Oilman Jim's Letter - June 4, 2024

Royal Helium (RHC.V RHCCF RD31.F) announced that it has now shipped both the 10th and 11th purified helium trailers from the Steveville helium purification facility, located near Brooks, Alberta. The Steveville facility continues to ramp up capacity and is experiencing both growth in throughput rate and more consistency in run-time. On the inlet side, the production zones of the reservoir are flowing as projected with helium concentrations meeting or exceeding original expectations. Over the course of the past three weeks, the company has achieved stable production at 50% of nameplate capacity with periodic increases up to 75% of nameplate capacity. Stable production at 50% of nameplate amounts to approximate sales of four trailers per month, representing a 100% increase from prior levels. Once the plant is at capacity, it is expected to produce between seven and eight trailers of purified helium per month. 

Deltic Energy (DELT.L) announced an update in relation to Licence P2252 and the Pensacola discovery. The company has been granted a short period of additional time from Shell, in its capacity as licence operator of P2252, which will allow Deltic until 12 June 2024 to progress discussions with potential counter parties in relation to a possible transaction. Absent that, Deltic will be required to withdraw from the Pensacola licence and transfer its interest in Pensacola to the joint venture partners.

88 Energy (88E.AX 88E.L EEENF POQ.F) announced a maiden internal prospective resource estimate of 381 million barrels of oil (net mean, unrisked) for Project Leonis. This follows review of a data suite that included 3D and 2D seismic data, well logs from Hemi Springs Unit-3 and Hailstorm-1, as well as nearby wells adjacent to the Project Leonis acreage, along with petrophysical analysis and mapping. Per the company, with the Trans-Alaska Pipeline running through the acreage and Deadhorse just six miles to the North, Project Leonis represents a significant resource and development opportunity. 88E says it has commenced permitting and planning processes for an exploration well, Tiri-1, ahead of a future potential drilling event, to target the USB zone. Timing for the drilling of the Tiri-1 exploration well is dependent on securing a farm-out partner.

Zion Oil & Gas (ZNOG) announced the start of recompletion operations for the MJ-01 well in Israel. The location is said to be safe and ready for operations, which have faced some logistical challenges due to the war. Zion had contracted services, equipment, and material from Turkey, which then placed an embargo on trade with Israel, however, the company has been able to secure alternatives from vendors located in Romania, Greece, and the United States. After opening the well, Zion will attempt to unlock hydrocarbon flows in both previously and newly identified zones of interest. The crew is currently engaged in safety testing and moving the rig.

Blue Star Helium (BNL.AX BSNLF) announced a significant helium discovery at the State 16 SWSE 3054 development well at its Galactica helium project in Las Animas County, Colorado. Laboratory analysis of reservoir samples show air corrected helium concentrations up to 1.9%, consistent with offset discovery wells. Peak flow rates were as high as 313 thousand cubic feet per day and stabilised at 285 thousand cubic feet per day, consistent with the adjacent Red Rocks commercialised development. CO2 approaching 70% concentration also has the potential to contribute significant revenues. Results are being analysed by the company’s independent engineering consultants, where a maximum stabilised rate and drawdown will be modelled for incorporation into development planning and economics. Blue Star has filed a new OGDP for 5 additional development wells and is progressing the helium processing plant site permitting.

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