Blue Star Helium Ltd (ASX:BNL, OTC:AZZEF) expects to receive an advanced initial drilling permit for its Enterprise 16#1 well with the Colorado Oil and Gas Conservation Commission (COGCC) this quarter, while a further four applications to test the Galactica and Pegasus prospects are expected to be submitted to the COGCC in August.
During the quarter, the company’s US-based operations were busy furthering preparations, lease acquisitions, surveying and site assessments, as well as refining pathways to commercialisation.
Blue Star’s cash balance at the end of the June quarter was around A$3.3 million.
Confident to receive a drilling permit
The company is targeting the execution of an initial three to five well drilling campaign across its Las Animas landholding in Colorado and is focussing its attention on beginning drilling operations as soon as possible.
To date, the COGCC has not issued any operator with a drilling permit under the new government regulations that were implemented on January 15, 2021.
The company remains confident that it will be amongst the first to receive a drilling permit.
Key highlights
Blue Star submitted initial drilling locations for a further four wells (to test the Galactica and Pegasus prospects) to the State Land Board in late July.
Following County review, these applications are expected to be submitted to COGCC during August.
The company is seeking to permit multiple potential wells across its various Las Animas prospects on a rolling basis.
This rolling permitting strategy is designed to give Blue Star significant flexibility around well selection and is expected to allow a continual drilling program with a substantial degree of embedded responsiveness to respective drilling outcomes.
Las Animas land position
In June, the Federal leases acquired by Blue Star in the Bureau of Land Management (BLM) December 2020 auction were formally issued (see BNL ASX release dated 10 June 2021 for further detail).
The helium stock also acquired leases over an additional 10,160 net acres during the quarter, including a key lease over the mapped crestal location at the Galactica prospect which is of strategic importance.
Bluestar is in the highly strategic position of holding a significant acreage position over several mapped structures in Colorado.
ESG initiatives
Blue Star agreed to fund the drilling of two water wells for a local ranch holder as part of its environmental, social and governance initiatives.
The drilling of the first of these wells kicked off during the June quarter and significant shallow water was found, which required additional equipment to complete the well.
This equipment is expected to be delivered shortly and it is anticipated that this well will be completed in the next few weeks.
Immediately following this, the second well is planned to be drilled.
A third well is then also planned to be drilled for a second rancher as part of the same program.
Blue Star will seek to gather data from the wells during drilling that may aid in the further definition of its helium prospects.
Encouragingly, the initial data obtained from the first well supports the Company’s stratigraphic interpretation of that area.
These wells will be drilled and owned by the ranchers and Blue Star does not have any interest in them.