EX-99.3 13 ea020298201ex99-3_cyberapp.htm INDEPENDENT PETROLEUM ENGINEER'S CONTINGENT CO2 RESOURCES REPORT AS OF JANUARY 1, 2024

EXHIBIT 99.3

 

WILLIAM M. COBB & ASSOCIATES, INC.

Worldwide Petroleum Consultants

 

12770 Coit Road, Suite 907 (972) 385-0354
Dallas, Texas 75251 Fax: (972) 788-5165

 

January 16, 2024

 

Via email: jcoates@protongreen.com, sel@protongreen.com

 

Mr. John Coates

Proton Green LLC

2000 Bering Drive, Suite 210

Houston TX 77057

 

Dear Mr. Coates,

 

As requested by Proton Green LLC (Proton Green), William M. Cobb & Associates, Inc. (Cobb & Associates) has prepared this resource and cash flow evaluation associated with the planned sales of beverage-grade carbon dioxide (BG CO2) at the St. Johns Field. This is an updated version of the December, 2023 analysis, incorporating revisions to the electrical expansion costs and BG CO2 recovery efficiency, applying an accelerated facility installation schedule, and adding a $200 per ton BG CO2 price sensitivity case.

 

Based on project timing, rate estimates, capital cost, operating cost, and estimated sales price information supplied by Proton Green, BG CO2 sales can be considered an add-on (incremental) project to the ongoing helium development project currently under way and planned for the St. Johns Field. Therefore, this analysis considers only the incremental costs and revenues associated with BG CO2 production.

 

The base costs are assumed to be borne by the helium development project (well capital and operating costs, flow lines, gas re-injection costs, any radon separation and treatment costs, and facility operating costs for helium recovery). This base helium development project (the “40/160/310 MMCF/D Case”) is described in the January 16, 2024 report (the Helium Report). The well drilling timing and production rates assumed for the helium development project are shown in Table 1 (note, existing wells are included in this table).

 

 

 

St. Johns Field CO2 Sales Evaluation
January 16, 2024

Page 2 of 7

 

Table 1: Potential Helium Project Schedule 
  
   40/160/310 MMCF/D Case 
Year  Tot
MCF/Day		   Helium MCF/Day   Production Wells   Injection Wells  

Total Wells

Drilled

 
2024   0    0    3    0    3 
2025   36,127    151    14    0    14 
2026   156,127    653    24    10    34 
2027   307,363    1,285    18    1    19 
2028   310,000    1,296    84    1    85 
2029   310,000    1,296    47    1    48 
2030   310,000    1,296    27    1    28 
2031   310,000    1,296    19    1    20 
2032   310,000    1,296    15    1    16 
2033   310,000    1,296    13         13 
2034   310,000    1,296    12         12 
2035   310,000    1,296    12         12 
2036   310,000    1,296    12         12 
2037   310,000    1,296    12         12 
2038   310,000    1,296    12         12 
2039   310,000    1,296    12         12 
2040   310,000    1,296    4         4 
2041   293,556    1,227              0 
2042   270,952    1,133              0 
2043   250,089    1,045              0 
2044   230,832    965              0 
2045   213,058    891              0 
2046   196,652    822              0 
2047   181,510    759              0 
2048   167,534    700              0 
2049   154,634    646              0 
2050   142,727    597              0 
2051   131,737    551              0 

 

Note: Of 3 2024 Production Wells, 1 is new drill

 

The BG CO2 project consists of 12 separate plant installations, each consisting of a 500 ton per day (T/D) sales volume BG CO2 plant. The project schedule assumes the plants will be installed as six pairs, with the second plant of each pair bearing a “B” designation. Based on information from Proton Green, field CO2 offtake is assumed to undergo zero shrinkage as it is processed to yield BG CO2. Each plant is assumed to have a 20-year productive life. The construction and production timing and rates for the 12 plants is shown in Table 2, based on information provided by Proton Green.

 

 

 

St. Johns Field CO2 Sales Evaluation
January 16, 2024

Page 3 of 7

 

Table 2: Beverage Grade Carbon Dioxide Plant Timing and Rates

 

Plant Number

 

CO2 Plant
Construction
Start Date

 

CO2

Production
Start Date

 

Months to
Complete
Plant

  

Field
Offtake
to Plant
(MCF/D)

  

Plant
Beverage
Grade CO2
Sales

(MCF/D)

  

Plant
Beverage
Grade CO2
Sales (T/D)

