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I know there is a lot of enthusiasm but I feel a bit more cautious about big helium discoveries here. I’m new to this, but having looked at their CPR, no doubt there is a lot of helium in this area seeping out everywhere but the problem is how you trap it with the right geological configuration (reservoir and especially seal). Most of their prospects (although not all) are 3 way dip closures meaning they rely on a fault seal in the 4th direction and that’s quite risky already with common oil and gas prospects and probably even more risky with helium which requires really good seals (generally evaporites) and we know that helium is leaking to surface through faults. I’m not saying it’s impossible but I see significant risk there. Having said that I see good potential for the share price in the short-medium term, I guess they will probably encounter helium shows in the mud system during drilling enough to generate a lot of enthusiasm, but then the real assessment will be the well testing…
@Adrian87
Have you looked at the Geological cross-section showing Itumbula and Kasuku?
Would be interested in what you think.
page 22
http://www.helium-one.com/wp-content/uploads/2020/11/259989-Project-Apollo-CLN-reduced-memory-Final-13.11.20.pdf
The cross section shows that you can have a variety of different play types in this area which is good, however again I feel a bit uncomfortable about all this faulting. Most of these prospects seem to rely on sealing faults (providing an effective lateral barrier for the accumulation), however as you can see from this cross section some of these faults extend all the way up to the surface into young sediments, hence faulting has been active until very recently and may still be active at present day. In general, old faults that have not been active for a long time (geologically speaking) tend to provide better seals, hence again I see risk linked to leakage along faults, and the seeps whilst demonstrating the presence of helium, may also be indicative of a leaking system (at least around the big faults). In general, I feel these guys have done good technical work and have probably adequately captured the risk in the report, there is a case for being even more conservative but you can see from their work that the risked prospective resources are about a tenth of the non-risked resources, indicating that the chance of geological success here is just over 10%. Something that people don’t like to emphasize to shareholders but important to bear in mind when investing in this type of projects
Thanks Adrian87
Thats a good summary. Just to add, CoS is 20%, likely the Seal parameter weighing the CoS aggregate down. I didn't see the details anywhere of breakdown.
To add, Hannam & Partners ran their valuation using the risked volumes in their paper.
On risks, i would have preferred to see 3D seismic completed ahead of any drill campaign. Whats your take on the 2D seismic quality, from the limited screen grab you can see on the report?
Sorry I gave the wrong page number, not sure how that happened as I looked at the cross-section to get the page number ?.
I was wondering about the faults reaching the surface while others end below the river bed, all I could find was some seal, while others allow migration. All learning for me..
So glad I asked.
Its interesting they have not chosen any of the sites where the faults a covered by the river bed.
Mbuni is not shown, would like to see that now. Its probably public information, I had a good search but failed..
Thanks, much appreciated..
Come on Elon. Give us a Twitter shoutout!
Hi Adrian87
Having read all you wrote - your concerns are all very valid and totally something any of us invested should research into (if not already done).
The reason why my mind still strongly feels this project is worth the risk (for me personally) is because of the skillset and experience of the people behind it - from the board of directors to the CEO down to even the drilling company being used. There is a wealth of experience, research, and care being taken by HE1 I feel that negates a lot of those concerns for me.
Could there be dust in the first drill? sure, anything is possible! The question is, does the company have the means and skill to find a viable reservoir within Rukwa before moving onto the other two locations? I strongly feel like they do and hence why I have put my capital into it.
Obviously, if anyone does have strong hesitations then they should only invest whatever they won't lose sleep over if things don't go as planned initially. For me, the company seems like a once-in-a-lifetime opportunity and something I simply can not ignore but as always DYOR!
GLA
Hi deepbluediver,
I fully agree with you they badly need 3D seismic or at least additional infill 2D lines. Looking at their prospect map on page 106 of the pdf, it seems the spacing between the existing lines is around 4 km. It would have been ok if this was an exploration well in a simple large anticline, but we are dealing here with tilted fault blocks, lots of faults and structural complexity, a lot could be going on within those 4km that we don’t get to see. The seismic quality for what I can see looks ok, these are shallow structures and so imaging shouldn’t be a problem. What concerns me here is also being able to accurately tie the stratigraphy from the wells to the seismic, as there are only two wells at this stage. Again, that’s ok if you a targeting a simple bump, but with this degree of structural complexity, you may easily drill a well that is not in an optimal position.
