Voyager Life PLC - Second frack planned at Nilson well, Hugoton

26 September 2024

Voyager Life plc

("Voyager" or the "Company") 

Second frack planned at Nilson well, Hugoton

Voyager is pleased to announce that a second, significantly larger frack, is planned on the Nilson well owned by M3 Helium Corp. ("M3 Helium") following a successful project finance of US$170,000 by M3 Helium to cover the operation's costs. 

Highlights

·    Nilson production, containing approximately 0.6% helium, has been rising with associated water volumes decreasing

·    This evidences that gelled water fracks can be successfully performed in the mature Hugoton field

·    Fully funded programme to carry out more substantial frack to stimulate greater production

·    Local investors and one of the contractors have committed US$170,000 to cover costs of frack for a 25% economic interest in the well

Project overview

The Nilson well was originally fracture stimulated (fracked) with gelled water and sand to test a tight reservoir along the eastern edge of the Hugoton field which M3 Helium's management considered to be shale-like. The well was stimulated with a single stage, relatively small frack; the total amount of gelled water used in the fracture was only 37,500 gallons, and the sand volume was only 30,000 pounds. By comparison, stimulated shale wells in the US are typically 5-10 times those volumes, per stage, with many stages across a horizontally drilled lateral.

As M3 Helium's management hoped for, the Nilson well exhibited shale-like response behavior following the first frack including a sharp increase in gas production, followed by a corresponding sharp decline over the following days. However, unlike shale, the Nilson well has subsequently increased in production, steadily over time, while associated water volumes have steadily decreased.  As of 22 September 2024, the Nilson well was producing 34,000 cubic feet per day (34 Mcfd) containing approximately 0.6% helium, along with approximately 22 barrels of water.

This highly encouraging behavior from the well, coupled with proof that gelled water fracks can be successfully performed in this field, has supported a follow up proposal of a more substantial fracture stimulation to further enhance the well's production, scheduled to commence shortly. The planned fracture stimulation is for at least 170,000 gallons of gelled water along with 150,000 pounds of sand, being approximately 5 times the initial pilot stimulation. As far as M3 Helium's management are aware, this will be the Hugoton field's first large water-based frack stimulation in several decades.  If successful, it could open up a significantly enhanced operation for M3 Helium.

Funding for the programme

The frack operation is anticipated to cost in the region of US$170,000.  Given the unexpected, but very pleasing, behaviour from the Nilson well, an operation of this magnitude was not in M3 Helium's or Voyager's original plan.  Nevertheless, should the operation succeed then the implications for the two companies' future operations in the Hugoton, being the largest conventional gas field in North America, could be significant.

The significance of this has attracted interest from local investors and M3 Helium has been able to raise project finance which has itself enabled operations to commence this week.

Four investors have committed an aggregate of US$150,000 of cash and one of the sub-contactors on the programme has committed US$20,000 (together, the "Investors").  Their returns will be based on their pro rata share of the future performance of the Nilson well.  To date, M3 Helium has invested a total of US$500,000 on the Nilson well, including drilling, the first frack, tie in to the Scout Partners' gathering system and water disposal.  In return for their commitments, the Investors will earn a share of approximately 25% of the well's future production.

The Investors will not receive any shares in Voyager or M3 Helium and, consequently, there is no dilution to existing shareholders or debt burden for the Company.

Nick Tulloch, Chief Executive Officer of Voyager, said: "Conventional oil & gas theory is that well production declines over time.  The fact that Nilson has been steadily rising since coming on production last month is remarkable.

"Nilson is located to the east of the core part of the Hugoton field, known as the transition zone.  Higher water content has deterred extensive drilling in the past and M3 Helium's first, cautious frack recognised the risks of being compromised by water.  However, what is apparent is that the frack has been successful and the water has declined over time since the well went into production.

"This second larger frack, innovatively financed, gives the company the ability to test a hypothesis which, if successful, would open the route to more extensive drilling on a part of the Hugoton field that, to date, has been largely overlooked.  A successful result could be highly significant.

"We have been very encouraged by the opportunities for M3 Helium since signing the option in June 2024.  This new programme at Nilson gives Voyager and M3 Helium an interesting look at what could open up to a new, and much larger, strategic initiative."

As announced on 27 June 2024, the Company has an option to acquire M3 Helium, a producer of helium based in Kansas and with an interest in six wells.  There is no certainty that the Company's option to acquire M3 Helium will be exercised, nor that the enlarged group will successfully complete its re-admission to trading on the AQSE Growth Market.

This announcement contains inside information for the purposes of the UK Market Abuse Regulation and the Directors of the Company are responsible for the release of this announcement.

ENDS

Enquiries:

Overview of M3 Helium and the Hugoton North Play

Voyager announced on 27 June 2024 that it has entered into an option agreement to acquire the entire issued share capital of M3 Helium through the issue of 57,611,552 new ordinary shares in Voyager to M3 Helium's shareholders.  The exercise of the option will constitute a reverse takeover pursuant to AQSE Rule 3.6 of the Access Rule Book and is subject to, inter alia, publication of an admission document.

M3 Helium has interests in six wells in South-Western Kansas of which three (Peyton, Smith and Nilson) are in production.  Five of the company's wells are within the Hugoton gas field, one of the largest natural gas fields in North America.  Significantly these wells are in the proximity of a gathering network and the Jayhawk gas processing plant meaning that producing wells can quickly be tied into the infrastructure.

The sixth well is in Fort Dodge and was tested in July 2024 as containing 5.1% helium composition.  Although not within direct access to the gathering network, M3 Helium owns a mobile Pressure Swing Adsorption production plant which could be used to purify the helium on site.

FORWARD LOOKING STATEMENTS

This announcement includes "forward-looking statements" which include all statements other than statements of historical facts, including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations, or any statements preceded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or "similar" expressions or negatives thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this announcement. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based unless required to do so by applicable law.