Jade Gas Faces Critical Phase as Red Lake Production Recovers from Outage

Strong Operational Progress at Red Lake

Jade Gas Holdings Limited (ASX, JGH) has reported a productive December quarter at its Red Lake coal bed methane project in Mongolia’s South Gobi region. Two horizontal wells remained online throughout the quarter, delivering continuous gas flow with methane content exceeding 97%, a key indicator of the commercial quality of the resource. This high methane purity, coupled with very low carbon dioxide levels, supports multiple commercial pathways including liquefied and compressed natural gas supply, as well as gas-fired power generation.

Despite a brief production suspension due to generator maintenance, the company successfully managed well integrity and flow rates have since recovered, with ongoing improvements expected. The wells currently rely on diesel-powered generators, but Jade plans to transition to using its own gas production for site power within the first half of 2026, reducing operational costs and environmental impact.

Strategic Partnerships and Leadership Changes

In a significant commercial development, Jade signed a non-binding Letter of Intent valued at A$70 million with Zhengzhou Langrun Intelligent Equipment Co., Ltd., a Chinese gas equipment manufacturer experienced in coal bed methane projects. This partnership is expected to accelerate the development of the Red Lake field, leveraging Langrun’s operational expertise and financial capacity.

Leadership has also been strengthened with the appointment of Chris Newport as Managing Director and CEO. Newport brings over 40 years of experience in oil and gas development and business strategy, including recent advisory roles in Mongolian coal bed methane projects. His expertise is anticipated to be instrumental in guiding Jade through the next phase of commercialisation and field development.

Financial Position and Future Outlook

Jade successfully raised over A$5 million through a placement and share purchase plan during the quarter, bolstering its financial position. At quarter-end, the company held A$1.81 million in cash with an additional A$5.79 million available through convertible notes and director loans. Exploration and evaluation expenditure was A$2.2 million, including a prepayment towards drilling a new well to expand the Red Lake field.

The appraisal phase is nearing completion, with plans to submit the Plan for Development and Operations and apply for a production license. These milestones will enable Jade to move towards commercial gas sales, supporting Mongolia’s energy transition by displacing imported diesel with cleaner, locally produced gas.

Supporting Mongolia’s Energy Transition

Jade’s strategy aligns with Mongolia’s growing energy demand and environmental goals. By developing coal bed methane resources, the company aims to enhance energy security, reduce reliance on imported fuels, and improve air quality. The proximity of the Red Lake project to major coal transport routes presents a compelling opportunity to supply natural gas for heavy vehicle fleets, which currently depend heavily on diesel.

With robust operational data, strategic partnerships, and strengthened leadership, Jade Gas Holdings is positioning itself as a key player in Mongolia’s emerging gas sector. The coming quarters will be critical as the company advances towards commercial production and broader market engagement.