American Noble Gas, Inc. (AMNI) has been making significant strides in the exploration and development of its properties, based on their recent SEC report. The company has shut down its horizontal production wells as of March 31, 2023, and December 31, 2022, and is now considering deepening its conventional wells to explore for helium and other noble gases in deeper producing zones. As a result, AMNI has recorded an impairment charge of $712,812 to reduce the capitalized tangible and intangible costs related to its Central Kansas Uplift properties.
On April 4, 2022, AMNI acquired a 40% participation in a Farmout Agreement between Sunflower Exploration, LLC, and Scout Energy Partners, concerning their oil and gas interests in the Hugoton Gas Field, located in Haskell and Finney Counties, Kansas. The agreement covers the drilling and completion of up to 50 wells, with the first exploratory well spudded on May 7, 2022.
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Hugoton JV and Helium Production
The Hugoton JV will utilize Scout’s existing infrastructure assets, including water disposal, gas gathering, and helium processing. The Farmout Agreement also provides the Hugoton JV with rights to market and sell its share of helium at prevailing market prices.
Brine Mineral Recovery Technology
In addition to helium production, the Hugoton JV also acquired the right to all brine minerals in Finney and Haskell Counties, subject to a 10% royalty to Scout. Brine minerals, harvested from the formation water produced from active oil and gas wells, may include various dissolved minerals, such as bromine and iodine. AMNI and the Hugoton JV are currently developing proprietary technology to recover brine minerals, focused mainly on bromine. The technology has already demonstrated recovery efficiency and is expected to be available for use in existing and future development wells.
Unconventional Exploration and New Wells
The Hugoton JV’s unconventional theory for exploration has not previously been targeted by historical operations in the field. The initial exploratory well commenced on May 7, 2022, near Garden City, Kansas, where production casing was set after testing and completion logs identified at least two potential zones with substantial gas and helium reserves. The well was connected to the pipeline and began commercial production and sales of natural gas, natural gas liquids, and helium on August 17, 2022. AMNI is continuing to evaluate the initial flows of both natural gas and helium to determine its plan for additional wells on the farmout.
Investment in GMDOC, LLC
Furthermore, American Noble Gas has made a significant investment in GMDOC, LLC, acquiring 60.7143% of limited liability membership interests for a total purchase price of $4,037,500. GMDOC had previously acquired 70% of the working interests in certain oil and gas leases, known as the GMDOC Leases, from Castelli Energy, L.L.C. The leases cover approximately 10,000 acres located in Southern Kansas near the Oklahoma border and currently produce about 100 barrels of oil and 1.5 million cubic feet of natural gas per day on a gross basis.
Challenges and Future Prospects
While the company faces substantial operational and financial challenges, it has made considerable progress in resolving many of its existing financial obligations and acquiring oil and gas producing properties to deploy its new operational strategy. The continued exploration and development of the Properties and the Hugoton Gas Field will likely require AMNI to raise substantial amounts of debt or equity capital in the future. However, the company’s advancements in helium exploration and brine mineral recovery technology may pave the way for new revenue streams and growth opportunities in the industry.
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