Helium Evolution Expands & Accelerates Drilling Program Through Enhanced Farmout With North American Helium

Helium Evolution Incorporated (“HEVI” or the “Company”), a Canadian-based helium exploration and production company focused on developing assets in southern Saskatchewan, is pleased to announce enhancements and amendments to the existing farmout agreement with North American Helium (“NAH”), through the execution of an Amended and Restated Farmout Agreement dated October 20^th, 2022 (the “Amended Farmout”). The Amended Farmout offers HEVI near-term drilling catalysts that can accelerate cash flow generation without incurring up-front capital costs and allows the Company to retain 99% of its land base. At no cost, HEVI will also receive NAH’s proprietary seismic that was recently used to drill three successful and producing NAH wells in the Mankota area, giving HEVI greater insight and valuable data that can be used in identifying future targets.

Partnering with an industry leader such as NAH, which is the most active driller of helium wells globally by a wide margin, offers a significant advantage for HEVI. As a result of being aligned with NAH and executing this Amended Farmout, HEVI is ideally positioned to benefit from the continued exploration and development of its asset base by NAH and to leverage its extensive data, learnings, and expertise, without spending capital in the near term. NAH’s farm-in allows HEVI to conserve its approximately $10 million in cash and liquid assets while maintaining financial flexibility and future optionality to pursue other targets across the Company’s 5.5 million acres of helium rights.

As part of the Amended Farmout, HEVI and NAH also entered into a new seismic option agreement (the “Seismic Option Agreement”) and seismic option review agreement (the “Seismic Option Review Agreement”) (and together with the Seismic Option Agreement, the “Seismic Agreements”), which could expand the number of wells to be drilled by NAH by 60%, from the original five to up to eight. The Amended Farmout supersedes the original farmout entered into with NAH on June 28, 2022 (the “Original Farmout”) and maintains all earning terms and after-earning operations from the Original Farmout.

“This Amended Farmout truly sets HEVI apart from other helium-focused peers, as we are afforded multiple near-term drilling catalysts, including two exploration wells by year-end 2022 and a third drill in the first half of 2023, without spending our own capital and while retaining 99% of our land base,” said Greg Robb, President & CEO of HEVI. “In addition, NAH could increase the number of drills from five, contemplated under our Original Farmout, up to potentially eight wells as a result of the Seismic Agreements, an approximately 60% increase. The Amended Farmout allows HEVI to maintain optionality to continue exploration and development of internally-generated targets on our extensive land base while providing visibility to bring production on stream without subjecting shareholders to dilutive equity financing.”

Strategic Benefits of the Amended Farmout & Seismic Agreements

• Drilling Timelines Accelerated: NAH will accelerate the timeline to drill its first two test wells at Mankota, as defined herein, into Q4/22 and commits to drilling a third well in the first half of 2023. If any of these three initial test wells are commercially productive, NAH has committed to expeditiously drill development wells on the related earned farmout blocks, which management expects could be timed to coincide with a potential new NAH processing facility.
• Receipt of Proprietary Seismic: Under the Amended Farmout, NAH will furnish to HEVI two proprietary seismic lines comprised of 35km of data in the Mankota area, previously used by NAH to target drilling locations, of which three are currently producing helium. Mankota is situated in the first of three predetermined blocks of land in Saskatchewan as outlined in the Original Farmout. NAH will select a fourth and fifth test well location on each of the other two blocks by June 30, 2023, with both wells to be spud by Q1/24.
• Seismic Agreements Expands Drilling: NAH and HEVI have entered into a new Seismic Option Agreement and Seismic Option Review Agreement, covering two seismic option areas (the “Seismic Option Areas”) and one seismic review area (the “Seismic Review Option Area”) at Mankota. Details of the Seismic Agreements are provided below.

Seismic Option Areas: Pursuant to the Seismic Option Agreement, NAH will shoot new seismic, incurring 100% of the cost, in both Seismic Option Areas, the data from which will be provided to HEVI, and earn NAH the right to drill an option well (the “Option Well”) in each of the two Seismic Option Areas prior to August 31, 2023, thereby earning an 80% operated interest in the section on which the Option Well was drilled plus nine contiguous sections of land. Following the drilling of each Option Well, NAH retains an 80% and HEVI a 20% working interest in the operations and lands. If NAH does not spud an Option Well by August 31, 2023, their ability to earn a working interest terminates.

Seismic Review Option Area: Pursuant to the Seismic Option Review Agreement, NAH is able to review HEVI’s proprietary seismic data covering the identified Seismic Review Option Area, along with data from HEVI’s 06-02-06-06W3M well for a 30-day period. Following this review, NAH can elect to drill a well in the Seismic Review Option Area (the “Seismic Review Option Well”) on or before the end of Q2/23, release the option altogether, or shoot new seismic data over the Seismic Review Option Area. If the latter option is elected, NAH would provide the data to HEVI, and have the option to spud a Seismic Review Option Well before October 31, 2023, on the same terms as Option Wells outlined above.

Executing this Amended Farmout provides numerous strategic advantages for HEVI. With NAH committing to drilling two wells in Q4/22 and a third well in the first half of 2023, HEVI offers shareholders exposure to near-term drilling catalysts that can accelerate cash flow generation. In addition, HEVI will receive proprietary seismic that NAH used to successfully bring three new helium wells into production, giving HEVI greater insight and valuable data that can be used in identifying future targets. Finally, the execution of the Seismic Agreements will give HEVI access to greater seismic coverage on its land without the associated costs, and provides an opportunity to participate in wells drilled by NAH across the Seismic Option Areas and Seismic Review Option Area. All of these enhancements are expected to drive meaningful value creation and strengthen HEVI’s longer-term outlook.

About Helium Evolution Incorporated

Helium Evolution is a Canadian-based helium exploration and production company holding the largest helium land rights position in North America among publicly-traded companies, focused on developing assets in southern Saskatchewan. The Company has over five million acres of land under permit near proven discoveries of economic helium concentrations which will support scaling the exploration and development efforts across its land base. HEVI’s management and board are executing a differentiated strategy to become a leading supplier of sustainably-produced helium for the growing global helium market, offering a compelling opportunity for investors.