SYDNEY - Mosman Oil and Gas Limited (AIM: MSMN) has announced the sale of its EP-145 asset as part of a strategic pivot towards helium exploration and production in the United States. The company has entered into an agreement with Echelon Resources Limited (ASX:ECH) to sell 100% of the EP-145 permit for A$400,000 in cash, while retaining a 5% royalty interest in helium and hydrogen.
The decision to divest the EP-145 asset, which is located in Australia's Northern Territory, was influenced by several factors including increased drilling costs, estimated to be around A$20 million, and heightened regulatory scrutiny following community concerns over fracking. In contrast, Mosman's U.S. projects, namely the Sagebrush and Coyote Wash projects in Colorado, offer more favorable conditions for helium exploration with existing production infrastructure, moderate drilling costs, and no prescribed expenditure commitments.
Mosman's CEO, Andy Carroll, stated that the U.S. projects have "considerable commercial advantages" over EP-145, including a proven helium production basin, lower operational costs, and easier access to services and markets. The sale proceeds, along with the saved planned expenditures for EP-145, are expected to be approximately A$3 million, which will support the company's helium exploration efforts in the USA.
The transaction is subject to customary conditions, including formal sales and purchase agreement and government approvals, which are expected to take a few months. The company has also completed the acquisition of the remaining 75% interest in EP-145 from Greenvale Energy Ltd (ASX:GRV), as previously announced on October 15, 2024.
According to Mosman's recent portfolio review, the Sagebrush Project is currently producing approximately 40 barrels of oil per day and has identified potential for further oil and helium exploration. The Coyote Wash Project, adjacent to Sagebrush, also shows high potential for helium based on seismic data.
The disposal of EP-145 marks a significant step in Mosman's strategy to concentrate on its U.S. assets. Carroll expressed confidence that the transaction will leave Mosman "fully funded for all exploration commitments in the next 12 months, and with funding available for discretionary exploration activities." This move is based on a press release statement by Mosman Oil and Gas Limited.
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