Jade Gas Faces Funding and Execution Challenges Ahead of 2025 Production

Progressing Towards Commercial Gas Production

Jade Gas Holdings (ASX: JGH) has reported solid progress in its December 2024 quarterly activities report, advancing its coal bed methane (CBM) project in Mongolia's South Gobi region. The company has completed drilling the first two of an initial four production wells, a critical step toward demonstrating commercial gas flows expected in 2025. This milestone underpins Jade's strategy to secure customer contracts and formally book gas reserves.

The drilling program is supported by a newly completed monitoring well, drilled to 385 metres, which intersected 10.8 metres of gassy coal, slightly thicker and higher than prognosed. This well provides essential data for the horizontal lateral drilling program, confirming gas content continuity and enabling pressure monitoring within the coal seam. Preliminary gas content estimates of approximately 14 m3/t (DAF) compare favorably with previous benchmarks, reinforcing the project's potential.

Exploration Success and Resource Confidence

Additional exploration wells drilled in late 2024 encountered multiple gassy coal intersections consistent with earlier results from the Red Lake gas field, which hosts a substantial contingent resource base. The field's 2C Gross Unrisked Contingent Resources stand at 246 billion cubic feet (Bcf), positioning Jade as a leading CBM player in Mongolia. These results bolster confidence in the resource quality and support the company’s goal to capitalize on strong local demand for cleaner energy alternatives, particularly liquefied natural gas (LNG) to replace diesel in heavy transport.

Financial Position and Funding Strategy

To accelerate its production strategy, Jade successfully raised A$3.63 million through a placement at 3.3 cents per share, providing sufficient capital to complete the initial production well program through to gas flow confirmation and reserve booking. Additionally, the company has drawn down A$7.6 million of an A$11 million unsecured convertible note facility, maintaining a healthy cash balance of A$1.46 million at quarter-end. These financial resources underpin Jade’s operational plans and provide runway for the next phase of drilling, which includes a planned 20-well program in 2025 supported by Mongolia’s largest CBM rig operated by DWK.

Strategic Outlook and Market Implications

Jade Gas is positioning itself to meet Mongolia’s growing energy needs by developing indigenous gas supplies that reduce reliance on imported fuels and coal-fired power. The company’s focus on cleaner fuel sources aligns with Mongolia’s energy transition goals, promising environmental and health benefits alongside energy security. With the drilling program on track and funding secured, Jade is well placed to deliver on its commercial objectives and potentially transform the South Gobi’s energy landscape.

Investors will be watching closely as Jade progresses through its production milestones, with gas flow confirmation in 2025 set to be a pivotal catalyst for the company’s valuation and market positioning.