Oilman Jim's Letter - Helium & Hydrogen
BSNLF BNL.AX BRNGF BRU.AX FHELF HELI.V GHYLF GHY.AX GRGUF GGE.AX HEEVF HEVI.V HLOGF HE1.L NBHEF NHE.AX PSRHF PLSR.V RHCCF RHC.V
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The letter today covers 10 small cap helium and hydrogen companies trading in the United States, Canada, Australia and the UK, all of which have recently issued news. The first ticker symbol after the company name is the United States symbol, .CN .TO or .V is Canada, .AX is Australia, and .L is the UK. Frankfurt symbols also have been added with the suffix .F.
Blue Star Helium (BSNLF BNL.AX) announced that it has spud the BBB #33 development well at its Voyager helium project in Las Animas County, Colorado. The surface hole has been drilled to 42 feet and the contractor has set and cemented the 13 3/8” casing. The well is now prepared for main rig arrival and drilling of BBB #33 is likely to complete in the new year. First helium product gas output from the Voyager development is expected during Q1 2024. BBB #33 is an offset well to the BBB #1 discovery well which tested the Voyager prospect in November 2021 and encountered a calculated air-free gas concentration of 8.8% helium in a 134 feet gas column. Voyager is located only 6 miles from the historic Model Dome analogue production, which produces a similar high helium gas composition averaging 8% concentration and an independent 2C resource estimate of 643 million cubic feet of helium net to Blue Star has been announced.
Buru Energy (BRNGF BRU.AX) announced an operations update for its hydrogen and helium business. Confidence in the prospectivity of its South Australian natural hydrogen and helium exploration portfolio has been enhanced with recent positive drilling results in adjacent areas with similar geological characteristics (see Gold Hydrogen below). The business has six Petroleum Exploration Licence and two Gas Storage Exploration Licence applications in South Australia and has recently been confirmed as the preferred applicant for an additional area, PELA 763, covering some 5,800 sq km to the northeast of the current application areas. Exploration for natural hydrogen and helium on these application areas will commence following the execution of land use agreements currently under negotiation and the subsequent granting of the licences. Buru has also been advised it is the successful applicant for six Special Prospecting Authorities with an Acreage Option adjacent to the Perth Basin and in the Goldfields area in Western Australia. These are areas highly prospective for helium and associated gases.
First Helium (FHELF HELI.V 2MC.F) announced it has commenced preparations to bring its gas gathering pipeline infrastructure into service in conjunction with the planned installation of the 15-25 well helium processing facility later in 2024. In addition, the company has finished its completion plan for the horizontal helium well, which was drilled and cased in August 2022. First Helium is targeting natural gas pools containing helium, similar to the historical pools found on the western part of the Worsley Trend. Based on an example from publicly available industry data, a single gas pool, the Leduc D3-D Pool, approximately 25 km west of First Helium's 15-25 well, produced 46 billion cubic feet of natural gas with approximately 1.0% helium content, over a period of roughly 12 years. Management estimates that the value of the helium produced from this single pool would be approximately US$230 million at a price of US$500 per thousand cubic feet of helium. The company currently has an inventory of 15 identified multi-zone drilling locations plus multiple follow-ups, all located on First Helium's 100% owned 60,000 acre land base.
Gold Hydrogen (GHYLF GHY.AX) announced completion of its Ramsay 2 well, with helium concentrations reaching up to 6.8% in raw gas from the Kulpara formation. These values would potentially make the Ramsay project a world-class helium project if replicated across the tenement. Schlumberger (now SLB) conducted the tests and results have been independently validated by a specialised third-party laboratory. Despite being only the second well in the company’s exploration program, it says multiple data points throughout the drilling campaign indicate the potential for a significant helium reservoir and a prolific helium system at the Ramsay project site, complementing the established hydrogen play. Latest news was the announcement of firm commitments for a A$14.8 million institutional placement at A$0.75 per share to existing and new institutional and sophisticated shareholders.
Grand Gulf Energy (GRGUF GGE.AX) announced that the work-over rig has been mobilized to the Jesse-1A well-site and a low cost operation to evaluate the wellbore integrity, isolate the lower Leadville, and flow-test the upper Leadville helium reservoir(s) has commenced. The maiden Red Helium project exploration well, Jesse-1A, intersected a greater than 200 foot gross gas column with 101 feet of net pay and 1% helium in the primary Leadville Mississippian Dolomite target. The current work program will facilitate a comprehensive helium gas flow test. Information obtained will be used to characterise the status of the current borehole and gas flow capacity to optimise Jesse-1A and inform the Jesse-3 new drill well design. The company’s Red Helium project is located in Utah, in the proven helium producing Four Corners area of the United States. The project has an independently estimated, gross unrisked P50 prospective resource of 12.7 billion cubic feet of recoverable helium, with over 29,000 acres leased.
