Mendell Helium #MDH – Proposal to install 1,000 Mcf/day helium production facility at Rost

Mendell Helium is pleased to announce that M3 Helium Corporation (“M3 Helium”) has received a non-binding proposal with a leading helium producer to install equipment to recover and sell helium at its Rost 1-26 well (“Rost”) and the nearby Rost twin well (“Rost Twin”) where drilling has recently finished in the Fort Dodge region of Kansas, USA (the “Facility”). 

Highlights

·    Proposal to install the Facility to recover and sell helium on the Rost site

·    The Facilty would support production from Rost and the Rost Twin

·    Phase 1: The Facility is being initially designed at 1,000 Mcf/day of raw gas with 5% helium content which equates to around 50 Mcf/day of helium production based on Rost’s gas composition

·    Phase 2: The Facility could be expanded to accommodate future growth from M3 Helium wells in the Fort Dodge region

As announced on 27 June 2024, the Company has an option (the “Option”) to acquire M3 Helium, a producer of helium which is based in Kansas and holds an interest in six producing wells. There is no certainty that the Company’s option to acquire M3 Helium will be exercised, nor that the enlarged group will successfully complete a re-admission. The Company and M3 Helium have agreed to extend the date on which the Option should be exercised to 30 April 2026. 

Under the terms of the non-binding proposal, M3 Helium will contract with a leading third party helium processor to facilitate the installation of equipment to recover and sell helium at Rost and the Rost Twin. Phase I of the Facility will be designed to process 1,000 Mcf of raw gas per day. Upon a successful drilling programme by M3 Helium in Fort Dodge. Phase II will incorporate expansion to allow for material incremental throughput from nearby wells and, with that, additional helium production and sales into what has become a constrained helium market. 

M3 Helium’s obligations would be to provide a sufficient space on site to accommodate a larger PSA and compression facilities to load tube trailers as well as access to the 3-phase power that is already in place. M3 Helium is also obliged to deliver a gas stream from the wells that is suitable for use in a PSA meaning that some limited pre-treatment may be required.

The proposal includesa fee structure whereby processing fees are expected to be the greater of a fixed monthly amount and a percentage of helium revenues, together with an additional marketing fee.  This structure ensures that higher production levels by M3 Helium are expected to have lower incremental costs. The proposal has a four year term and is renewable thereafter. 

Subject to execution of definitive agreements, M3 Helium will have several redundant items of equipment at Rost, including its own PSA.  These are intended to be redeployed on future wells.  Full installation of the new Facility is expected to take around four months subject to availability and lead time for necessary equipment – M3 Helium will continue to operate its own surface purification equipment until that time. Further announcements will be made in due course following the execution of definitive agreements and updates in relation to the development of the proposed Facility.

Nick Tulloch, Chief Executive Officer of Mendell Helium and Chairman of M3 Helium, said: “In another validation of M3 Helium’s operations at Rost and the Rost Twin, this proposed collaboration with a leading helium producer represents a significant expansion of operations. The proposal received from M3 Helium’s partner to size the facilities at 1,000 Mcf/day illustrates its view of the potential of the two Rost wells.

“The conflict in the Middle East has generated some speculation on the direction of helium prices.  Whatever the short term benefits may be to helium producers, the long term opportunity centres on the fragility of global helium supplies.  Working with an industry partner to produce purified helium at M3 Helium’s well site represents a significant commercial advantage.

“Completion and perforation operations will shortly be underway for the Rost Twin and both Rost wells will be serviced by the facilities already in place at Rost before this proposed redevelopment.”

This announcement contains inside information for the purposes of the UK Market Abuse Regulation and the Directors of the Company are responsible for the release of this announcement.

ENDS

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