TMK Energy’s Record Gas Surge Raises Questions on Sustainability

Record Production Surge

TMK Energy Limited (ASX: TMK) has announced a remarkable operational milestone at its Gurvantes XXXV Coal Seam Gas (CSG) Project, with total gas production in January 2025 soaring approximately 300% compared to December 2024. This surge not only shattered previous monthly records but also demonstrated the tangible impact of recently drilled pilot wells coming online.

The pilot wells LF-04, LF-05, and LF-06 commenced production on 10 January, contributing significantly to the near 8,000 cubic meters of gas produced during the month. Despite these wells being operational for only part of January and facing minor operational adjustments such as pump cleanouts and upgrades, the project still achieved a 40% increase over its prior monthly best.

Positive Indicators from Existing Wells

Notably, the existing well LF-02 experienced a dramatic uplift, producing over four times its historical gas rate. TMK attributes this to enhanced water pumping capacity, which is a key proxy for coal seam permeability and overall reservoir health. Water production rates climbed from around 300 barrels per day before the new wells to approximately 1,000 barrels daily, underscoring improved reservoir connectivity and stimulation.

CEO Dougal Ferguson expressed cautious optimism, highlighting that while it is still early days, the project is on track to meet its goal of delivering commercially significant gas volumes within the first half of 2025. He emphasized that the positive trends observed in both new and existing wells support this outlook, even as the company continues to monitor the sustainability of these elevated production rates.

Outlook and Market Implications

While the Gurvantes XXXV project remains in an early evaluation phase, the January results provide a compelling signal of the resource’s potential. The company has maintained its forecast for a material increase in gas flow rates by late Q1 or early Q2 2025, a timeline that investors will watch closely. The operational success also reinforces TMK’s technical capabilities in coal seam gas extraction, a sector where early-stage production data can be highly volatile.

Investors should note, however, that sustaining these production levels remains uncertain, and the company has not yet confirmed commercial flow rates. Continued updates from TMK will be critical to assess whether the current momentum translates into long-term value creation.