Helium Evolution (HEEVF HEVI.V) announced that its partner, North American Helium, has spud Joint Well #2 on joint lands held at Mankota in Saskatchewan. Joint Well #2 is approximately six kilometers north of HEVI’s helium discovery at Joint Well #1, which was announced last month. HEVI will participate in the drilling of Joint Well #2 at its 20% working interest, which is estimated to cost the company approximately C$0.4 million net. Joint Well #1 had helium concentrations of 0.95%, more than three times the 0.3% level deemed commercially viable, and 96% nitrogen, with the balance comprised of fractional percentages of minor component gases. The well flow tested at 1.3 million cubic feet per day and a post-flow pressure transient analysis suggests the deliverability of Joint Well #1 could potentially increase by four to six times with stimulation. Helium Evolution claims to hold the largest helium land rights position in North America among publicly-traded companies, with 5.6 million acres of land under permit near proven discoveries of economic helium concentrations.
Helium One Global (HLOGF HE1.L 9K3.F) announced a company update. The replacement iron rough neck for the drilling rig has been purchased and is currently being mobilised from the United States. Installation is expected to be completed this month. Hydraulic and electrical maintenance and repairs are said to be currently nearing completion. Civils work at the revised Itumbula well pad is now complete and the rig has been successfully rigged down from Tai-3 and moved to Itumbula. The spud of Itumbula is now anticipated to be in early January 2024, targeting a deep seated basement fault. Site personnel have been reduced to minimise costs during the rig maintenance and repair period. A cost analysis and budgeting exercise in relation to the Itumbula well indicates a need for further funding and the company says it is advancing discussions with a number of investors.
Noble Helium (NBHEF NHE.AX) announced a trading halt. Expect an announcement tomorrow. Previous news last week confirmed that data collected from drilling the Mbelele-1 well indicates a 10-15 metre column of free gas within the upper part of the Mbelele structure, consisting of a mixture of helium and nitrogen. The company says it is now working with NSAI with a view to satisfying the requirements under the guidelines of the SPE-PRMS for declaration of a conventional helium discovery. Noble considers the free gas as potentially material to its early monetisation plans and intends to revisit this gas intersection as soon as possible with a small, low-cost rig for sampling and flow testing. Evidence indicates all of the reported reservoir intersections at Mbelele-1 and Mbelele-2 contain helium-enriched fluids. In numerous cases exsolution bubbles with elevated helium were identified in the mud system while drilling, demonstrating high levels of gas saturation. The company has completed drilling Mbelele-2 and is now proceeding to collect the data. Early indications are said to be excellent and consistent with the results to date at Mbelele-1.
Pulsar Helium (PSRHF PLSR.V Y3K.F) announced that the drill rig under contract for the appraisal well at the Topaz project is now expected to arrive on site mid-February 2024. In the meantime, the company has received the interpreted Topaz seismic survey data. A significant and distinct shear wave velocity anomaly has been identified at the same depth of 542 metres where gas containing helium was encountered in the LOD-6 discovery well. Pulsar owns 100% of the Topaz helium project in Minnesota and the Tunu helium project in Greenland, both locations with primary helium occurrences not associated with the production of hydrocarbons. Topaz was drilled in 2011 as a mineral exploration borehole and helium-rich gas was intersected by chance. It flowed 10.5% helium, with only trace hydrocarbons present. Pulsar says its efforts are focused on fast-tracking activities at Topaz to realise its potential.
Royal Helium (RHCCF RHC.V RD31.F) announced the start of commercial sales. This commences fulfilment of the company’s offtake agreement with its major North American aerospace customer, which has contracted to purchase its Steveville facility volumes over the next several years. Per Royal Helium, this makes the company the first publicly listed helium producer operating in Canada. The plant is engineered to process 15 million cubic feet per day of raw gas fed by two of the 100% owned helium wells with an output capacity of approximately 22 million cubic feet of 99.999% helium per year. Offtake agreements are at an average price of US$538 per thousand cubic feet. The facility is said to have an ultra-low operating cost due to it being self-powered by fuel gas co-produced from the two helium wells. The plant also benefits from carbon credits, which will provide a material additional cash flow stream. Royal Helium controls over 1 million acres of prospective helium permits and leases across southern Saskatchewan and southeastern Alberta.
More in the Private and International Letters.