WRACE – Utah Helium / Oil & Gas Development

Industry

Infrastructure / Real Assets / Energy / Oil & Gas

Company Type

Upstream Oil & Gas / Midstream Oil & Gas / Helium

Location

U.S. – Utah

Size

$103 Million

Investment Type

Debt / Equity
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Contact: Tina Vital, Managing Director

Email: tvital@castleplacement.com

Cell (917) 432-8474 

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OVERVIEW

Western Resources and Clean Energy, LLC (“WRACE”) is seeking +/-$103 million (excluding $0.83 million in committed sponsor investment) to develop mineral leases in eastern Utah to produce helium, natural gas, oil and carbon dioxide.

  • Straightforward gas development in an area well-known for successful oil & gas plays with upside growth potential based on well control, logs and data, and future development work
  • Development – 126,430 net acres of mineral leases in Hook Prospect (Carbon-Emery Counties, Utah), plus existing PDP oil well
  • Easy access to transportation – Highway 6 and Union Pacific rail line (to northern Utah and other states)
  • Experienced management team – expertise in drilling, completions, exploration and workovers in the domestic oil & gas industry 
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OPPORTUNITY

Global market for helium reached $4.45 billion in 2022, and is expected to expand to $6.5 billion by 2027, and $8.9 billion by 2032.

  • Helium is a relatively rare and utilized in various scientific, commercial and industrial applications, and classified by the U.S. Department of Interior as critical for national security and economic stability
  • Commercial helium deposits are known to occur in areas that are on the edges of hydrocarbon-bearing basins; helium is generally considered economically viable for commercial production at concentrations greater than 0.3% in oil and gas deposits
  • For nearly 100 years, helium deposits have been documented in the natural gas wells of eastern Utah; the Grassy Trail helium play straddles the Carbon-Emery Counties on the north-plunging end of the San Rafael Swell (includes Farnham Dome, Sunnyside, and Grassy Trail gas fields)
  • According to the USGS, the mean volume of recoverable helium within known geological natural gas reservoirs in the U.S. was 306 billion cubic feet plus 2.19 billion cubic feet in Federal helium inventory
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NORTH AMERICAN HELIUM MAP

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OPPORTUNITY – HELIUM APPLICATIONS

  • Helium market is segmented by type into liquid and gaseous
    • liquid – at low temperatures below -269 degrees; coldest cryogenic liquid used for superconducting magnets critical in MRI and NMR devices
    • gaseous – at normal temperatures; used to inflate blimps, research balloons and for celebrations, as well as an inert shield for arc welding, pressurizing liquid-fueled rocket fuel tanks and in supersonic wind tunnels
  • Segmented by end-user into wide range of applications – healthcare, welding and metal fabrication, electronics and semiconductor, laboratory, lifting and balloons, and other (including defense, controlled atmosphere, energy and power industries)
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SOLUTION/STRATEGY

WRACE plans to cost effectively extract helium-rich crude gas from strategically acquired mineral leases in Hook Prospect (Carbon-Emery Counties), Utah – an area well-known for helium deposits and successful oil & gas production for over 100 years.

  • Extracting helium requires re-entering and drilling additional wells, installing gathering infrastructure, and constructing a helium processing plant to separate and purify the helium
  • Enhanced oil recovery (EOR) – plans to inject CO2 into producing formation to increase oil & gas recovery; CO2 source will likely be from helium processing plant where CO2 is expected to be separated from the helium gas (alternative sources include Farnham Dome geologic structure and nearby wells owned by Savoy Energy)
  • Permitting – Utah permits (to be submitted to re-enter wells; shorter approval process anticipated)
  • Offtake agreements – WRACE’s founder has previously negotiated and entered into similar agreements with potential off-takers (such as industrial gas distributors)
  • Reservoir engineers – MI3 Petroleum Engineering (contract in-place)
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OPERATIONAL SCHEMATIC

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STRATEGIC PLAN/PROJECT TIMELINE

  • Carbon-Emery Counties, Utah (Hook Prospect)
  • Mineral Leasehold – 126,430 net acres (90% Working Interest)

