Member Info for Blubay

Just read the BNL corporate presentation Kread, which you consistently refuse to do. All the projected commercial numbers and caveats are laid out very plainly. Then you can decide if you want to be more cautious about volumes or more optimistic about prices.

Kread - we’re in the middle of March, the amine unit is up and running and CO2 onsite liquefaction is scheduled in H1, so commercial sales should progress within weeks. On initial projections, the high grade CO2 should roughly match the revenue from the low grade helium, although if local spot helium prices do rise then the sums change a bit.

Honestly, this letter is just embarrassing, it’s full of errors and unrealistic expectations.

This is frankly delusional and presumably not serious?

With respect, arithmetic is not your strong point. If they produced 2,200 Mscf a month (that's not likely but say it was 2,000) and if they could sell low grade helium for $1,000 (also a very big if) then they might possibly gross $2m a month (which is just under £1.5m). Where on earth do you get £4m a month from???

Peaky - the numbers are all set out in BNL's December presentation, so there's need to reverse calculate or inflate the figures uncessarily. Just read the presentation. The unknown part is the input assumption as their illustrative model assumes the plant runs at maximum theoretical capacity every day without a break or an efficiency margin, downtime or maintenance. But if you apply a bit of caution it's fairly clear. It doesn't add up to £37m and the helium is not more precious or high grade, nor is it carbon free as the main product is CO2. It is worth a lot though and it's cheap to produce. For example, if they could sell 20,000 to 25,000 Mscf low grade helium a year at anywhere near $500 then that could be as much as $10m gross revenue. The CO2 sales might even be worth the same again at the quantity and quality they have.

The company geologist was put in the role of CEO but the boardroom is full of 'commercial sharks'. Their primary competitive asset as an early stage, pre-revenue small cap in a high risk exploration field was precisely their ability to raise capital on the markets (albeit very painfully for any long term shareholders). They've raised tens of millions to advance claims on unproven reserves in Tanzania and built out a fully functioning commercial operation in the US, all with zero debt in the company. If they invested their own money in loads of shares they'd have to keep trading them publicly to stay afloat, which would look far worse than not holding them in the first place.

No way of knowing without information on the output volume of the processing plant. They didn't have all the wells tied in to start and they were still tweaking the optimisation. If the plant was up to it's absolute maximum capacity running 24/7 then it might produce 2,200 Mscf helium for sale per month, or maybe 2-3 days to fill a trailer (not sure if the land owner's royalty gas is shipping in the same trailer). In practice, they might be starting nearer half capacity initially and there'll be a good bit of testing and tweaking to do. Hopefully under a week, but anyone's guess really.

Tell me what the scenario is. How many wells producing how much helium per day on average?

“Annual revenues could exceed $50 million to $100 million.”

Can you explain the scenario in which the annual revenue exceeds this much? For example if a typical well met the company best production case averaging 20,000 bbl/d water, yielding 25% volume gas, at 5.4% helium, then you’re looking at a bit more than 6 Mscf/d helium (more than 2,000 Mscf per year). That’s perhaps $250k per year (gross). Forty wells, maybe $10m per year. An estimate of $100m gross annual revenue would require maybe 400 wells each maxing out HE1’s geological model for the best possible case. I’ll be very happy if Rukwa nets a similar margin to Colorado. The value in Rukwa should be its potential longevity, compared to Colorado, rather than production volume.

The BNL price returning to 0.006 Ask could be significant for sure. Great news if they’ve cleared the offering. Still 0.004 on the Bid so can’t imagine anyone trading that 33-50% spread

The Nomad is also the broker and an MM, although obviously the three desks never pass each other in the corridor as that would be malpractice

The data provided so far from BNL on production and processing capacity points to the commercial estimates made at the time of acquisition being pretty much on target in terms of helium, but significantly enhanced in terms of CO2. The 'maximum' capacity of the processing plant would be 2,200 Mscf helium per month after allowing for the land owner's share. That's about 12-13 tube trailers a month, or one every 2-3 days (if the plant could be made to run at maximum theoretical capacity 24/7 all year). That's not doable in practice, so assuming headroom for variations in inflow, processing efficiency, maintenance, downtime etc, then perhaps 10 trailers a month or 20,000 - 25,000 Mscf per year tops. The estimated mid price for the grade of helium was approx $475 (in range of $350-600) minus local opex of $13. Very roughly then, maybe in the broad range $6-14m annual gross, pre tax or reinvestment and split two ways between partners. You might need to make assumptions towards the high end to accrue much more than $2m per partner net, although it's certainly possible.

A mid price estimate was given by BNL in their December presentation, together with a price range

@CrudeTrader it should’ve around double that after adding the beverage grade CO2 sales

I’ve just given you the link to the figures in the RNS/ASX from December. Nothing in that changes as far as I can see.

@Toffers

All the figures were published for BNL’s subscription offer

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-03040461-6A1304736

@kread

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-03040461-6A1304736

All the commercial projections were in the BNL corporate presentation a few weeks ago, volumes per well, total processing targets, market price ranges and detailed overhead costs.

Confirmation of integrated operation to start filling spot sales trailer was anticipated but the second part is very encouraging. They’ve made great progress on tying in the seven wells from the drilling programme. Piping all the way up to State16, which will bridge into the future Nortgern fields. Now five wells into production brings the plant closer to initial capacity with the other two on track to coincide with the CO2 liquefaction process. Good news 👍