 
1  1/2/2024  10/1/2024   9    8,700    8,700    500 
1B  1/2/2024  10/1/2024   9    8,700    8,700    500 
2  3/2/2024  12/1/2024   9    8,700    8,700    500 
2B  3/2/2024  12/1/2024   9    8,700    8,700    500 
3  3/2/2024  3/1/2025   12    8,700    8,700    500 
3B  3/2/2024  3/1/2025   12    8,700    8,700    500 
4  5/2/2024  5/1/2025   12    8,700    8,700    500 
4B  5/2/2024  5/1/2025   12    8,700    8,700    500 
5  11/1/2024  7/1/2025   8    8,700    8,700    500 
5B  11/1/2024  7/1/2025   8    8,700    8,700    500 
6  1/2/2025  9/1/2025   8    8,700    8,700    500 
6B  1/2/2025  9/1/2025   8    8,700    8,700    500 

 

The ability of the helium project to supply the rates needed by this BG CO2 project was confirmed by plotting the total field rate from the helium project and the production rates needed to supply the 12 plants, Figure 1. Note that the helium project development will need to proceed as described in Table 1 to provide the necessary gas production to the BV CO2 plants.

 

 

 

St. Johns Field CO2 Sales Evaluation
January 16, 2024

Page 4 of 7

 

Figure 1: Total Project Rate and Rate Dedicated to CO2 Extraction Plants

 

 

 

Each plant’s installation and operating costs are shown in Table 3 based on information provided by Proton Green.

 

Table 3: Beverage Grade Carbon Dioxide Plant Costs

 

500 TPD Beverage Grade CO2 Plant  Cost 
Pre-Processing  $1,000,000 
Plant Capex  $8,150,000 
Shipping  $160,000 
Construction  $1,630,000 
Loading Bays  $500,000 
Spare Parts  $300,000 
Storage (5500 tons)  $1,000,000 
Total Plant Cost  $12,740,000 
Electricity Expansion Cost (Plant 1 only)  $3,000,000 
Plant Operating cost (monthly)  $16,979 
Electricity (monthly) (based on $0.12 per kwh)   164,376 

 

 

 

St. Johns Field CO2 Sales Evaluation
January 16, 2024

Page 5 of 7

 

Assuming $100/Ton BG CO2 price and the Table 3 cost values, the resulting rates and cash flow for the first plant’s initial 24 months is provided in Table 4:

 

Table 4: Plant 1 Rates and Cash Flow, First 24 Months

 

 

Date

  Prod. Mo.  

CO2

Production MCF/D

   CO2 Sales MCF/D  

CO2

Sales T/D

   CO2 Sales
T/Mo		  

Plant

Capital Cost, $

  

Plant

Operating Cost $/Mo

   Electrical
Cost, $/Mo		  

Electrical Expansion,

$

  

Revenue,

$/Mo

  

 

Cash Flow

   Cumulative Cash Flow 
Nov-23                                                    $0   $0 
Dec-23                                                    $0   $0 
Jan-24                           $12,740,000             $3,000,000        $(15,740,000)   $(15,740,000) 
Feb-24                                                    $0   $15,740,000)
Mar-24                                                    $0   $(15,740,000)
Apr-24                                                    $0   $(15,740,000)
May-24                                                    $0   $(15,740,000)
Jun-24                                                    $0   $(15,740,000)
Jul-24                                                    $0   $(15,740,000)
Aug-24                                                    $0   $(15,740,000)
Sep-24                                                    $0   $(15,740,000)
Oct-24   1    8,700    8,700    500    15,220        $16,979   $164,376        $2,435,200   $2,253,845   $(13,486,155)
Nov-24   2    8,700    8,700    500    15,220        $16,979   $164,376        $2,435,200   $2,253,845   $(11,232,310)
Dec-24   3    8,700    8,700    500    15,220        $16,979   $164,376        $2,435,200   $2,253,845   $(8,978,466)
Jan-25   4    8,700    8,700    500    15,220        $16,979   $164,376        $2,435,200   $2,253,845   $(6,724,621)
Feb-25   5    8,700    8,700    500    15,220        $16,979   $164,376        $2,435,200   $2,253,845   $(4,470,776)
Mar-25   6    8,700    8,700    500    15,220        $16,979   $164,376        $2,435,200   $2,253,845   $(2,216,931)
Apr-25   7    8,700    8,700    500    15,220        $16,979   $164,376        $2,435,200   $2,253,845   $36,914 
May-25   8    8,700    8,700    500    15,220        $16,979   $164,376        $2,435,200   $2,253,845   $2,290,759 
Jun-25   9    8,700    8,700    500    15,220        $16,979   $164,376        $2,435,200   $2,253,845   $4,544,604 
Jul-25   10    8,700    8,700    500    15,220        $16,979   $164,376        $2,435,200   $2,253,845   $6,798,448 
Aug-25   11    8,700    8,700    500    15,220        $16,979   $164,376        $2,435,200   $2,253,845   $9,052,293 
Sep-25   12    8,700    8,700    500    15,220        $16,979   $164,376        $2,435,200   $2,253,845   $11,306,138 
Oct-25   13    8,700    8,700    500    15,220        $16,979   $164,376        $2,435,200   $2,253,845   $13,559,983 

