Jade Gas Holdings announced that total depth (TD) has been reached at Red Lake-1, the first of six wells to be drilled at the Company's coal bed methane gas project over the Production Sharing Agreement area of the Tavantolgoi XXXIII unconventional oil basin in Mongolia (TTCBM Project). Jade is targeting natural gas from three coal seams of interest - IV, III and 0 - across the Red Lake Field. The drilling program will improve the Company's understanding of the central core area of its TTCBM Project, which has an associated Prospective Resource of 1.0 Tcf of gas. The Company reached TD at Red Lake-1 of 1,011.5 metres, with all the three coal seams of interest intersected and cored between 730 metres and 970 metres depth. The extensive coring program delivered a total of 145 metres of coal, 58 metres of which had gas coming off the recovered core. Core sampling and drilling data collection was completed at the Company's on-site mobile lab operation. The complete evaluation program for Red Lake-1, which will build an understanding of which coal seams may be targeted for commercial production, is underway and includes: Gas desorption, to assess gas content and expected to be completed over the coming weeks; Permeability testing, to identify the ease with which fluids flow through the coals; and Isotherm analysis, to assess gas saturation. The isotherm analysis will require specialist laboratory testing and as a result is expected to be completed around three months after the conclusion of desorption testing. With the strong results from Red Lake-1, Jade has engaged a second drilling contractor to expedite the program by drilling two wells in parallel with the current drilling services provider. The second well in Jade's six well program, Red Lake-2, is located approximately two kilometres west of Red
Lake-1 and expected to spud in the coming weeks. The well will be extensively cored and drilling is expected to reach TD at around 800 metres, with drilling to take approximately four weeks. All wells in this program will continue to target the three coal seams of interest, those being IV, III and 0. The third well of the program, Red Lake-3, is located approximately 1.3 kilometres south-west of Red Lake-2 and will also spud over the coming weeks. Red Lake-3 will be extensively cored and is expected to reach TD at around 730 metres, with drilling to take place over a three to four week period.