TMK Energy Signs Drilling Contract for Well Re-Completions at Nariin Sukhait

TMK Energy Fires Up Its 2026 Work Program With New Drilling Contract and Well Re-Completions at Nariin Sukhait

TMK Energy Limited (ASX: TMK) has moved its 2026 field program closer to execution at the 100% owned Gurvantes XXXV Pilot Well Project in Mongolia, with a drilling contract signed with Major Drilling, an initial commitment to drill LF-08, and re-completions planned for three existing pilot wells. According to the ASX announcement dated 26 August 2026, the work is designed to increase gas production and test whether the Nariin Sukhait coal seam gas project can produce at commercial rates.

The update matters to investors because it shifts attention from planning to near-term operational activity. TMK reported that drilling of LF-08 is expected to commence in late September 2026, while re-completions of LF-02, LF-03 and LF-06 are planned to begin in September 2026, with key equipment already being transported from China to Mongolia.

A Targeted 2026 Work Program Focused on Production

According to the announcement, TMK reviewed its originally proposed three-well drilling program and reduced the number of new wells in order to focus more directly on lifting output from wells already producing gas. The result is a narrower but more execution-focused work program.

The key components are:

• LF-08 as the initial new pilot production well
• Re-completions of LF-02, LF-03 and LF-06
• A signed drilling contract with Major Drilling
• Flexibility within the contract to drill up to three pilot production wells
• Long lead equipment largely manufactured and being shipped from China to Mongolia, with residual items still to come from Australia

This sequence suggests TMK is prioritising practical production improvement over a broader drilling campaign. For investors, that means the next phase is likely to be judged less by the number of wells drilled and more by whether gas production trends continue to improve.

CEO Commentary

"The objective of the 2026 Work Program is to increase gas production from the Pilot Project and demonstrate the commercial viability of the enormous, 100% owned, discovered gas resource at Nariin Sukhait," said Dougal Ferguson, Chief Executive Officer of TMK Energy.

A second point from management is also relevant. Furthermore, Ferguson stated that monthly gas production increases, declining reservoir pressure and continued water production rates are, in the company's view, the ingredients needed for a successful coal seam gas project.

Why LF-08 Is the Main Near-Term Catalyst

In the report, TMK described LF-08 as the initial committed well under the Major Drilling contract and identified it as a potential early gas producer. That language makes LF-08 the most closely watched part of the current program.

There are three reasons the well stands out.

First, location. TMK said LF-08 is being drilled in an up-dip location. In simple terms, that means the well is positioned higher within the geological structure of the coal seam, which can be favourable for earlier gas production.

Second, design. The company stated that LF-08 will use a more optimal engineered wellbore design. The aim is to improve gas production while continuing to remove water from the seam and reduce pressure in the reservoir.

Third, benchmarking against LF-07. TMK said LF-08 is intended to build on the performance of LF-07, which it identified as the best performing well at the pilot project. LF-07 is also significant because, according to the announcement, it is the only well produced under the revised reservoir management plan adopted in August 2025.

This gives investors a clearer framework for assessing future results. If LF-08 performs well, it may support TMK's view that well placement and completion method are important drivers of output at Nariin Sukhait.

What Do "Up-Dip" and "Wellbore Design" Mean for Investors?

These terms can appear technical, but their relevance is straightforward.

An up-dip location refers to a well drilled higher in the rock structure. In coal seam gas projects, that can improve the timing and efficiency of gas flow if the reservoir responds as expected.

A wellbore design is the way the well is planned and constructed. Changes in design can affect how effectively a well removes water, lowers reservoir pressure and allows gas to flow.

For TMK, LF-08 is not just another pilot well. It is being used to test whether a better-positioned and better-designed well can accelerate gas production from the pilot project.

Understanding Coal Seam Gas and Why Dewatering Matters

For readers less familiar with the sector, TMK's update centres on the mechanics of coal seam gas (CSG) development. Coal seam gas is natural gas, mainly methane, that is stored within coal seams underground.