CURRENT STATUS

  • 1 PDP well – 60 BOE per day (0.2% helium (or 0.3% of crude gas stream); 30% oil; 52.3% natural gas and NGLS; 8.3% CO2; 9.2% N2)
  • Contingent resources – estimated 71 BOE (0.4% helium; 29.6% oil; 52.5% natural gas and NGLs; 8.3% CO2; 9.2% N2)

MONTH 1:  TEST FOR COMMERCIAL VIABILITY

  • Well re-entry and testing (4 wells) – estimated cost $5 million

MONTH 2:  ESTIMATE RESERVES AND JUSTIFY DEVELOPMENT PLAN

  • Flow testing
  • Gas analysis
  • Field development plan and budget

MONTHS 3-6:  WELL DEVELOPMMENT AND CONSTRUCTION

  • Road construction
  • Well development and completion (50+ wells)
  • Construction of helium recovery unit
  • Construction of gas gathering pipelines and surface equipment

MONTHS 7+:  WELL PRODUCTION AND RESERVIOR MANAGEMENT

  • Completed (50+) wells producing
  • Start-up of helium recovery unit
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LAND MAP – HELIUM POTENIAL – UTAH

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MANAGEMENT

Steven James Lund – Founder and Managing Member, Western Resources and Clean Energy, LLC

Over 35 years of upstream oil and gas experience in engineering and executive management. In 2020, founded Western Resources and Clean Energy, LLC to develop helium resources in eastern Utah. In 2007, founded Energy of the Rockies to operate and rehabilitate Grassy Trails oil and gas field.  Managing Member Operator of the Clark Valley Unit (a natural carbon dioxide reserve in Carbon County, Utah). Previously served as Buyer, Gas Gathering Marketer, and Area Engineer for Williams Field Services; Production Engineer for Mesa Limited Partnership; Field Engineer for Dowell Schlumberger. Member of the Utah House of Representatives (District 66). Sanpete County Commissioner. Board Member of the Intermountain Health Care; Sanpete Valley Hospital; Pioneer Heritage Gardens; and Executive Office for Boy Scouts (Troop 538). B.S. in Petroleum Engineering (Tau Beta Pi – National Engineering Honor Society), New Mexico Institute of Mining and Technology.

Colter James Lund – Engineer and Project Executive, Western Resources and Clean Energy, LLC

Over five years of experience in civil engineering. Since 2022, Engineer for Western Resources and Clean Energy, LLC. Prior Law Clerk for Smith Hartvigsen PLLC; and Civil Engineer for Alpha Engineering. Previously served as Staff Sergeant, U.S. Air Force – Utah Air National Guard. JD (expected December 2023), University of Denver Sturm College of Law. M.S. in Engineering & Technology Management, Colorado School of Mines. B.S. in Civil Engineering, Brigham Young University.

Carlos Pereira – Co-Founder and President, MI3 Petroleum Engineering

Over 27 years of experience in petroleum engineering of upstream oil and gas fields, including naturally fractured reservoirs. Co-Founded MI3 Petroleum Engineering in 2011. Previously served as Manager, Oil & Gas Division for Norwest Corporation (U.S.); and Reservoir Engineer for PDVSA Intevep (Venezuela). Numerous upstream oil and gas engineering publications. Member of the Society of Petroleum Engineers. M.S. in Petroleum Engineering, Colorado School of Mines. M.S. in Chemistry, Central University of Venezuela.

Mahmood Ahmadi, PhD – Co-Founder and Vice President, MI3 Petroleum Engineering

Over 16 years of experience in reservoir engineering of upstream oil and gas fields, including both conventional and unconventional reservoirs. Co-Founded MI3 Petroleum Engineering in 2011. Previously served as Petroleum Reservoir Engineer for Norwest Corporation (U.S.). Engineering Internships at Baker Hughes (U.S.); Atoka (U.S.); National Iranian Oil Company (NIOC, Iran); and Bojnourd Cement Plant (Iran). Numerous upstream oil and gas engineering publications. Member of the Society of Petroleum Engineers. PhD and M.S. in Petroleum Engineering, Colorado School of Mines. B.S. in Mining Engineering, Shahrood University (Iran).

