Ann: Jackson 29 Well Drilled to TD with Gas Confirmed, page-2

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Jackson 29 Well – Review and Scenario Analysis

Based on the announcement from Blue Star Helium Limited regarding the Jackson 29 well, here’s a structured breakdown focusing on best-case and worst-case scenarios, as well as pressure benchmarking against industry standards.

Key Facts from the Announcement

• Location: Galactica project, Las Animas County, Colorado

• Formation: Lyons Sandstone

• Depth: Reached total depth (TD) of 1,183 feet

• Gas Confirmation: Yes – via wireline logs and natural flow

• Gas-bearing interval: 61 feet of high-quality, gas-saturated sandstone

• Water Presence: None encountered, which is positive

• Next Steps: Surface pressure readings and full flow testing pending

• Partners: Helium One Global Ltd is contributing first US$450,000

Best-Case Scenario

1. 
   

   High Helium Concentration:

   • Helium grades >1% are considered economically viable.
   • If testing reveals helium content in the 2–3%+ range (comparable to Arizona's Holbrook Basin or some Tanzanian discoveries), this could significantly boost valuation.

2. 
   

   High Reservoir Pressure:

   • Ideal pressures: For economic production, wellhead pressures of 500–1,500 psi are typical for strong helium wells.
   • Natural flow at TD already suggests a pressurized system, which bodes well.

3. 
   

   Minimal CO₂ and Contaminants:

   • Lower CO₂ levels reduce processing costs.
   • Clean gas stream makes for more attractive offtake agreements.

4. 
   

   No Water Production:

   • Confirmed absence of water eliminates water handling/disposal costs.
   • Also suggests minimal depletion risk due to water encroachment.

5. 
   

   Scalable Production:

   • If this well mirrors others in the field (e.g., Jackson 31), the Lyons Sandstone may support scalable, modular production setups.

Worst-Case Scenario

1. 
   

   Low Helium Content:

   • Anything below ~0.3% helium can be uneconomic without major infrastructure.
   • High CO₂ without helium offset could result in a stranded asset.

2. 
   

   Poor Pressure:

   • If surface pressure is low (<200 psi), the well may require artificial lift or be uneconomic to tie-in.
   • Could suggest compartmentalization or depletion.

3. 
   

   Operational Delays:

   • Flow testing or tie-in issues, or rig availability, could delay monetization.

4. 
   

   Regulatory or Partner Challenges:

   • Delays from permits, JV conflicts, or local opposition are always a risk.

Benchmarking Against Industry Standards

Recommendations / Next Steps

1. 
   

   Await Laboratory Results:

   • Helium and CO₂ content will define economics.
   • Pay attention to purity and inert gas ratios.

2. 
   

   Monitor Surface Pressure and Flow Test Data:

   • This will determine production viability without compression.

3. 
   

   Compare Against Offset Wells (e.g., Jackson 31):

   • Similar behavior across wells strengthens field-wide assumptions.

4. 
   

   Sensitivity Modeling:

   • Consider running economic scenarios for helium content at 0.3%, 1.0%, and 2.5% with varying pressures to evaluate thresholds for profitability.