REG - Mosman Oil & Gas - Acquisition of Helium Exploration Lease in US

Mosman Oil and GasAnnouncement

30/12/2024 09:00

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RNS Number : 5852R  Mosman Oil and Gas Limited  30 December 2024

30 December 2024

Mosman Oil and Gas Limited

("Mosman" or the "Company")

 

 Acquisition of Helium Exploration Lease in US Held by Hydrocarbon Production

 

Mosman Oil and Gas Limited (AIM: MSMN) the helium, hydrogen and hydrocarbon
exploration, development and production company, has entered into an agreement
with a private company, Seeley Oil Company LLC ("Seeley"), to acquire an 82.5%
working interest in the Sagebrush Project in Colorado, a large 10,000 acre
lease that is held by production ("HBP") from seven producing oil wells. Based
on technical studies Mosman anticipates that helium and additional
hydrocarbons will be present on this lightly explored lease.

 

The lease is adjacent to the Company's 4,320-acre Coyote Wash Project, details
of which were announced on 19 December 2024. Both leases are on Tribal Land
administered by the Ute Mountain Ute Tribe.

 

Highlights

 

Through its wholly owned subsidiary, Mosman Helium LLC, the Company, is to
acquire 82.5% interest in the 10,000 acre lease from Seeley, a Colorado based
private company for a US$630,000 cash payment, financed from the Company's
existing cash reserves.

 

 ·             Mosman will acquire an 82.5% working interest ("WI") and take over
               operatorship with an effective date of 1 January 2025 and a completion date of
               31 January 2025. The contract is subject to due diligence and routine
               approvals.
 ·             In this "Four Corners" area, helium is present in the Leadville and McCracken
               Formations below the salt seal.
 ·             The current gross oil production is circa 40 bopd.

 

Helium Exploration Potential

 

There are four main elements required to be successful at helium exploration:
Source, Seal, Reservoir and Structure/Trap

 

Source

The basement rocks in the Colorado Plateau "Four Corners" area of the USA (see
map below) is a radiometric igneous basement rock that is rich in uranium and
thorium. The presence of helium is proven in multiple producing fields.

 

Seal

The southern areas of the major geological feature in this area, the Paradox
Basin, have a widespread salt formation that overlays the Leaville and
McCracken formations that are proven reservoirs for helium. This salt is an
excellent seal for helium and other gases.

 

Reservoir

The Leadville Formation is a significant reservoir for helium in the
southwestern part of Colorado and exists in the Sagebrush and Coyote Wash
Project areas. The McCracken sandstone lies below the Leadville and is a
secondary reservoir for helium.

 

Structure/Trap

Several large undrilled structures have been mapped using the existing 3D
seismic data over the Coyote Wash leases that could potentially hold
significant quantities of helium.

 

In addition, seismic evidence from a large 2D swath survey has shown several
undrilled structures in the Sagebrush area.

 

All of these geological elements required to have a commercial accumulation of
helium are present in the Coyote Wash and Sagebrush leases.

 

Mosman's US Operations Director, Howard McLaughlin has separately agreed to
acquire a 10% WI in the Sagebrush Project for a consideration of $70,000
(representing the same proportionate cost as Mosman).

 

Mosman intends to review existing data to identify drilling prospects and
potentially acquire additional low cost seismic to improve probability of
success of well. It may be that a well can target both oil and helium. One
drilling funding option is to farmout a de-risked drilling prospect.

 

Commenting on this latest acquisition, Andy Carroll, Chief Executive Officer
of Mosman, said: "The Sagebrush acquisition along with the Coyote Wash Project
is the fulfillment of a key goal for Mosman's strategic shift toward helium
exploration, development and commercialisation. Acquisitions were a key
rationale in the September 2024 capital raise and these two projects deliver
on this objective and the acquisition costs can now be funded from cash
reserves.

 

"I would particularly like to thank Howard McLaughlin who has done a great job
to complete technical due diligence and secure these lease areas. The
Sagebrush acquisition brings a large attractive area for exploration of helium
and has steady oil production with minimal decline supplying revenue as well
as holding the acreage for helium and hydrocarbon exploration and development.
This is an area with production infrastructure where one well can explore for
both helium and hydrocarbons.

 

"Mosman now has a very strong diversified portfolio of attractive helium and
hydrocarbon assets at various stages of maturity."

 

 

MAP OF LEASES

 

 

Background on the Sagebrush Project

 

The Sagebrush well drilled in 1984 tested non-flammable gas (40% CO2 & 35%
nitrogen, but was not tested for helium) below the salt layer and made an oil
discovery above the salt layer. The oil well's initial production was in
excess of 600 bbls/day of oil and it has cumulatively produced over 300,000
bbls of oil (gross) since coming into production across nine wells, seven of
which are producing and two of which are shut-in.

There are no existing Reserve or Resource Reports.

Oil production at Sagebrush has been fairly consistent since 2010, with a
gross annual rate of approximately 17,000 bbls from the seven producing wells
(see graph below). Minor gas production is used to power pump jacks and there
is circa 50 barrels of water per day produced. There are two additional wells
that are currently shut-in.

 

GROSS SEELEY OIL PRODUCTION (BARRELS OF OIL)

 

 

Net profit before income tax for the 82.5% interest in the Sagebrush Project
in the twelve months ended June 2024, after royalties, local taxes and all
lease operating costs was circa US$286,000.

 

 

 

 

Market Abuse Regulation (MAR) Disclosure

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 ('MAR') which has been incorporated into UK law by the
European Union (Withdrawal) Act 2018. Upon the publication of this
announcement via Regulatory Information Service ('RIS'), this information is
now considered to be in the public domain.

 

 

Enquiries:

 Mosman Oil & Gas Limited                                             NOMAD and Joint Broker

 Andy Carroll                                                         SP Angel Corporate Finance LLP

 CEO                                                                  Stuart Gledhill / Richard Hail / Adam Cowl

 acarroll@mosmanoilandgas.com (mailto:acarroll@mosmanoilandgas.com)   +44 (0) 20 3470 0470

 Alma                                                                 Joint Broker

 Justine James / Will Merison                                         CMC Markets UK Plc

 +44 (0) 20 3405 0205                                                 Douglas Crippen

 mosman@almastrategic.com (mailto:mosman@almapr.co.uk)                +44 (0) 020 3003 8632

Updates on the Company's activities are regularly posted on its website:
www.mosmanoilandgas.com (http://www.mosmanoilandgas.com)

 

Notes to editors

Mosman (AIM: MSMN) is a helium, hydrogen and hydrocarbon exploration,
development, and production company with projects in the US and Australia.
Mosman's strategic objectives remain consistent: to identify opportunities
which will provide operating cash flow and have development upside, in
conjunction with progressing exploration. The Company has several projects in
the US, in addition to exploration projects in the Amadeus Basin in Central
Australia.

 

 

 

 

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