Quantum Helium Ltd (AIM:QHE) said extended production testing at its Sagebrush-1 well in Colorado has confirmed helium-bearing gas and unexpectedly identified commercial oil production, opening a new hydrocarbon play alongside the company’s existing helium resource.
The AIM-listed company, which holds a 90% working interest in Sagebrush, said laboratory analysis confirmed helium concentrations of around 2.5%. That is consistent with historical testing and above typical industry concentrations of roughly 0.3% to 1.0%.
Testing also showed reservoir connectivity after acid fracture stimulation, with pressure build-up reaching around 90% of virgin reservoir pressure within four days, measured by downhole gauges.
More than 80 barrels of oil have been recovered during testing to date from the Leadville Formation, with Quantum’s technical team indicating potential production rates of up to 40 barrels per day gross to the company’s working interest before royalties, following the optimisation programme now underway.
Chief executive Howard McLaughlin said the preliminary results had “exceeded our expectations in several key areas”, adding that the programme was focused on determining the best engineering route to produce the helium resource, “not proving its existence”.
Quantum said the next phase includes additional perforations, commingling of upper Leadville intervals, aggressive fluid recovery and installation of rod pump and pumpjack equipment to support longer-term operations.
The company intends to provide production, pressure and fluid data from the test to Sproule ERCE for review, including assessment of the newly identified oil potential.
