(DME, 1.Apr.2024) — Desert Mountain Energy Corp. (DME) updated its shareholders on the current operational developments in New Mexico and Arizona.
From the President of the Company.
DME has successfully installed the necessary physical equipment for the helium processing plant in New Mexico, achieving its initial objective of becoming a fully vertically integrated helium company. The required hardware and software components for handling the gaseous mixture have been installed and tested for operations. These components were essential to meet end-user BTU requirements and upcoming industry changes in natural gas processing, safety, and transportation. The dehydration, amine and high-pressure compression units are operational and currently processing gas. Numerous modifications were made to address the compositional change from a nitrogen to a natural gas environment, which includes both light and heavy fractional hydrocarbon molecules. The replaced components have been retained for use in the construction of a future plant to be used in a primary nitrogen gas stream where natural gas values are less than 9.8%, such as in Arizona.
The company is still performing cost-efficient maintenance on initially selected wells to increase the overall throughput of the plant. The geologic team has identified wells for short-term, and long-term production boosts. For example, foaming 15 wells has led to a notable increase in raw gas flows to the plant. This maintenance has been carried out multiple times in recent months, resulting in sustained gas flow increases and a significant reduction in saltwater production.
The company continues negotiations with a specific end-user for the natural gas portion of the product stream at the end of the current contract. DME continues to receive interest from end-users for our processed helium due to the ongoing helium shortage. Additionally, we are collaborating with a private company and national laboratories for CO2 capture and processing. The company’s goal is to cost-effectively produce food-grade CO2 for potential commercial sale. There is a reported shortage of food-grade CO2, providing an additional opportunity for increased revenues and value for the company.
The company continues to work closely with state and federal inspectors to bring the visible side of the field operations current. This involves repairing and maintaining roads and the perimeter surrounding the surface equipment. This crucial aspect of field operations was highlighted during recent wildfires in West Texas and South-Eastern New Mexico. The company has acquired tracked equipment and haul capability to handle these issues internally and safeguard its investment. So far, DME has repaired numerous miles of roads on its BLM and State of New Mexico leases and will proceed with planned work.
The DME team has completed its end-of-year and first-quarter financial reports and diligently navigated the latest changes between Canadian IFRS and US GAAP accounting procedures. Despite the complexity of the task, the team recognized the importance of addressing these issues to support the company’s transition from exploration to a full-scale helium producer. While the initial NI 51-101 report on the West Pecos New Mexico asset was limited due to time (only the first 90 days after purchase) and data available, DME anticipates gaining a clearer understanding of future opportunities once the plant is fully operational. Canadian regulators developed the NI 51-101 to provide specific insights into different categories of oil and gas production and reserves. Although the presence of helium is well documented in almost every well, helium production was never tracked separately, nor were royalties or credit given to the well owners/producers. Therefore, until the company has documented helium values properly accounted for, future reserves are purely based on well-test data. After DME has the plant fully operational, it should provide a better idea of what initial future production exists for that field and where to seek out further opportunities to maximize helium production.
The company has renewed its leases in Arizona and is actively striving to establish a cost-effective pathway to production in the state, mirroring successful models in other states.
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