Mr. Robert Rohlfing reports

DESERT MOUNTAIN ENERGY CORP. PROVIDES OPERATIONAL UPDATE: NEW MEXICO AND ARIZONA

Desert Mountain Energy Corp. has shared an update on its operations in New Mexico and Arizona, as well as a review of the audited financials for 2024.

New Mexico operations

The helium processing facilities at the West Pecos Abo gas field in New Mexico were brought on-line over a span of several months. As stated in a press release dated Oct. 30, 2024, the company faced various software issues that were present from the initial assembly, as well as instances of incorrect, substandard and missing components. All of the issues have since been rectified, and the plant is separating helium from the natural gas stream. It is anticipated that the first truckload of helium will depart from the project site shortly. Based on current gas production volumes, the company looks toward filling a truckload every 18 to 21 days depending upon customer specifications. This will change as gas volumes and helium percentages increase.

Desert Mountain is currently selling natural gas on a monthly basis, without any sales being made into the Waha hub. The company is actively engaged in negotiations to secure a more favourable long-term natural gas agreement.

Recently, the Desert Mountain gas field in the Rozwell area has been identified as having significant potential for hosting data centres. The company has been conducting a pilot project on its West Pecos gas field to assess the feasibility of operating small modular cryptocurrency mining equipment and small data centres. Additionally, a local gas producer has partnered with a major data operator to construct a 250-megawatt net-zero energy data centre. Desert Mountain is actively investigating the streamlining of the collection system to facilitate the increase in the percentage of helium and the transportation of processed gas to a mainline for use by a data centre.

Continuing to own its workover rig allows Desert Mountain to efficiently and economically carry out targeted maintenance on its wells, avoiding additional expenses such as mobilization, rig-up, rig-down and standby costs. This enables Desert Mountain to selectively assess and test different perforations, identifying and isolating those perforations with the most productive gas-bearing zones.

Additionally, Desert Mountain has conducted maintenance on various sections of older pipelines as a pro-active measure to prevent leaks and spills. As of now, there are no wells in the field that require artificial lift for extracting salt water to boost gas production, resulting in substantial cost savings for the company.

The company has developed and finalized plans for near-term, interim and long-term strategies to achieve the goal of maximizing natural gas and helium production from the existing wells in the field within the next 24 to 36 months. Over 60 per cent of the company's leases in New Mexico are situated on federal Bureau of Land Management properties, and the transition in the administration in Washington, D.C., is expected to bring further favourable impacts to its operations in both New Mexico and Arizona.

Arizona operations

The company is in continuing talks with regulatory agencies and lawmakers to establish definitive guidelines that will foster helium production in Arizona. Desert Mountain appreciates the input received from the federal Arizona delegation, state legislators, the Arizona Chamber of Commerce and, particularly, the Tech Council members.

Desert Mountain continues to collaborate with Beam Earth Ltd. and Hethos Ltd. to advance its hydrogen opportunities alongside its helium projects in Arizona and New Mexico. The company is engaging in conversations with Beam and Hethos regarding the possibility of utilizing hydrogen cells to fuel a joint helium and hydrogen processing facility in Arizona. Additionally, talks involve the potential use of Desert Mountain's plant design in various regions. The focus of these discussions is centred on energy efficiency as Desert Mountain's plant design is believed to operate with an 18-per-cent reduction in electricity consumption.

In relation to the current legal action with the City of Flagstaff, the company continues its claim and multiple defences. On Jan. 8, 2025, the trial court dismissed three more claims against the company, reducing the total to six out of the original 11 claims.

2024 audited financials

The company changed auditor last year, and the new team finalized the fully audited financials, submitting them before the deadline. Desert Mountain achieved a 66-per-cent decrease in net loss, from 0.14 to 0.05 cent per share. Management is optimistic about achieving profitability in 2025.

About Desert Mountain Energy Corp.

Desert Mountain is a publicly traded resource company primarily focused on the exploration, development and production of helium, hydrogen and natural gas. The company is focused on helium extraction from different raw gas sources in an environmental and economical manner, supplying elements deemed critical to the renewable energy and high-technology industries.

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