Highlights

  • TMK Energy shares rose 3.85% on 4 June 2026 following the release of an operational update.
  • Average daily gas production increased 4% month-on-month to approximately 687 cubic metres per day during May.
  • Gas production from LF-07 continued to improve, with current rates ranging between 11,000 and 12,000 standard cubic feet per day.
  • Preparations for the 2026 drilling and workover program are progressing, with drilling expected to commence in July.
  • The company signed an agreement to advance a 1MW Gas-to-Power project with one of Mongolia’s largest LPG importers and distributors.

TMK Energy Ltd (ASX:TMK) shares traded 3.85% higher at AUD 0.14 during the morning session on 4 June 2026 after the company released an operational update outlining rising gas production, progress toward its upcoming drilling campaign and advancement of a pilot gas-to-power initiative in Mongolia. Despite today's gain, the stock remains down 20.59% over the past 12 months.

The latest update appears favourable, highlighting continued production growth across the company's Lucky Fox coal seam gas project while also detailing operational preparations aimed at improving future well performance. Investors appeared encouraged by the combination of increasing gas output, upcoming development activity and progress toward potential commercialisation pathways for produced gas.

TMK Energy is focused on coal seam gas exploration and development in Mongolia. The company's flagship Gurvantes XXXV Project covers a large exploration area in the South Gobi region and hosts the Lucky Fox pilot project, where TMK has been undertaking appraisal and production activities. The company has been working toward establishing commercial gas production from the project while gathering operational data to support future development decisions.

Gas Production Continues to Move Higher During May

One of the key takeaways from the latest update was the continued increase in gas production during May.

TMK reported average daily gas production of approximately 687 cubic metres per day during the month, equivalent to around 24,260 standard cubic feet per day. This represented a 4% increase compared with April's average production rate of approximately 663 cubic metres per day.

The improvement was achieved despite several operational interruptions across the field. LF-03 remained offline for much of May while awaiting a pump replacement, LF-02 was temporarily shut in to undertake a pressure build-up test and back-flush operation, and LF-01 experienced downtime associated with mechanical repairs.

Given these interruptions, the increase in overall production may be viewed as a notable operational outcome, particularly as not all wells were contributing throughout the full month.

Water production across the field averaged approximately 450 barrels per day during May, around 10% lower than previous levels. The reduction was primarily linked to the temporary production interruptions experienced during the reporting period.

LF-07 Continues to Deliver Encouraging Results

A significant portion of the company's attention remains focused on LF-07, which has emerged as the best-performing gas producer within the field.

According to TMK, gas production from LF-07 continued to trend higher throughout May. Average gas output from the well exceeded 10,000 standard cubic feet per day during the month.

Excluding March, when production rates rose rapidly and averaged approximately 17,900 standard cubic feet per day, May delivered the highest average monthly gas production achieved from LF-07 to date.

Current production rates from the well are reported to be ranging between 11,000 and 12,000 standard cubic feet per day. These levels are approximately 10% to 20% above the average production rate recorded during May.

The company also noted that LF-07's gas production has increased by around 50% since February, indicating a return toward the elevated production levels previously observed earlier in the year.

Performance data from LF-07 has also influenced planning for future wells. TMK indicated that lessons learned from the well have contributed to modifications in drilling and completion designs that are expected to improve productivity in upcoming wells.

July Drilling Program Moves Closer

Alongside production growth, TMK continues to prepare for its 2026 drilling and workover campaign, which is expected to begin in July.

The company announced that drilling plans are now well advanced and that a formal drilling tender for up to three additional production wells has been released in Mongolia.

Preparatory work has also commenced on acquiring long-lead equipment and materials required for the upcoming program.

Management stated that the recently expanded operations team has elected to proceed with a modified drilling and completions design. Among the changes are reductions in hole sizes and pump sizes, which are expected to contribute to improved well productivity.

In addition to new well drilling, the company is assessing opportunities to optimise production from existing wells through potential workover activities and operational improvements.

TMK's recently appointed Production Manager, Danny Chong, has been involved in identifying several production enhancement opportunities. According to the company, his work has not only focused on existing wells but has also influenced the design of planned future wells.

The company believes these initiatives could support higher gas production rates from both new and existing production Assets.

Gas-to-Power Project Advances with Industry Partner

Another notable development during May was the execution of an agreement aimed at progressing a pilot gas-to-power project.

TMK signed an agreement with one of Mongolia's largest LPG importers and suppliers to advance an initial 1MW Gas-to-Power project.

Detailed design and engineering activities are now underway as the parties move the project forward.

The proposed Facility is intended to utilise gas currently being produced from TMK's pilot project to generate electricity for field operations.

Management outlined several potential benefits associated with the initiative.

One objective is to improve the reliability of power Supply for the company's operations. Existing activities are periodically affected by power interruptions, which can increase operating costs and create delays in water production and field operations.

By generating power from produced gas, TMK expects to reduce reliance on diesel generators while improving operational continuity.

The project could also reduce the need for gas flaring, allowing produced gas to be used productively within the operation.

Beyond internal operational benefits, the company views the project as an opportunity to demonstrate the potential application of coal seam gas as a fuel source for electricity generation, particularly in remote Mining and off-grid environments.

Commercialisation Pathway Continues to Develop

TMK also provided an update regarding regulatory engagement and future licensing plans.

During May, company representatives met with Mongolia's Mineral Resources and Petroleum Authority (MRPAM) to discuss the process required to convert discovered resources within the company's extensive 8,400 square kilometre exploration area into an exploitation, or production, licence.

The company indicated that it expects to initiate this process following completion of the 2026 work program.

Management believes the upcoming drilling and operational activities will generate additional information that may assist in future reserve evaluation work and support the licensing process.

The update suggests TMK remains focused on gathering the technical and operational data necessary to advance the project toward potential commercial production status.

Focus Remains on Production Targets

Management's commentary highlighted a continued focus on increasing gas production and advancing field development initiatives throughout the remainder of 2026.

The company stated that recent production improvements at LF-07, together with planned drilling activities, production optimisation measures and the development of a use case for produced gas through power generation, are all intended to support broader commercial objectives.

Preparations for the July drilling campaign, ongoing production growth and progress on infrastructure initiatives are expected to remain key areas of attention over the coming months.

What Does the Update Mean for Investors?

TMK Energy's latest operational update delivered several developments that may have attracted investor attention, including higher gas production, continued improvement at LF-07, progress toward a July drilling campaign and advancement of a pilot gas-to-power project.

Average daily gas production increased to 687 cubic metres per day during May, while LF-07 continued to record rising gas rates. At the same time, the company moved closer to its next drilling phase, announced a tender for additional production wells and continued progressing pathways that could support future commercial development of the project.

These operational milestones appear to have contributed to the positive share price reaction seen during Thursday's Trading session.