Mendell Helium #MDH buys out minority investors in Nilson well

Mendell Helium (LON: MDH), the helium exploration and production company, is pleased to announce that it has acquired the remaining 25% interest in the Nilson 22‑1 well in Haskell County, Kansas (“Nilson”) for US$186,092 (£138,611) to be satisfied through the issue of 3,094,000 new ordinary shares at a price of 4.48 pence (“Acquisition”).  Nilson is located in the Hugoton gas field, one of North America’s most prolific producers of natural gas and helium. Mendell Helium now has a 100% interest in Nilson following the Acquisition.

Highlights

• Nilson is the Company’s most successful well in the Hugoton gas field in south-western Kansas
• The well was fracked in Q4 2024 following a successful operation that increased flow to over 100 Mcf/day
• Investors committed US$170,000 to the frack
• Nilson is connected to the Hugoton gathering system, eliminating the requirement for on-site purification and enabling the Company to generate revenue from helium, methane and natural gas liquids
• Although revenue generating, Nilson would benefit from a disposal well which would reduce operating costs of trucking water
• Securing 100% ownership of the well positions Mendell Helium for further development of Nilson

Background on the Acquisition

On 26 September 2024, Mendell Helium announced plans for a second, much larger frack on the Nilson well.  US$170,000 was raised from five third party investors who collectively acquired an approximately 25% economic interest in the well (with Mendell Helium retaining the other 75%).  The frack was a success with Nilson’s flow rates increasing to over 100 Mcf/day and ranking it as one of the top producers in the Hugoton region.

As with the Company’s production wells in Fort Dodge, water disposal is a key part of the operation and, to date, water at Nilson has been collected on site and disposed of by a water tanker to a suitable location. Trucking water is charged by the barrel and, consequently, the process can become uneconomic at large volumes with prices typically being around US$2.50 – $3.00 per barrel.  For this reason, Mendell Helium has explored the possibility of connecting Nilson to a disposal well which would enable it to increase pumping of the well, thereby potentially generating greater gas volumes.

Nilson is connected to the extensive infrastructure in the Hugoton gas field with all production being tied to a gathering system from the well head and delivered to the Jayhawk gas processing plant.  With no site purification or processing required, Mendell Helium is not constrained from higher production levels contingent on the availability of sufficient water‑disposal capacity. Although there are no immediate development plans, owning 100% of the well gives the Company far greater flexibility on future opportunities and, in the meantime, increases its revenue share from the well to 100%.

A sample taken from Nilson returned a helium concentration of 0.61% and a methane concentration of 68.14%.  With higher helium prices now being seen as a result of the conflict in the Middle East and robust methane prices, the Board considers that acquiring a 100% interest in Nilson is an attractive proposition. In particular, it is currently in negotiations with its off-taker for the Hugoton region for improved pricing across all constituents of the produced gas stream.  Nilson has not been pumping while these adjustments and negotiations have been ongoing so production over the last months has been below the well’s potential but the Company anticipates returning the well to higher production levels in the near term.

Terms of the Acquisition

The Nilson investors have accepted an offer of, in aggregate, 3,094,000 new ordinary shares in return for their interest in the well.  The offer comprises the return of the US$170,000 invested in 2024 to fund the frack together with US$16,092 being their share of profit from the well after satisfying all costs.  No premium has been paid to the investors for control of the well.

The new ordinary shares have been issued at a price of 4.48 pence being the being the 14 day volume weighted average price up until the date that the offer was made to the minority investors.

Admission

Application has been made for 3,094,000 new ordinary shares to be admitted to trading on AIM (“Admission”). Admission is expected to occur at 8:00 a.m. on or around 15 October 2026. The new ordinary shares will rank pari passu with the existing Ordinary Shares.

Total Voting Rights

Following Admission, the Company’s enlarged share capital will comprise 357,930,937 Ordinary Shares of 1 pence each. Therefore, the total number of voting rights in the Company will be 357,930,937. This figure may be used by shareholders as the denominator for calculations by which they will determine if they are required to notify their interest in the Company, or a change to their interest in the Company, under the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules.

Nick Tulloch, Chief Executive Officer of Mendell Helium, said: “Although our focus remains firmly on Fort Dodge, it is important to remember that we also have five production wells in the world-famous Hugoton gas field. Their flow rates and helium composition may not be as high as Fort Dodge to the east but they benefit from access to production infrastructure meaning we have no obligation to purify the gas stream and earn revenue from all the valuable component, not just the helium. 

Nilson has long been our flagship well in the Hugoton exhibiting flow rates that can rival the very best wells in that region.  Taking 100% control of the well, through this cost-effective mechanism, gives us more flexibility in the future as we examine possible opportunities for improved pricing, economic water disposal and higher production.”

ENDS

Engage with the Mendell Helium management team directly by asking questions, watching video
summaries and seeing what other shareholders have to say. Navigate to our Interactive Investor
website here: https://mendellhelium.com/link/PKa6Ve

Enquiries: