-07, the company is now:

1. Inputting this data into an updated reservoir management plan
2. Gradually increasing pump speeds for surrounding wells (LF-04 and LF-06) over the coming week
3. Developing production type curves to better predict well performance
4. Refining their models to more accurately forecast gas production rates and timeframes

This disciplined, data-driven approach allows TMK to optimise well placement and production parameters, potentially leading to significantly higher production rates as operations mature.

"The data we have gathered to date has already been inputted into the updated reservoir management plan, which will help to develop type curves for production wells and better predict the time required to reach critical desorption," explained Ferguson.

Building a Production Model for Commercial Development

While the company notes that current production volumes are "not commercially significant at this stage," the consistent gas flow across all seven wells serves a critical purpose—proving that gas can be successfully produced from the coal seams and gathering the data needed to optimise future commercial development.

The technical team is now focused on collecting information to make informed decisions on how to maximise both gas and water production going forward. This information will be vital for:

• Determining optimal well spacing
• Establishing production forecasts for full-field development
• Creating accurate economic models
• Planning infrastructure requirements

The Gurvantes XXXV project is currently producing at some of the highest rates seen to date, and TMK Energy expects further increases over the coming weeks as pump speeds are increased in selected wells.

Coal Seam Gas Production Fundamentals

Coal seam gas, also known as coal bed methane, is natural gas contained within coal deposits. Unlike conventional gas reservoirs that hold gas in porous rock formations, coal seam gas adheres to the internal surfaces of coal through a process called adsorption.

The production process involves several key steps:

1. Dewatering: Initially, wells produce primarily water as pumping reduces the reservoir pressure.
2. Desorption: As pressure decreases below the critical threshold, gas molecules detach from the coal surface.
3. Diffusion: Gas moves through the coal matrix toward fractures and cleats (natural cracks in the coal).
4. Flow: Gas travels through these pathways to the wellbore and up to the surface.

This process means that coal seam gas wells typically follow a production profile where gas rates increase gradually as water is removed, reach a plateau, and then decline more slowly than conventional wells. The initial dewatering period can take months to years depending on reservoir properties.

For TMK Energy's Gurvantes project, the early gas production from wells like LF-07 indicates that the dewatering process is progressing effectively, and the reservoir is beginning to release its gas.

Investment Thesis: Early-Stage CSG Success with Room to Grow

TMK Energy represents a potentially compelling opportunity for investors seeking exposure to the development stage of coal seam gas production. The company has several notable advantages:

1. 100% project ownership provides full economic exposure to project success
2. Rapid early production results with LF-07 producing substantial gas within days
3. Project-wide production doubling in just two weeks suggests effective reservoir management
4. Methodical, data-driven approach to development reducing technical risk

As pump speeds increase in the coming weeks and months, investors should watch for:

1. New monthly production records as predicted by management
2. Further refinements to the reservoir model and production forecasts
3. Updated economic assessments as more production history is accumulated
4. Potential announcements regarding commercial development plans

Why Investors Should Follow TMK Energy

TMK Energy has positioned itself at a pivotal moment in the project lifecycle—successfully demonstrating production capability across multiple wells while gathering the critical data needed to inform full-scale commercial development. The company's methodical approach to reservoir management, combined with the encouraging early production results from LF-07, indicates the technical foundations for success are being established.

For investors interested in the energy sector, particularly those seeking exposure to projects with demonstrated production capability but still offering substantial growth potential, TMK Energy presents an interesting opportunity to monitor. The coming months should provide important insights into the project's commercial potential as production rates increase and reservoir models are further refined.

With 100% ownership of the Gurvantes XXXV Project, TMK Energy offers shareholders direct and undiluted exposure to the success of this emerging coal seam gas development.

The company has committed to providing ongoing updates as new production milestones are reached in the weeks and months ahead, giving investors regular insight into the project's progression.

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