D3 Energy’s Production Right Application Marks Critical Step Amid Exploration Uncertainties

Production Testing Confirms New Helium Province

D3 Energy Limited (ASX: D3E) has reported encouraging results from its recent production testing at the Nooitgedacht Major borehole within its ER315 permit in South Africa’s Free State Province. The testing revealed an average gas flow rate of 95 million standard cubic feet per day (Mscfd) over two weeks, with helium concentrations reaching 5.6% and methane at 83.2%. These figures not only confirm the presence of a new northern production province but also highlight the potential for lower development costs due to the relatively shallow depths of tested zones, ranging between 100 and 300 meters.

Expansion of Exploration Footprint

In a strategic move to bolster its exploration portfolio, D3 Energy secured three new Technical Cooperation Permits (TCP258, TCP259, and TCP260) covering nearly 5,800 hectares adjacent to its flagship ER315 and ER386 permits. These permits, granted for one year, allow the company to conduct low-cost desktop studies and position it to apply for further Exploration Rights. This expansion underscores D3 Energy’s commitment to capitalising on what is increasingly recognised as a world-class helium province, further supported by the recent success of neighbouring Renergen’s Virginia Gas Project in commencing liquid helium sales.

Advancing Towards Production Rights

Preparations are well underway for D3 Energy’s submission of an initial Production Right application over the southern portion of ER315. This area includes previously drilled and tested wells such as RBD01, which demonstrated helium concentrations as high as 6.2%. The company anticipates lodging the application in the second quarter of 2025, with an expected approval timeline of approximately 18 months. This step is critical for transitioning from exploration and appraisal to commercial production.

Robust Resource Base and Financial Position

D3 Energy holds a substantial independently certified contingent and prospective resource base at ER315, with recoverable helium resources ranging from approximately 13.8 to 35.2 billion cubic feet (BCF) in contingent resources and 9.4 to 76.9 BCF in prospective resources. Methane resources are similarly significant. Financially, the company ended the quarter with cash reserves of around AUD 6.3 million. Notably, exploration and feasibility costs are tracking under budget, attributed to lower drilling expenses and better-than-expected production results, enabling an accelerated Production Right application with fewer wells than initially planned.

Outlook and Market Context

While no production or development activities occurred during the quarter, D3 Energy’s progress in expanding its exploration footprint and confirming new production zones positions it well within the competitive helium market. The Free State Province continues to attract attention as a helium hotspot, with D3 Energy and its peers poised to benefit from growing global demand for helium, driven by its critical applications in technology and healthcare. The company’s next phase of exploration, including seismic data acquisition and multiple well drilling, is contingent on final permit approvals expected shortly.