Mosman Oil and Gas Ltd (AIM:MSMN) today revealed it is moving deeper into helium and hydrogen, with a deal with Australian partner Greenvale Energy it is taking control of the EP-145 asset in the Amadeus basin.
With a low cash cost of A$250,000, the AIM-quoted explorer is taking up the 75% of EP-145 that it didn’t already own.
The deal brings back the assets after last year entering a farm-out to Greenvale, which recently opted to refocus on uranium.
According to estimates, EP-145 is host to substantial prospective resources with ‘total gas’ seen between 12 billion cubic feet (Bcf) to 2.29 trillion cubic feet – including 0.3 Bcf to 229 Bcf of helium and 0.24 Bcf to 275 Bcf of hydrogen.
It adds to Mosman’s exposure to helium exploration in North America, via its 20% stake in a Colorado-focused venture – here around five potential well locations have so far been identified.
"We are pleased to have 100% ownership and operational control of EP-145, a project that the Mosman's technical team knows extremely well and has been involved with over a number of years,” Mosman chief executive Andy Carroll said in a statement.
“The permit is now ever more commercially compelling with increased value of proven hydrocarbons that would be co-produced along with the high-value helium.”
"Recent seismic acquired nearby has confirmed the ability of seismic to define the exploration targets on the Central Ridge (which includes the Mereenie oil and gas field) that extends in to EP-145.”
Mosman highlighted the favourable economics of the asset buy-back, noting that the stated asset valuation of EP-145 stood at A$1.49 million (according to it carrying value in Mosman’s most recent accounts).
In other words, Mosman today acquired an asset it values at around A$1.12 million for A$250,000.
At the same time, Mosman’s management believes that the economic and investment proposition for the project has strengthened since it previously entered the original Greenvale deal.
“The gas shortfall currently evident in the Northern Territory and in the major markets of the East Coast, coupled with the increasing spare production capacity in nearby gas plants at Mereenie and Palm Valley, offers development opportunities for future gas projects in the Amadeus Basin like EP-145,” Andy Carroll said.
“Readily available infrastructure includes gas processing facilities, gas pipelines to Darwin, where there is a helium plant, and major gas transmission systems to markets in Eastern Australia.”
"Mosman has a clear business strategy to expand and deliver on a portfolio of helium exploration projects in Australia and USA which are experiencing strong demand growth and escalating pricing."