Blue Star Helium Ltd (ASX:BNL, OTC:AZZEF) is well placed ahead of a three to five well drilling campaign across its Las Animas County landholding in Colorado, following increases in resources and landholding in the half-year to June.
The helium explorer released its half-year report in mid-September, showing cash reserves of $3.3 million.
It has made strong progress towards its goal of finding and developing new supplies of low-cost, high-grade helium in the past six months, despite a backdrop of changing oil and gas regulations.
Blue Star increased its P50 prospective helium resource by a whopping 175% back in February, with the Galactica, Pegasus and Argo prospects independently assessed to add 6.1 billion cubic feet to the company’s P50 unrisked prospective helium resource. (P50 refers to the quantity of oil or gas within the reserves category that has a 50% probability of being exceeded.)
Then Blue Star managing director Joanne Kendrick - she has since departed the company - said at the time the resource assessment was an outstanding result.
“This almost triples our total resource which, together with the interpretation of gas columns at two historic wells within the Galactica and Pegasus prospects, is hugely supportive of our planned drilling program,” she said.
That resource was further increased in June, following the acquisition of new federal leases, taking the company’s total P50 net unrisked prospective helium resource to 13.4bcf.
Those new federal leases substantially increased Blue Star’s landholding and prospective helium resources across Las Animas County, formally granting the company nearly 33,000 additional net acres within a helium play fairway.
Blue Star acquired the new acres via a Bureau of Land Management auction in December 2020.
Following the upgrade, the company’s total leasehold in Las Animas County comes to 173,000 net acres.
Achievements against uncertain backdrop
Blue Star’s progress in the last six months comes despite some uncertainty in the oil & gas sector, created by regulatory changes to the State permitting process and executive orders from the Biden Administration that caused additional complexity and delay across applications for drilling activities.
Crucially, Blue Star’s Form 2A application for the Enterprise 16 #1 well passed a completeness review with the Colorado Oil and Gas Conservation Commission (COGCC) in late August.
Blue Star believes it is the first helium operator in Colorado to pass completeness on an OGDP application since the January rule changes.
It is also the first drilling application of any type to achieve this in Las Animas County since January and only the sixth overall across Colorado.
New managing director
The company also replaced Kendrick with Trent Spry, who is recognised as one of the few highly skilled helium explorationists in the world.
Spry has been an executive director of Blue Star since April 2019 and is a qualified geoscientist with more than 25 years of practical experience in the oil, gas and helium resources industries covering exploration, appraisal, operations and new ventures.
- Daniel Paproth