Mendell Helium has confirmed a farm-in deal with Scout Energy in Kansas which enables the Scotland-based company to cost effectively scale its business.
Under the agreement involving the 161,280-acre site in the near-100-year-old Hugoton gas field, Mendell Helium has full access to Scout’s gathering system and Jayhawk processing plant at a fixed helium price, as well as first refusal on Scout’s 1 million acres in Kansas, according to CEO Nick Tulloch. No payments are due until 31st March 2025 or when drilling starts.
Jayhawk processes 4% of the world’s helium, as well as nitrogen, methane and natural gas liquids, and Scout is the second largest helium producer in the US.
“We have an outstanding partner and an outstanding opportunity,” said Tulloch.
On 27th June, Mendell Helium announced an option to acquire M3 Helium Corp., a producer of helium which is based in Kansas and holds an interest in nine wells.
Then on 6th November, M3 Helium entered into a farm in agreement with Scout Energy Partners for the site in the Hugoton field. The agreement includes a minimum target of 25 new wells but M3 Helium estimates a potential 100-200 well opportunities within this acreage.
M3 Helium has acquired an 85% interest in the Bearman, Demmit and Cockerham wells, which are all located on the western side of the Hugoton gas field in Stanton County.
The Bearman and Demmit wells are currently producing 25 Mcf/day in aggregate with a helium composition of approximately 0.6%. The wells are connected to Scout Energy’s Jayhawk gas processing plant via a pipeline operated on vacuum by Energy Transfer.
M3 Helium’s flagship well, located in its Fort Dodge prospect, was tested by Shamrock Gas Analysis as containing 5.1% helium in July.
Tulloch said alongside the farm-in with Scout Energy, which provides an immediate and cost-effective path to scale the M3 Helium business, the “exceptional performance” of the flagship Rost well could potentially become a significant contributor to M3 Helium’s cashflow in the coming months.
“Meanwhile M3 Helium’s innovative larger frack at the Nilson well has provided ample evidence to support further use of this technique to stimulate increased production in Hugoton wells, something that could prove to be a crucially important factor as M3 Helium develops its farm-in programme,” he said.
