Mendell Helium's Strategic Milestone: Kansas Disposal Well Approval and Path to Production at Rost

The helium sector, long characterized by its inelastic demand and supply bottlenecks, is undergoing a quiet but transformative shift. With global demand projected to grow at a compound annual rate of 6% through 2030, driven by applications in medical imaging, semiconductor manufacturing, and quantum computing, companies with robust infrastructure and strategic operational clarity are poised to outperform. Mendell Helium's recent approval of the Brobee saltwater disposal well in Kansas represents such a strategic inflection point, offering a compelling case for near-term value creation through sector consolidation and infrastructure readiness.

De-Risking Production Timelines: A Critical Step

The Brobee well's approval by the State of Kansas is more than a regulatory checkbox—it is a de-risking catalyst for Mendell's Rost 1-26 recompletion project. By securing a permit to inject 5,000 barrels of water per day at 1,200 psi, the company has validated the technical feasibility of its water disposal infrastructure, which is critical for helium extraction. Prior field tests demonstrated the well's capacity to handle 4,500 barrels/day at 640 psi, confirming its ability to manage production volumes from Rost and potentially offset wells. This eliminates the need for further lower-zone testing, accelerating timelines and reducing capital outlay.

The integration of the Brobee well with the Rost project is now well underway, with final preparations including the installation of water tanks, pumping equipment, and an Electric Submersible Pump (ESP) from Halliburton's Summit division. This equipment, coupled with the existing mobile Pressure Swing Adsorption (PSA) plant capable of processing 800 Mcf/day of raw gas into 99.999% pure helium, positions Mendell to achieve production targets on schedule and within budget.

Scalability and Sector Consolidation: A Dual Advantage

The Brobee well's capacity not only supports the Rost well but also opens the door for future production from adjacent wells. With ten wells of interest in Southwestern Kansas, Mendell is strategically positioned to leverage its existing infrastructure to scale operations. The Rost well's proximity to the Jayhawk gas processing plant and the Hugoton gas field—a North America giant—further enhances this scalability. By tying into established gathering networks, the company minimizes the need for costly greenfield infrastructure, a critical edge in a sector where capital efficiency is paramount.

This infrastructure readiness aligns with broader industry trends. As helium prices remain elevated (trading at ~$125 per thousand cubic feet as of Q2 2025, up from ~$90 in 2022), consolidation among operators with proven extraction capabilities is accelerating. Mendell's ability to fast-track production while maintaining cost discipline makes it a prime candidate for acquisition or partnership, particularly as larger players seek to secure stable helium sources.

Inelastic Demand and Investment Rationale

Helium's inelastic demand profile, coupled with supply constraints from aging U.S. government reserves and geopolitical bottlenecks in global production, creates a structural tailwind for companies like Mendell. The Rost well's 5.1% helium composition and 2,900 Mcf/day flow rate are commercially viable, especially when processed to 99.999% purity—a grade that commands a premium in industrial and high-tech markets.

For investors, the Brobee approval represents a near-term catalyst in a market starved for new production. The company's current market capitalization (~$150 million) underprices its operational progress and strategic assets. A reveals a divergence that suggests undervaluation, particularly as the sector trends upward.

Conclusion: A Near-Term Buy

Mendell Helium's Brobee well approval is a microcosm of its broader operational discipline and strategic foresight. By mitigating production risks, enhancing scalability, and aligning with helium's inelastic demand, the company is well-positioned to capitalize on sector tailwinds. Investors seeking exposure to a constrained market with clear catalysts should consider Mendell as a near-term buy, with a price target of $1.20/share (a 50% premium to current levels) by Q4 2025. The path to production at Rost is now firmly within reach, and the infrastructure is in place to turn this into a scalable, long-term asset.