A REPORT FROM THE CEO: ROBERT ROHLFING
Monday, October 26, 2020
3RD QUARTER REVIEW
The third quarter has been very significant for the Company:
- Received drill permits for wells State 10-1 and State 16-1.
- Successfully completed both wells, significant pay zones were discovered in both holes.
- Sampling proved significant concentrations of helium in both wells with excellent well pressure, low CO2 concentrations.
- Purifying the helium will not involve any costly or problematic issues due to the mix of gases in our wells.
- Completed a $13 million financing priced at $1.60.
- Added 3 new board members to the team.
- Began design work on a solar-powered processing facility
The Company is planning on becoming a vertically integrated helium producer selling directly to end users. Offtake discussions that have taken place over the last 2 years with helium processors made it evident that over 40% of our revenues would go to support their “processing system”. Prices for finished product have varying price points that range from $490 per mcf for shield gas to $3,200 per mcf for extreme high purity gas. We believe that the shareholders should benefit from the greater revenue achieved by finishing our own helium.
The Company plans to be in production starting the 4th quarter of 2021. To achieve this goal, we will undertake the general following items:
- Finish permitting for a third well in the western part of the Holbrook basin to prove-up additional low CO2, high nitrogen content raw gas.
- Drill third well in early November, secure gas analysis and flow rates
- Contract with Gas Engineering firm to begin design of both well site Nitrogen stripping and final processing facilities.
- Contract with power engineering firm to finalize solar generation site requirements. Goal is to become as close to carbon neutral as possible
- Finalize & sign contracts with surface owners, for both power generation site and processing facilities.
- Begin archeological studies and reviews for both well sites 4-6 and seismic acquisition
- Exercise options for up to additional 42,000 acres of leases or some portion thereof.
- After further gas analysis and flow testing, provide possible end users with options for purchase agreements and execute them when most advantageous for DME.
- Secure Tractor trailer rigs as required by agreements.
- Train plant personnel and secure additional contract drivers for trucking aspects
DME’S 4-YEAR PLAN:
We plan to start producing from 4 to 6 wells the fourth quarter of 2021. Our success in raising $13 million gives us the money to rapidly move forward with the first phase of our plans. Full development of our land package is expected to take approximately 4 years.
The 4-year plan to full production:
- Total number of wells projected to be 50-55
- Total projected capital expenditures including all drilling and infrastructure over 6 years is $45,000,000
- Upgrade helium to end users will result in a shorter payback period.
- Signing contracts with end users will stabilize future price swings in the helium market and give us a competitive edge.
We realize this is a very ambitious plan, however, with the success of the first 2 wells proving our geological model, it can be achieved. There is a lot of work and planning to be done along with expanding our team.
ABOUT DESERT MOUNTAIN ENERGY CORP:
Desert Mountain Energy Corp. is a publicly traded exploration and resource company focused on the discovery and development of rare earth gas fields in the US. The company is primarily looking for elements deemed critical to the green energy and high technology industries. We are an equal opportunity employer.
We seek safe harbor
Robert Rohlfing, CEO
For more information, contact:
Don Mosher, Vice President of Finance 604-617-5448
The TSX Venture Exchange & IIROC has not reviewed and does not accept responsibility for the adequacy or accuracy of the information contained herein. The statements made in this press release may contain certain forward-looking statements that involve a number of risks and uncertainties. Actual events or results may differ from the company’s expectations.