Further to its announcement of 27 June, Mosman Oil and Gas Limited announces the termination of its drilling campaign at the Vecta Helium Project following disappointing results from the first three wells.
The campaign, targeting the helium-rich Lyons formation at depths of 1200-1500 feet, included prospects in the Billy Goat AMI, BARD AMI, and Garcia AMI. Both the BARD and Garcia prospects encountered the Lyons formation deeper than anticipated, with water-wet conditions at the top and no structural traps as predicted by surface mapping. These results indicate that surface mapping is not a reliable predictor of subsurface structures in this poorly explored region, which lacks seismic data and modern subsurface logs.
Under the agreement with its partners, Mosman disposed of its cost commitments in the Billy Goat AMI in exchange for a royalty on future revenue prior to drill results being obtained with zero cost to the Company, funded 100% of the drilling in the BARD AMI and 20% of the drilling in the Garcia AMI. The remaining two planned wells incur no cost to Mosman, allowing the Company to exit the programme with minimal financial impact and no further payments. The total cost to Mosman of the drilling across the campaign was US$214,931.
The Lyons formation, a Permian-aged sandstone reservoir, typically contains helium percentages of 2-3%, with historical highs up to 11%. However, the low-pressure gas (below 40 psi) and resultant low flow rates require high helium concentrations to justify the extensive development wells needed for commercial viability. Mosman's decision to exit the project reflects a strategic move to limit exposure in a high-risk exploration area.
Howard Mclaughlin, Interim Chief Executive Officer of Mosman, said: "We thank our partners for enabling Mosman to exit the programme early with minimal cost. We now look forward to focusing our efforts on the larger opportunities at our Sagebrush and Coyote Wash helium projects in Colorado, where we see significant potential for growth."
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.