Blue Star Helium Ltd (ASX:BNL) (OTCMKTS:AZZEF) has substantially increased its landholding and prospective helium resources across Las Animas County in Colorado, USA.
The increase follows a recent federal lease completion, which formally granted Blue Star nearly 33,000 additional net acres within a helium play fairway.
Blue Star acquired the new acres via a Bureau of Land Management auction in December 2020.
As a result, the company’s P50 net unrisked prospective helium resources have increased 39% to 13.4 billion cubic feet.
Following the upgrade, the North America-focused helium explorer and producer’s total leasehold in Las Animas County comes to 173,000 net acres.
Blue Star Las Animas County leasehold position (new leases in brighter yellow shading).
Exploration at Argo, Galactica and Pegasus
Blue Star’s boosted landholding in Colorado also positions it for further exploration across three key helium prospects - the Argo, Galactica and Pegasus assets.
These prospects are wholly within the Lyons Formation Helium Play Fairway, a proven helium resource within Las Animas County.
The Galactica, Pegasus and Argo leasehold position (new leases in brighter yellow shading).
So far, the company has undertaken petrophysical analysis on two historical wells within the Galactica and Pegasus prospects.
Although interpretation relies on old, digitised data, Blue Star’s anlaysis of the historical wells points to a significant gas column that has been trapped at both locations.
While Blue Star does not hold economic interest in either of the wells, the Colorado #1B well sits within one of the company’s mineral leases.
Table indicates the net increase in total prospective helium resources from new lease acquisitions.
Forward work program
Now that its increased landholding has been finalised, Blue Star intends to conduct a three- to five-hole drilling campaign.
Engineering estimates accompanying the program have confirmed an expected dry hole cost is around US$300,000.
If the first well drilled at any prospect uncovers helium, Blue Star intends to conduct a log evaluation and well testing program.
Further, if commercial helium production rates are indicated during the well testing, that well may be completed as a producer.
In this event, the well’s completion costs have been estimated at US$100,000, which is additional to the dry hole cost.
Meanwhile, Blue Star remains on track to receive the final permit to drill its Enterprise 16#1 helium well during the third quarter of 2021.
The company also expects to submit initial applications for a further two wells shortly.