Jade Gas Holdings (ASX:JGH) has announced its execution of a 20 well agreement at Red Lake with Chinese driller DWK.
The Mongolia-based explorer now sits in a binding deal with DWK where the latter will fund Jade’s next 20 production wells – should Jade be able to successfully complete 4 existing wells to be sunk.
Regulators must also approve the deal. Jade will retain project ownership with “minimal … funds” to be eaten on the foreseeable horizon.
The deal ultimately forms part of a larger wave of M&A activity happening all around the world. The 4 wells Jade must first complete will be commenced “shortly.”
Jade noted on Monday that the full vision at Red Lake sees 175 gas wells planned, making DWK’s stake over 20 a fairly small portion.
The upside here, in the company’s own words, is that Jade sees a faster pathway to gas sales.
“In recent months, we have validated customer demand for gas in the South Gobi region. Now, this partnership with DWK offers Jade the ability to quickly move to develop the Red Lake gas resource to capitalise on this strong market demand,” Jade EC Dennis Morton said.
“The structure of the Partnership provides a unique way for Jade to transition to a major gas producer in quick time with only a small number of production wells, offering a way to effectively develop the Red Lake area.”
JGH last traded at 4.8cps.