Quarterly Activities/Appendix 5B Cash Flow Report

Blue Star Helium Limited (ASX:BNL, OTCQB:BSNLF) (Blue Star or the Company) is pleased to provide an update on activities undertaken during the quarter ended 31 March 2023.

Highlights

• Final approval received from COGCC for four exploration wells at Galactica/Pegasus.
  
  • These four wells are to be drilled as offset development wells to the JXSN#1 and JXSN#2 discoveries.
• Final approval received from COGCC to drill the first two helium development wells (BBB 33#1 and 34#1) at the high-grade Voyager helium development.
  • These two wells offset the BBB#1 helium discovery and are planned to be production wells.
• Additional five-well OGDP for Voyager to be submitted to the COGCC in early May; together with BBB 33#1 and BBB 34#1 locations, strategically set to deliver robust inventory from which to select the initial 3-4 production well locations for Voyager.
• Strategic crestal mineral leases and surface access agreements acquired at Voyager; expected to drive increase in contingent resources.
• Commercial discussions for provision of leased helium facility at Voyager highly advanced with expected execution of a facilities agreement in coming weeks.
• Blue Star targeting first helium production from Voyager during H2 CY2023.
• Quarter end cash balance of A$5.398 million and zero debt.

OPERATIONS

Field development

Further leases and additional access acquired at Voyager

During the quarter, Blue Star agreed to acquire further strategic mineral leases and access rights in the Voyager area. The additional surface access allows optimisation of the planned siting of the helium processing facility at Voyager and a more efficient gas gathering system layout.

The leases comprise a total of 2,987 gross acres (1,382 net acres) and are located high on the Voyager structure. These additional leases are expected to facilitate an increase in the contingent resource base at Voyager.

Helium processing facility commercial discussions

Blue Star continues to progress negotiations with a mid-stream company for the lease of a helium processing facility at Voyager (see BNL announcement dated 19 December 2022). These discussions are now highly advanced and expected to conclude in execution of a facilities agreement in the coming weeks for supply and operation of the processing plant.

Blue Star remains on track for targeted first helium production and sales from Voyager during H2 CY2023.

Well permitting

Voyager prospect (100% BNL)

The Colorado Oil and Gas Conservation Commission (COGCC) issued the final Form 2 approvals relating to the BBB 33#1 and BBB 34#1 helium development wells on 18 April 2023. These wells relate to the “BBB 2860” Oil and Gas Development Plan (OGDP) located within the Company’s high-grade Voyager helium development (refer Figure 1).

These two wells offset the BBB#1 helium discovery and are intended to produce into the initial Voyager facility (see BNL announcement dated 19 December 2022). Drilling of the first of these wells is expected to commence in late Q2 or Q3 and is planned to include subsequent flow and pressure testing evaluation.

Following the recent acquisition of further strategic mineral leases and surface access agreements, the next planned OGDP submission at Voyager has been expanded to five wells and is expected to be submitted in early May after expiry of mandatory pre-submission notices to the County. Coupled with BBB 33#1 and 34#1, approval of these further locations is expected to deliver a robust inventory of permitted wells from which to select the initial 3-4 production well locations at Voyager.

Previously this OGDP included the three eastern wells on the map below (on existing leases shown in blue). Submission of the OGDP was paused to add the two highly regarded well locations associated with the newly acquired strategic minerals leases (displayed in yellow). This approach follows COGCC guidance.

The COGCC also advised at the operator meeting held on 14 March 2023 that it is implementing a revised permitting process designed to shorten the time between submission and hearing to 4.5 months. According to the COGCC, this current process takes an average of 7 months to complete.

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