 

Incremental economics for the BG CO2 project over the helium development were run for three cases. The base case assumes a BG CO2 sales price at the plant gate of $150/ton, with all costs as supplied by Proton Green. The stress case assumes a BG CO2 sales price of $100/ton and all costs equal to 1.5 times the values supplied by Proton Green. A high price case assumes a BG CO2 sales price of $200/ton, with all costs as supplied by Proton Green. Under these three sets of assumptions the by-plant and total project are economic in all three cases. A summary of the by-plant and total economics is provided in Table 5, and a comparison of the results for the three cases is provided in Figure 2.

 

 

 

St. Johns Field CO2 Sales Evaluation
January 16, 2024

Page 6 of 7

 

Table 5: Estimated By-Plant and Total Project Incremental Economics

 

   $100/Ton Sales Price, 1.5 Cost Factor   $150/Ton Sales Price, 1.0 Cost Factor   $200/Ton Sales Price, 1.0 Cost Factor 

Plant Number

 

NPV, $

Millions

  

Investors
Rate of Return

  

Years to
Payout

  

NPV, $

Millions

  

Investors
Rate of
Return

  

Years to
Payout

  

NPV, $

Millions

  

Investors
Rate of
Return

  

Years to
Payout

 
1  $69    45%   2.8   $146    110%   1.5   $205    147%   1.3 
1B  $74    55%   2.4   $148    134%   1.3   $208    179%   1.2 
2  $73    55%   2.4   $146    134%   1.3   $205    179%   1.2 
2B  $73    55%   2.4   $146    134%   1.3   $205    179%   1.2 
3  $71    50%   2.7   $142    112%   1.6   $200    145%   1.4 
3B  $71    50%   2.7   $142    112%   1.6   $200    145%   1.4 
4  $69    50%   2.7   $140    112%   1.6   $197    145%   1.4 
4B  $69    50%   2.7   $140    112%   1.6   $197    145%   1.4 
5  $69    57%   2.3   $138    143%   1.3   $194    195%   1.1 
5B  $69    57%   2.3   $138    143%   1.3   $194    195%   1.1 
6  $68    57%   2.3   $136    143%   1.3   $191    195%   1.1 
6B  $68    57%   2.3   $136    143%   1.3   $191    195%   1.1 
Total  $842    NA    2.9   $1,701    NA    1.8   $2,384    NA    1.7 

 

Figure 2: Beverage Grade CO2 Project Present Value and Payout Period Results

 

 

 

 

St. Johns Field CO2 Sales Evaluation
January 16, 2024

Page 7 of 7

 

Evaluation Stipulations

 

This potential volumes and values presented in this evaluation is based on the Helium Report’s estimates of in-place and potentially recoverable CO2 gas volumes in the St. Johns Field. Because these gases are not hydrocarbons, they are not subject to the SEC’s or the petroleum industry’s hydrocarbon reserves definitions. However, to put these volumes estimates into a technical context, the corresponding reserves category would be “contingent resources”, as defined by the petroleum industry’s Petroleum Resources Management System, revised in June 2018 (the PRMS).

 

The PRMS defines “contingent resources” as “Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects, but which are not currently considered to be commercially recoverable owing to one or more contingencies.” While not petroleum, the CO2 gas contained in the Field otherwise fits this definition. The “contingent” aspect of this resource relates to the current absence of a fully- budgeted development project. Commitments to the execution of both the helium and BG CO2 development projects would remove this contingency for each area subject to development, with volumes moving to reserves categories as commitments, well data, and production data warrant.

 

No review has been made of the agreements, if any, under which the Field would be developed and operated, nor of any sales agreements. No on-site Field inspection or review of the title to the properties has been carried out. No review has been made of the permitting requirements of this project, nor of the ability of Proton Green to obtain any such needed permits or approvals.

 

The results presented in the referenced reports are based on geologic and engineering judgment, and as such are estimates. There are uncertainties in the analysis of the available data. Any estimated future production volumes may or may not, in fact, occur. Volumes may increase or decrease as a result of future operations, or as the result of unforeseen geological conditions. Therefore, those results are not warranted or guaranteed as to their accuracy, but represent opinions based on the interpretation of technical data.

 

Cobb & Associates appreciates this opportunity to be of service to Proton Green. Please let me know if you have any questions.

 

  Sincerely,
   
  WILLIAM M. COBB & ASSOCIATES, INC.
  Texas Registered Engineering Firm F-84
   
  /s/ Randal M. Brush
  Randal M. Brush, P.E.
  President

 

 

 

 

RMB