Blue Star Helium, an independent helium exploration and production company, has entered an agreement with Helium One Global involving its Galactica/Pegasus project in Colorado, USA.
The terms include a US$1.5 million ($2.2 million) payment to Blue Star upon completion, with Helium One funding the drilling of six development wells to secure a 50% interest in the project.
Helium One has also announced an equity raise of US$8.2 million ($12.1 million), which supports the upcoming drilling activities.
The initiative aims for the first helium and CO2 production from Galactica/Pegasus during the first half of 2025.
Blue Star will remain the operator of the project throughout the venture.
"We are very pleased to welcome Helium One as a partner in the Galactica/Pegasus development. This partnership is the first step in our strategic plan to accelerate growth across our large Las Animas asset portfolio," said Trent Spry, managing director and CEO of Blue Star Helium.
The drilling of the initial six wells is expected to commence in the fourth quarter, subject to final approvals from the Colorado Energy and Carbon Management Commission.
The company highlights that if any well exceeds the US$450,000 ($662,149) cap, additional costs will be shared equally between the parties.
The agreement further includes granting Helium One a right of first refusal to farm-in into Blue Star's helium acreage in Las Animas County, excluding the Serenity Project.
Completion of the agreement is aimed for by Oct. 31.
At the time of reporting, Blue Star Helium’s share price was $0.0060.