Grand Gulf expands helium sales deal to include upcoming Jesse-2 well

Grand Gulf Energy has expanded its existing helium gas sales agreement with Paradox Resources to include its upcoming Jesse-2 well, which is expected to spud in the current quarter.

Paradox is owner of the advanced Lisbon helium processing plant located 20 miles north of the company’s Red Helium project.

The plant is connected to existing pipelines proximal to Jesse-2 and includes a liquefaction plant capable of producing 99.9995% purity helium which commands a premium price due to its use in the semi-conductor, defence and space industries.

Grand Gulf Energy (ASX:GGE) is drilling Jesse-2 to follow-up on its Jesse-1A helium discovery in Utah after receiving a permit for its drilling.

Picking up on the lessons learned from the first well, which intersected 101 feet (30.78m) of net gas pay with up to 1% helium returned to surface, the new well will exclusively target the gas zone and incorporate managed pressure drilling which will allow testing while drilling the target zone.

The company is currently in advanced negotiations with multiple rig operators to spud Jesse-2 – 1.5 miles (2.4km) southeast of Jesse-1A – in the current quarter.

The Jesse-2 location was selected as the best of three mature prioritised locations on the Jesse structure, which were themselves derived from an extensive review of data from six historical wells and Jesse-1A including calibrated 2D seismic to target a structural high location on the Jesse feature to maximise the thickness of the gas pay zone.

“The expansion of the offtake agreement with Paradox continues the relationship with a proven helium refiner and seller with deep helium processing and marketing experience,” managing director Dane Lance said.

“Grand Gulf is well placed to capitalise on one of the world’s most critically scarce commodities with the ability to quickly monetise a commercial well with minimal time and cost.”

He also pointed out last week that engineering of the Jesse-2 well included lessons learned from the evaluation program on the maiden helium exploration well to minimise risk of water production by staying high in the column.

“Coupled with the managed pressure drilling program to maximise well deliverability, which also allows preliminary flow evaluation whilst drilling, the drilling of Jesse-2 in Q1 2023 will be an exciting period for the company,” he added.

Lance noted that a commercial discovery could be quickly monetised to generate near-term cash flow with “minimal time and cost”.

Multi-well potential

The Jesse discovery within Grand Gulf’s Red Helium project is interpreted to be capable of supporting more than 20 wells within the areal extent of the closure.

This estimate is based on the performance of analogues and the big gas column intersected at Jesse-1A.

Additionally, the expansion of the Gas Sales & Processing Agreement with Paradox provides a pathway to monetise Jesse-2 in the event of success.

The GPSA expansion continues a relationship with a proven helium refiner and seller with deep helium processing and marketing experience.

The key terms include an 80/20 industry standard revenue split in favour of the producer (GGE) as well as standard tariffs for gathering, compression and processing.

Both companies are participating in ongoing discussions to identify further strategic business opportunities framed by a Strategic Alliance, which includes GSPA expansion and further corporate synergies.

This article was developed in collaboration with Grand Gulf Energy (ASX:GGE), a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.