Key Highlights

  • Jade has started drilling a third horizontal production well at Red Lake in Mongolia, described as the first multilateral well of its kind in the country, with five lateral sidetracks.
  • About 3,700 metres of drilling is planned, including 2,950 metres in-seam, with completion expected before the end of November 2026.
  • Binding financing and development agreements for the proposed Phase 1 development are now targeted for November, after a revised signing timeline.

Jade Gas Holdings shares closed at $0.059 on 27 October 2026, up 1.72% for the session. The broader market finished higher, with the ASX 200 closing at 8,850.1, a gain of 0.46%, and the energy sector index ending at 11,074.7, up 0.63%. Separately, Brent crude oil eased 0.60% to USD 115.15 as diplomatic efforts over the U.S.-Israeli war with Iran reduced escalation concerns. Jade Gas Holdings Limited (ASX:JGH) is a gas developer focused on the coal bed methane (CBM) potential of Mongolia. Its flagship asset is the TTCBM Project over the Tavantolgoi XXXIII production sharing agreement area, operated through Methane Gas Resource LLC, a joint venture with the Mongolian Government.

Latest Development: First Multilateral Well Spudded at Red Lake

In its announcement of 19 October 2026, Jade said drilling has commenced on its third horizontal production well at the Red Lake CBM Project. The well will test an advanced completion design with five lateral sidetracks from the main wellbore, which the company described as the first of its kind in Mongolia.

The planned well involves approximately 3,700 metres of total drilling, including a targeted 2,950 metres of in-seam multilateral drilling. It will target Seam IIIb, the same seam intersected by the two existing producing wells. The company said the targeted in-seam length is a significant increase over that achieved in either of the previous single-lateral wells.

  • Purpose: refine well designs and drilling and completion practices ahead of the major development drilling program targeted for 2027
  • Design aim: increase contact with gas-bearing coal from a single main wellbore, which the company said has the potential to expand drainage area, improve gas recovery and achieve higher flow rates
  • Timing: drilling and completion expected to finish before the end of November 2026, subject to operational conditions and drilling outcomes

Latest Development: Red Lake Financing and Development Talks

Jade reported that discussions with representatives of the Chinese-led consortium have progressed negotiations towards definitive financing and development agreements for Phase 1 of Red Lake. The proposed Phase 1 comprises 175 production wells with estimated capital expenditure of US$762.5 million (A$1.1 billion), and under the proposed arrangements the consortium would fund 100% of that amount.

The release states that the talks advanced the allocation of project responsibilities, cost-recovery mechanisms and the financing structure. Methane Gas Resource LLC would remain the holder of the Production Sharing Agreement, while the consortium would undertake the agreed development activities.

Jade said updated draft agreements are expected shortly and that the signing timeline has been adjusted to reflect the complexity and scale of the transaction, with execution now targeted during November.

Comments From Jade's Directors

Executive Director Dr Ian Wang said multilateral designs are well established in China's Qinshui Basin and that Jade aims to apply the approach at Red Lake. He said the well will test the company's expectation of better performance than its single-lateral wells.

Executive Director Joe Burke said finalising the framework has taken longer than anticipated, but that recent meetings progressed key terms and Jade is confident binding agreements can be executed in November.

Risks and Catalysts on Watch

Matters identified in the release:

  • The proposed transaction remains subject to finalisation of definitive documentation and satisfaction of relevant approvals and other agreed conditions
  • The company stated that finalising the financing framework has taken longer than anticipated, and the signing timeline has been revised to November
  • Remaining commercial, legal and regulatory matters are yet to be completed, and updated draft agreements are expected shortly
  • Well completion is expected before the end of November 2026 but is subject to operational conditions and drilling outcomes
  • Drilling, dewatering and gas production results will inform future well configurations ahead of the 2027 program

Wrapping Up

Jade's 19 October 2026 release covers the start of drilling on a five-lateral well at Red Lake and a revised November target for binding agreements with the Chinese-led consortium on the proposed US$762.5 million Phase 1 development.