Relooking at the helium play system model (page 96 of the pdf), I can’t make full sense of the trapping mechanism they are invoking. Clearly, they recognise that faults are a migration pathway for helium (from the basement where it’s generated up to the surface helium springs), yet at the same time these faults are also preventing helium to migrate to the surface just by the right amount to fill a trap. Faults can have a dual behaviour but typically during different geological events, providing a barrier when they are not active (and not always), allowing migration when they are active. The slightest movement along these faults would cause fracturing, and even the smallest fracture would be enough to make everything leak out…and again we know that helium is leaking to surface because of the seeps….
Hi GLA,
Thank you for your comments, glad to hear that you feel strong about the management. I don’t know them and I might be too critical here, but so far I see a lot of problems and significant risks, unless I’m missing something. I agree if the management is well experienced, and with the help of additional data, eventually they might be able to find something quite valuable, but it might be a long ride…perhaps at this stage makes sense to me to invest a small sum that I can afford to lose and see how things develop...
Written text can be notoriously easy to misinterpret, so let me explain that I'm genuinely interested - no slant intended.
Adrian87 - what's your background ? You're clearly deeply knowledgeable in the field of geology and mining, but you've suddenly popped up here on HE1 with narey a post to your good name. I like that you're keeping our hopes in check (keeping them to more realistic expectations) so do keep it up. A share like HE1 will have a lot of rampers, several well-informed cheerleaders and needs a couple of counter-balances such as yours (IE: well informed, presenting evidence).
So I'm just interested to learn how you know as much as you do. Don't feel compelled to reply if it's intrusive, of course.
Helium One (AIM: HE1) ("Helium One" or "the Company"), further to its announcement of 18 February 2021, is pleased to announce the commencement of seismic data acquisition with mobilisation of vibroseis trucks and geophones to its Rukwa Project (100%) in Tanzania.
Highlights
· Mobilisation of data acquisition team, vibroseis trucks and geophones.
· 150km of infill 2D seismic targeting multiple trapping styles.
· Interpreted seismic data will define optimal well locations and reduce risk in drill targeting.
· Final technical input prior to commencement of Helium One's maiden drilling campaign in 2nd quarter 2021
Close spaced seismic data acquisition will be focussed in areas of known prospectivity to assist in providing greater clarity on the subsurface structures which Helium One believe have the highest chances of successfully discovering Helium. The seismic campaign is fully permitted and benefits from strong community and governmental support.
I am no Geologist and leave that to the professionals, I do know that the Geologist that went on to complete the analysis post 2D reprocessing has a very good track record for drill success post 2D interpretation. Obviously he did this long before the 2D infill. It would be very interesting to hear his thoughts on the infill, alas I believe he is now out of the loop.
Seeps to surface of high concentration does confirm the Helium present along with the 2D reprocessing and the Airborne gravity already completed and hence the 138 BCF P50 CPR.
It's all abut the drill bit, trap and seal and possible commercial quantities. A high risk, high potential reward multi target drill programme from May onwards.
Best of luck
The figure on page 106 includes the infill lines, in yellow which I find really hard to see. Combining the current and infill lines the spacing looks to be 1/2-1 km, less in some cases. As the spacing is not consistent I would think they know roughly where the best locations are , and are fine tuning. There also appears to be an increase in lines at a 4th location Tai, maybe the 4th drill. Both Tai and Mbuni are missing from the figure on page 93, I wonder if these differ.
Thats the only info I can add, if its worth adding..
The same infill figure on page 13(double checked this time) is a lot sharper,,
http://www.helium-one.com/wp-content/uploads/2020/11/20-11-04-02-Helium-One-Presentation_RTO_Verf_V1.pdf
Have you seen the Thesis, chapter 5 is specific to Tanzania, might add something to the picture..
http://etheses.dur.ac.uk/12573/1/Full_Thesis_Danabalan_2017_with_corrections.pdf?DDD15+
That infill spacing is approaching what is apparently regarded as a dense grid.