Brian Black – Geoscience Manager, MI3 Petroleum Engineering

Over 20 years of geological experience in the oil and gas industry, including field development, exploitation, exploration, project management, and seismic interpretation. Since 2014, Geoscience Manager and Senior Geologist for MI3 Petroleum Engineering. Prior Owner and Petroleum Geologist for Black Petroleum Resources; Executive Senior Geologist for Elk Petroleum; Development Geologist and Project Manager for Rocky Mountain Oilfield Testing Center; and G&G Consultant for Landmark Graphics. Past Adjunct Faculty – Geology Department, at Utah Valley University. Numerous upstream oil and gas engineering publications. Member of Rocky Mountain Association of Geologists, Wyoming Geological Association, and American Association of Petroleum Geologists. M.S. and B.S. in Geology, Brigham Young University.

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FOOTNOTES:

Overview
Solution/Strategy
Strategic Plan/Project Timeline
(1) Western Resources and Clean Energy LLC – WEM Dragon LLC – First Amendment to Purchase and Sale Agreement – FULLY EXECUTED – 220804
(2) Western Resources and Clean Energy LLC – WEM Dragon LLC – Assignment and Bill of Sale – FULLY EXECUTED – 210601
(3) Western Resources and Clean Energy LLC – WEM Dragon LLC – Purchase and Sale Agreement – FULLY EXECUTED – v2 210601
(4) Western Resources and Clean Energy LLC – WEM Dragon LLC – Purchase and Sale Agreement – Exhibit A-1 – v2 210601
(5) Western Resources and Clean Energy LLC – WEM Dragon LLC – Purchase and Sale Agreement – Exhibit A-1 Comments – v2 210601
(6) WRACE – Utah IG – Lease and Field Audit – 2023
(7) WRACE – Cap Table – v1 230724


Opportunity
(8) Explorer.aapg.org – The History of Helium Exploration – Part 1 of 2 – Jan 2019
(9) US Geological Survey – Mineral Commodity Summaries – Helium – v1 Jan 2020
(10) US Geological Survey – Mineral Commodity Summaries – Helium – v2 Jan 2020
(11) USGS – Mineral Commodity Summaries – 230131
(12) US Geological Survey – Wiseman Eckels – Proven and Hypothetical Helium Resources in Utah – 2020
(13) USGS – Interior Releases 2018 Final List of 35 Minerals Critical to U.S. National Security – 180518
(14) US Department of Interior – Geological Survey – List of Critical Metals – 180216
(15) The Business Research Company – Helium Global Market Opportunities and Strategies to 2032 – Mar 2023


Opportunity – North American Helium Map
(16) Utah Trust Lands Administration – Tyler Wiseman – Helium Migration Accumulation Entrapment – March 2021
(17) Utah Trust Lands Administration – Tyler Wiseman – North American Helium Map – 2021


Opportunity – Helium Applications
(18) The Business Research Company – Helium Global Market Opportunities and Strategies to 2032 – Mar 2023


Solution/Strategy
(19) Western Resources and Clean Energy LLC – MI3 Petroleum Engineering Corp – Service Contract Agreement – FULLY EXECUTED – 220511
(20) Western Resources and Clean Energy LLC – Whiting Oil & Gas Corp – UT Department of Natural Resources – Application for Permit to Drill – 140512
(21) Bill Barrett Corp – UT Division of Oil Gas Mining – Application for Permit to Drill 16H-32-15-12 – 081125
(22) Bill Barrett Corp – UT Division of Oil Gas Mining – Approval – Permit to Drill 43-007-31366 – 080310
(23) US Geological Survey – Wiseman Eckels – Proven and Hypothetical Helium Resources in Utah – 2020


Operational Schematic
Land Map – Helium Potential – Utah
(24) MI3 Petroleum Engineering – Industrial Gases and O&G Prospects – Central Utah – July 2022


Strategic Plan/Project Timeline
(25) Utah Geological Association – Oil and Gas Fields of Utah – Grassy Trail – Data and Maps
(26) MI3 Petroleum Engineering – Methodology – Contingent Resources to Reserves – 230713
(27) WRACE – MI3 Petroleum Engineering – Estimated Production Curves


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Ken Margolis | Managing Partner Castle Placement, LLC
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