Sep 21, 20224 min
American Noble Gas released initial results from its first production well on the Hugoton gas field, Peyton 21-1, confirming that it has been producing natural gas, NGLs, and helium at combined rate of >100 mcf/d. The helium concentration of the produced gas is ~0.5%, which is still accumulating in the company's account until sold. Although all three upper main pay zones have not yet been tested, the middle pay zone is currently being produced, with the addition of more pay zones in the future. AMGAS is currently in talks with multiple potential buyers of its production. AMGAS highlighted the benefit it has of significant existing infrastructure in the area. It plans to drill 50 wells and could reach 20mcf/d (~7mmcf/y) of helium based on vertical wells, which would still be relatively minor production.
Press Release:
American Noble Gas, Inc announced initial results that confirm that it has become one of the few United States publicly traded companies that is actually producing and selling helium gas. The Company reported results that met its initial goals in terms of production forecasts and further confirmed that its initial production is generating positive cash-flow from its Hugoton Gas Field operations.
The Company's first production well, the Peyton 21-1, has been producing natural gas, natural gas liquids, and helium since August 11, 2022 at rates most recently over 100 mcfd (Thousand Cubic Feet Per Day). The results are particularly noteworthy because the Peyton 21-1 well is free-flowing despite the fact that modest fluid has accumulated and is impeding the flow at the bottom of the well near the production zone perforations. A pump has been installed and will begin moving the accumulated fluids to further open up the flow of gas which we expect will improve production from the Peyton 21-1 well. It should be noted that all three upper main pay zones have not yet been tested. Only the middle pay zone is currently being produced, with the addition of more pay zones in the future, the Company believes that production may be enhanced further.
The helium concentration of our produced gas is approximating .5% which is accumulating in our account held by the processor and awaiting final sale. The Company is currently in talks with multiple potential buyers of its production. Our agreement with the helium processor provides that we control our own destiny and may take our helium 'in-kind' at the tailgate of the plant. This enables us to sell our helium to wholesale and retail customers including industrial gas distributors at prevailing market rates throughout the world. Among the various terms being discussed with potential buyers, are price, as well potential financing arrangements, whereby the helium buyer may assist the Company in acquiring capital for growth including the drilling of additional wells in the Hugoton Gas Field, on favourable terms to the Company. The potential arrangements would provide the helium buyer with a reliable source of helium supply, and the Company with prevailing retail helium market prices and access to a reduced cost of capital for future growth. Helium gas is in short-supply worldwide and its retail value has increased dramatically recognizing its short supply and growing uses.
AMGAS is working with its Hugoton Farm-out Venture partners to analyse the information obtained from the successful initial exploratory well drilling and completion to determine the timing and location of the drilling of its next exploratory well.
Management commentary:
Stanton E. Ross, Chairman and Chief Executive Officer of AMGAS remarked that "There are many small publicly-traded companies in both the US, Canada and Australia that are exploring for helium, few of them have found any, fewer still are in production with actual cash-flow from wells. In my opinion, the overriding factor that dwarfs’ the reported helium concentration in exploratory wells that many small companies like to focus on, is the available infrastructure issue allowing it to efficiently transport its helium and other gases to processors and markets that no one likes to talk about. If infrastructure does not currently exist in or near the production area, someone will have to build and pay for it and risk that investment before realizing any value for its helium content. In our case extensive infrastructure already exists that has been paid for through decades of Hugoton Gas Field production and we now are enjoying that strategic element everyday".
Ross continued, “The Company is excited about the potential of its Hugoton Gas Field assets while enjoying strong market natural gas prices, natural gas liquids prices, and soon to capitalize on its helium resources. The Company’s current plans are to grow to a total of 50 wells inside the Hugoton Gas Field in Haskell and Finney Counties, Kansas as covered by our participation agreement. The Company could reach a future production level of our share of 5 million cubic feet of gas per day along with 20 mcfd of helium if we can replicate the success of our first production well in the remaining 49 production wells. If we drill horizontal wells rather than conventional wells this expected future production level may be significantly greater” concluded Ross.