A 2-D grid is considered dense if the line spacing is less than about 1/4 mile [1,320 ft; 400 m].)
The advantages of 3-D include the following:
True structural dip (2-D may give apparent dip)
More and better stratigraphic information
Map view of reservoir properties
Much better areal mapping of fault patterns and connections and delineation of reservoir blocks
Better lateral resolution (2-D suffers from a cross-line smearing, or Fresnel zone, problem)
Thanks, Adrian87 - by the way, my name isn't GLA - that simply meant Good Luck All :-)
I would highly recommend looking up the experience of the drilling company and the people involved, notably: Ian Stalker, David Minchin, James Smith, and Principal Geologist Lorna Blaisse who has +13 years of Africa and North Sea experience; delivered successful exploration campaigns in Chad, Liberia and Uganda.
There is a slide about the board in the main HE1 presentation from November at around 15 mins 54 seconds:
Link: https://www.youtube.com/watch?v=NMNTd0HJ3vM&t=954s
Interview with Laura where she actually addresses some of the issues you mentioned also:
Link: https://www.youtube.com/watch?v=KKOXwTeg61s&t=3s
The drilling company Mitchell drilling international - offered to take equity for the 3rd drill and also do an extra optional 4th hole for equity - this is almost unheard of in recent times and shows confidence in the project.
Link: https://www.mitchelldrillinginternational.com/about/history
The good thing is that they totally have 3D seismic funded and coming after these initial exploration drills - that will give greater clarity going forward to target optimal helium locations.
I was reading the RNSs for Royal Helium, which was trading at 0.08 when they started the drilling works reaching 0.91, and then they had their results. They found Helium, but a fraction of what we are aiming to find; below is the initial quote from the last RNS:
"Royal Helium Announces Initial Testing Confirms Economic Helium Concentrations at Climax
April 6, 2021
SASKATOON, SASKATCHEWAN – (April 6, 2021) Royal Helium Ltd. (“Royal” or the “Company”) (TSXV: RHC) is pleased to announce that initial gas sample test results have returned elevated and economic levels of helium concentration from multiple formations at the Climax helium project, with tests returning levels ranging from 0.33% to 0.94% from the Deadwood, Souris River and Duperow formations. The company will now commence long term production testing of the most prospective zones to confirm flow rates and ultimately resource size".
Incredible what just the drilling can do to a share price. I am sure they price wouldn't be at 0.5 today should they have had better Helium levels.
ST
Yes the "One" in Helium One probably means it will hit £1 a share... ^_^
Interesting video on Helium's making rags to riches and why we should choose it; as if we didn't know! ;0)
https://youtu.be/gse_Y7kF770
ST
Hello Adrian
Good notes, enjoying our discourse on the subject. By chance, have you had a look at this?
http://etheses.dur.ac.uk/12573/1/Full_Thesis_Danabalan_2017_with_corrections.pdf?DDD15+
Its from one of Prof Gluyas' students which gives some insight on the subject matter- generation, traps, charging, loses, etc. Ive done some cursory reading but not a detailed review (thats coming) but what is interesting is it touched on the subject on faults / healing with respect to salt deposition in chapters 5 & 6.
Away from the thesis (and geology) and onto your second point, on whether any sand body / trap (deeper) that shares a path (both charge and leak to surface) could charge up with gas moving through the faults onto to surface (shallower), mathematically, which you can derive from first principle (Newton's second law) show that a shallow section would get filled up should it is connected to a path (fault in this case) which also leaks out to surface. the rate of leak vs charge into the reservoir would be dictated, and simply replicated using a combined Darcy and Hagen-Poiseulle's Laws. This can modelled mathematically using analytical means (pen and paper, easiest and straight forward) or through numerical means (software).
DYOR
@noob
I got the impression from the DME video that they classed each wells multiple targets as an asset.
Once 1 is not commercial they just drill down to the next..
