Mendell Helium (AIM:MDH) has acquired the outstanding 25% interest in the Nilson 22-1 well in Haskell County, Kansas, for $186,092 (£138,611), taking its ownership to 100%.
The AIM-listed helium exploration and production company is paying entirely in stock, issuing 3.09m new shares at 4.48p, the 14-day volume-weighted average price up to the date the offer was made to the minority holders.
Nilson sits in the Hugoton gas field, one of North America's most prolific producers of natural gas and helium, and the company describes it as its most successful well there.
The well was fracked in the fourth quarter of 2024 after five third-party investors committed $170,000 for an approximately 25% economic interest, funding an operation that lifted flow rates above 100 Mcf per day and ranked it among the region's top producers.
The new shares compensate those investors for the return of their original $170,000 stake plus $16,092 representing their share of profit after costs, with no control premium paid.
Nilson connects directly to the Hugoton gathering system and the Jayhawk gas processing plant, meaning Mendell avoids the on-site purification required at its Fort Dodge wells and can capture revenue from helium, methane and natural gas liquids alike.
A sample from the well returned helium concentration of 0.61% and methane of 68.14%.
Water disposal remains the operational constraint: Nilson's water is currently trucked off site at roughly $2.50 to $3.00 per barrel, a cost that becomes uneconomic at higher volumes, and the company has been exploring a connection to a disposal well that would allow increased pumping and potentially greater gas volumes.
Nilson has not been pumping in recent months while Mendell negotiates improved offtake pricing for the Hugoton region, a pause the company says has held production below the well's potential, though it expects to return it to higher output in the near term.
Nick Tulloch, Mendell Helium's chief executive, said the Hugoton wells, while producing lower flow rates and helium composition than Fort Dodge, benefit from existing infrastructure that removes any need to purify the gas stream.
"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," he said.