Unlike conventional gas reservoirs, the gas in coal seams is commonly held in place by pressure from water in the seam. To produce the gas, operators first need to pump out water. This reduces pressure and allows gas to start flowing. That process is known as dewatering.

This is why TMK placed emphasis on three operating indicators:

• Increasing gas production
• Declining reservoir pressure
• Good water production rates

According to the company, these are signs that the reservoir is responding to dewatering.

TMK specifically noted that water production rates act as a proxy for permeability. In accessible terms, that means strong water flow can suggest the coal seam allows fluids to move through it, which is an important condition for commercial gas production later on.

Re-Completions Could Offer a Lower-Cost Production Lift

Alongside LF-08, TMK is proceeding with the re-completion of three existing pilot wells: LF-02, LF-03 and LF-06. The company said this work remains on track, with equipment in transit and expected to arrive on site in the coming weeks.

A re-completion does not involve drilling a completely new well from scratch. Instead, it involves modifying an existing well so it can perform more effectively. For a pilot-stage gas project, that can be important because it offers a way to test production improvements using existing infrastructure.

According to the announcement:

• Major Drilling has been contracted to undertake the re-completion work
• A purchase order has been placed for the first three wells
• TMK has ordered enough equipment to re-complete the remaining existing production wells if the first three are successful

That creates a practical read-through for investors. If the initial re-completions deliver stronger gas output or better operating performance, TMK may have a pathway to improve production across more of the pilot well set without relying entirely on additional drilling.

Timeline and Operational Milestones to Watch

The ASX update provides a clear near-term schedule for the 2026 work program. In addition, the next few months are likely to be important for overall project momentum.

The earliest signs are likely to come from re-completion activity and then from operational updates on LF-08 once drilling begins.

What the Work Program Means for the Investment Case

The central issue at Nariin Sukhait remains commerciality. TMK has already established a pilot project and reported improving production indicators, however the market will be looking for stronger evidence that gas can be produced in commercial quantities.

Several points from the announcement shape that assessment.

1. Full Ownership Concentrates the Outcome

TMK said the Gurvantes XXXV Pilot Well Project is 100% owned. That means any future production success at the pilot level is attributable directly to TMK, without reference to a joint venture partner in this project update.

2. Existing Pilot Performance Is Being Used to Guide the Next Step

The company is not moving into this work program without operating data. Management highlighted month-on-month gas production increases, continued reservoir pressure decline and good water production rates. These are operational indicators rather than final proof of commercial success, but they help explain why TMK is now adding LF-08 and re-completing older wells.

3. Capital Appears to Be Directed at Targeted Interventions

TMK reduced its original three-well concept to an initial commitment for one additional pilot production well. In parallel, it is carrying out re-completions on wells already in the field. That combination indicates a measured approach to capital allocation based on production optimisation.

4. Existing Infrastructure Supports the Next Phase

The project already includes seven existing production wells, and the current program is intended to build on that installed base. For pilot-stage developments, that can shorten the path to meaningful operating data because the company is working within an already established field setting.

"TMK's 2026 work program is structured to test whether changes in well location, well design and re-completion methods can improve production enough to strengthen the commercial case for Nariin Sukhait."

Why TMK Energy Will Be Closely Watched Through September 2026

The coming phase is likely to be one of the most active operating periods yet reported for the Gurvantes XXXV licence. Re-completions are due to start in September 2026, and LF-08 is expected to commence drilling in late September 2026.

From an investor perspective, the next key developments are likely to include:

• Initial operational progress on LF-08
• Production response from LF-02, LF-03 and LF-06 after re-completion
• Continued reporting on month-on-month gas production
• Any decision to extend re-completions to additional wells
• Any use of the contract flexibility to drill further pilot wells

According to the ASX announcement, the drilling of LF-08 and re-completion of the three existing wells are expected to meet TMK's 2026 work program commitments for the Gurvantes XXXV licence. That gives the market a relatively defined near-term framework for judging progress.

For now, TMK has moved from planning into execution. The next set of field results should provide a clearer indication of whether the pilot project's improving technical indicators can translate into a stronger case for commercial coal seam gas production at Nariin Sukhait.

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