I assumed the bottom filled the top, but obviously that depends on seal and migration paths.
Energen said their wells have been producing the same levels of helium since first recorded, an ongoing natural process.
Its going to be interesting following this, and hopefully we will be handsomely rewarded too
With the free cash flow this company will be capable of achieving, thats where dividends are produced..
Hi Everyone,
Many thanks you for all your comments and for the links. I started to look at the thesis, clearly some good work has been done there in terms of research and geochemistry. I’m still on the learning curve for helium, but if these systems behave similarly to typical conventional gas traps, again it doesn’t help that all the current prospects are 3 way dip closures and hence share the same risk from that perspective. I have seen prolific gas traps in tilted fault blocks with very recent structuration and big faults extending up to the surface similarly to this area (eg. Tazerka and Oudna light oil fields in Tunisia), but they are not that common and rely on significant present day active charge. It would be nice to see if there are any analogue fields in the area to prove that this kind of trap configuration can work. Whichever way you put it, that is a risk that also adds to other unknowns in this area such as reservoir effectiveness.
Anyway, I would also like to draw your attention to the current prospect definition, and I’m only mentioning the most obvious problems:
- Prospect Mbuni: where is the data that defines this prospect?? Go on page 106 of the pdf, figure 8-1, zoom it in, nicely. There is only one seismic line at the edge of the prospect (the white dashed line, as the yellow lines have not been acquired yet). Not even a single seismic line in the opposite direction across the prospect…having been in the oil industry from several years, this seems to me quite a bullish interpretation! Let’s look at this a bit better. Notice the western corner of the prospect (towards the left-hand side of the image), all the elevation contours within the prospect seem to converge into one point. This is an artefact created by someone to close the prospect and create the structure that you are seeing on this map, you have no data there!! As far as I’m concerned this could be a tiny pimple or a larger structure, or something completely different to what they are proposing, who can tell?? You have no data across the prospect.
Maybe they used gravity data for somewhat defining the area of this prospect? But gravity data is not a substitute for missing seismic data, you rather integrate seismic and gravity data.
Don’t get me wrong on this, I like the concept and also the geology, but I just don’t feel that this is something you would consider drill ready at this stage, and I do wonder why they are doing things in this order. To me it would have made more sense to acquire at least some infill 2D data first, then drill the wells and try to target at least one 4 way dip closure even if with a small volume (if fault seal is a risk, try to minimise your risk, don’t put all your eggs in one basket), then acquire proper 3D seismic and evaluate new targets.
I replied to one of your other posts recently along the same lines (sic).
Infill seismic acquisition has taken place and is currently being interpreted to finalise drill locations.
Who knows they could possibly announce that 4th drill depending on what they come up with.
https://www.investegate.co.uk/helium-one-group-ltd--he1-/rns/commencement-of-seismic-acquisition/202103160700073231S/
Maybe they have not divulged all the survey results due to possible competition or local greed. This is Africa. Then again it's not West Africa. WaWa: West Africa wins Again!
Well known CSM Engineer's saying
Hi Adrian87,
That document you are looking at is from November of last year - HE1 is doing new infill 2D across the prospects before the exploration drills to be followed by appraisal and 3D seismic projects after.
The diagrams in the document are from the previous seismic images that HE1 reprocessed to use alongside their own new up-to-date seismic program.
All this has also been mentioned by the CEO multiple times via regular updates.
So actually everything you thought they should be doing, they are!
What I like about this article is how they give importance to Avanti’s management. I love the Avanti chart and of course that on a read across HE1 are not even on the first step! And that’s why we don’t get a mention? Shhh...
https://oilprice.com/Energy/Energy-General/Why-Helium-Could-Be-The-Next-Commodity-To-Boom.html
Trek
Hi Adrian87
page 13, yet again much improved/sharper slide showing 2D infill lines and original,
http://www.helium-one.com/wp-content/uploads/2021/04/21-04-15-Helium-One-Presentation-April-2021.pdf
Reading your post then looking at the directions and positioning of the infill lines adds to the bigger picture, certainly learning from your posts..
thanks