Oilman Jim's Letter - July 25, 2024

Blue Star Helium (BNL.ASX BSNLF) announced an update on its Serenity high-grade CO2 project in Las Animas County, Colorado. The company has undertaken a review of various development concepts for the Serenity CO2 project and selected an initial small-scale, low capex development targeting first production of beverage-grade CO2 from H1 2025. The proposed facility, expected to cost in the order of $1.3 million, is a chilled distillation system producing high-purity liquid CO2 and will support processing of approximately 500 thousand cubic feet per day of raw gas from an initial two-well development, producing between 20 and 25 tons per day of beverage-grade CO2. Meanwhile, the Sammons 315310C well has been drilled, tested and proven, and is currently suspended for tie-in to the production facility. Lab analysis of representative reservoir samples taken during natural flowing of Sammons 315310C contained a combined average composition from both the upper and lower Lyons reservoirs of 98.77% carbon dioxide, 1.15% nitrogen and 0.09% helium, with the lower Lyons reservoir consistently showing higher CO2 levels up to 98.95%. Flow testing was conducted at various stages throughout the upper Lyons drilling with gas rates as high as 500 thousand cubic feet per day through a 1.25-inch orifice. The company has three additional approved drilling locations which require final drill approvals and it is expected that a second well will be drilled with the existing Sammons well being completed for production in anticipation of installation of the initial facility. On successful development of the initial facility, Blue Star expects to be able to develop up to 18 further locations at Serenity as an expanded commercialisation of this asset. The company is also continuing to refine its development case for Galactica/Pegasus, which envisages production of both helium and CO2 product streams. Ongoing evaluation here is said to demonstrate the considerable opportunity presented by processing larger raw gas volumes through a CO2 plant prior to feeding what is then helium-enriched feed gas into a helium processing plant. Ultimately, Blue Star’s goal is the production of high-grade helium from Galactica-Pegasus and the sustainable production of food/beverage-grade CO2 from both Serenity and Galactica/Pegasus…more

Helix Exploration (HEX.L) announced the commencement of construction work on the access road and drill pad at the Ingomar Dome project area in Montana. Drilling of the Clink #1 well will commence in early August following completion of these works and through flow testing and appraisal, operations are expected to take approximately a further 10 weeks. The quoted cost for drilling and appraising the Clink #1 well at is approximately $2,130,000 including extended well test but excluding contingencies. The estimated cost for drilling and appraising the Darwin #1 well at Rudyard is approximately $1,980,000 including extended well test but excluding contingencies. Rudyard costs are lower than Ingomar due to the shallower target depth…more

Trillion Energy (TCF.CSE TRLEF Z62.F) announced an update on the flow rates and well perforations at the SASB gas field. South Akcakoca-2 well head pressure has stabilized at 371 pounds per square inch and the well was recently producing 1.94 million cubic feet per day using a 42/64 inch choke. At Guluc-2, initial flow was diverted to the platform vent line with a 64/64 inch choke where producing well head pressure was about 350 pounds per square inch. The well was shut in and within 40 minutes the well head pressure increased to 1,200 pounds per square inch. Guluc-2 is currently producing at 3.35 million cubic feet per day with a well head pressure of 484 pounds per square inch using a 32/64 inch choke. At West Akcakoca-1, only two of the five zones slated for perforations have been completed at this time due a wait for a replacement tool expected to arrive today. The two perforated zones contain 5 metres of gas pay, where well head pressure went from 1150 pounds per square inch to 1350 pounds per square inch. Three more gas zones totaling an additional 4 metres are expected to be perforated, after which the well will be tested and flowed. Akcakoca-3 was perforated over 11 metres of gas pay with no observable well head pressure increase, likely due to water loading which is currently at 315 metres depth. The well is expected to come back on at about 2 million cubic feet per day upon installation of a velocity string…more

Chariot (CHAR.L OIGLF C62.F) announced that the accelerated bookbuild has closed and the company has conditionally raised net proceeds of $6.4 million (£5 million), comprising gross proceeds of $7 million less expenses, through the placing of and subscription for 83,353,179 new ordinary shares at the issue price of 6.5p per share. In addition, the company proposes to raise up to a further $2 million by the issue of new ordinary shares pursuant to an open offer to qualifying shareholders on the basis of 1 open offer share for every 46 existing shares. The net proceeds of the fundraise will be used to strengthen the balance sheet, secure a material new venture opportunity with multi-billion barrel potential and progress onshore gas commercialisation plans in Morocco to build a gas to industry supply…more

Zephyr Energy (ZPHR.L ZPHRF VD5N.F) announced an update on State 36-2R LNW-CC well operations at the company's project in the Paradox Basin, Utah. Initial production test observations include high reservoir deliverability and high initial reservoir pressures (approximately 8,600 pounds per square inch absolute). Peak production rates achieved during the production test were 1,350 barrels of oil equivalent per day, at which level the well was still choked back and constrained. Condensate yield averaged 180 barrels per 1,000 thousand cubic feet produced and peaked at over 600 barrels of condensate per day. This elevated liquid yield has the potential to be a significant driver of improved economics and may increase recoverable liquid volumes across the company's White Sands Unit. There was said to be almost zero evidence of water production, another potential boost to the well's economics by reducing the need for water disposal…more

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