HyTerra's McCoy-1 well production test in Kansas reveals low gas saturation but notable helium concentrations, prompting a pause on further testing at the site as the company refines its geologic hydrogen strategy.
- McCoy-1 well shows low gas flow rate of 0.1 Mscf/d
- Elevated helium concentration of 2.8% detected
- Second zone testing at McCoy-1 deferred
- Rift Play exploration continues alongside Ridge Play
- Operational learnings to guide future hydrogen projects
McCoy-1 Production Test Yields Low Gas Flow but Elevated Helium
HyTerra Ltd (ASX:HYT) has wrapped up a 14-day production test at its McCoy-1 well in the Ridge Play of the Nemaha Project, Kansas, recording a modest gas flow rate of approximately 0.1 million standard cubic feet per day (Mscf/d). While the flow rate was lower than might be hoped for commercial development, the test revealed an elevated helium concentration of 2.8% on an air-corrected basis, consistent with prior laboratory analyses.
The test was completed on schedule, under budget, and without any health, safety, or environmental incidents, providing the company with valuable reservoir data and operational insights. However, preliminary interpretation suggests the tested interval had low gas saturation, which influenced the decision not to proceed with the planned second zone test at this stage.
Strategic Implications for Ridge and Rift Plays
McCoy-1 represents a single data point within HyTerra’s Ridge Play, which is geologically distinct from its parallel Rift Play that underlies more than 80% of the company’s Kansas acreage. The Ridge Play hypothesis involves hydrogen migrating from the Mid-Continent Rift to the crest of the Nemaha Ridge, but the low gas saturation observed at McCoy-1 tempers immediate expectations for this zone.
Meanwhile, the Rift Play targets hydrogen closer to source rocks and is supported by recent geophysical data and rock sample analyses identifying several promising targets, including the Larson 1-14 well. Drilling at Larson remains subject to funding and rig availability, reflecting the ongoing capital and operational challenges in advancing these frontier plays.
Next Steps and Portfolio Development
HyTerra’s management plans to integrate the McCoy-1 test results, including gas composition, pressure, flowrate, and reservoir data, to refine its technical framework and operational approaches. This will inform future prospect ranking, well design, and testing strategies both within the Ridge Play and across the broader portfolio.
CEO Riley Kemp emphasised that McCoy-1 has enhanced the company’s understanding of the Ridge Play but cautioned that it is only one well. He highlighted the importance of the operational learnings in shaping future exploration and reiterated the company’s commitment to establishing a commercial geologic hydrogen project through multiple pathways.
HyTerra continues to mature opportunities in the Rift Play and other international projects, consistent with its strategic plan to leverage diverse geologic settings and potential low-carbon hydrogen sources. The company will provide further updates as material progress is achieved.
Capital and Operational Context
HyTerra’s recent capital raises, including a $1.95 million shortfall offer completed in late June, support ongoing drilling and testing activities. These funds are critical given the inherent geological and development risks in emerging geologic hydrogen exploration, where uncertainties around gas presence, concentration, and recoverability remain significant.
The McCoy-1 results underscore the technical challenges of this frontier sector, where early-stage data must be carefully integrated to inform commercial viability. The elevated helium finding is a noteworthy byproduct, potentially adding value to future developments.
Bottom Line?
HyTerra’s McCoy-1 test offers key technical insights but underscores the uncertainties in commercialising geologic hydrogen, with future progress hinging on integrating data and advancing the Rift Play.
Questions in the middle?
- How will HyTerra’s integration of McCoy-1 data reshape its exploration priorities across the Ridge and Rift Plays?
- What funding and operational hurdles must be overcome to progress drilling at the promising Rift Play targets like Larson 1-14?
- Could the elevated helium concentrations open alternative commercial pathways alongside hydrogen development?