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The multi day exercise looks like a well managed distribution to de-risk a larger position. Very tentatively, I would venture that a small-mid equity fund may have built a speculative position (or even retained one via an association with the CLN distribution?) in anticipation of the current news cycle. If so, they haven't run for the exit on news but they may have de-risked through orderly selling into high liquidity surrounding the event. For example, they might be trading a portion of their total position for example while retaining an interest. My hunch would be on a proprietary / hedge-fund book and there are some similarities to the CLN distribution process, a different kind of 'whale' to the one suggested previously, more of a shark. But that's complete speculation for which I have no evidence.

Helx, you're only factoring two out of three variables and ignoring the gas water ratio. It's not a helium concentration in the water, it's a helium concentration in the gas, in the water. You have to factor the gas in the water before you factor the helium in the gas. They pumped six times more water but containing five times less gas, so overall the implied helium production would be way less than hoped for, if those results were replicated (but that's the point of now testing it all again on different wells to try and improve on that).

Thanks Dai, you'll do this better than me but I don't think they reported the gas water ratio in the EWT results. That RNS was also quite diplomatically crafted to focus on the positive gas composition and the projected best case scenario. However, the CPR with access to the modelling data summarised it clearly enough. According to Table 3.2 and Figure 3.4, the 6.2mscf helium production reflects the highest case. The low case was near zero and the best case was above 1 mscf (while acknowledging the cautious nature of the CPR). To summarise

P90 - GWR 0.04 and He 3.3%

P50 - GWR 0.25 and He 5.2%

P10 - GWR 0.99 and He 8.3%

The new ESP results bottomed the CPR P90 case for gas ratio (0.05) but tipped over the P50 case for helium concentration (5.4%). They didn't mention whether they still believe the liquid production rate could be raised towards 20,000 bbl/d but it did exceed the CPR low case of 12,300 bbl.

Exactly, the 'liquid' production rate increased six-fold with the pump, at an average of 15,000 bbl/d, which is good (although only about 75% of the 20,000 bbl/d modelled as the best case after the EWT). Within that 15,000 barrels of water there was an average of 5% gas (compared to 25% gas in the EWT model). Within that gas there was 5.4% helium (compared to 5.5% in the EWT model). From the EWT results RNS (4 September 2024)

"Internal modelling demonstrates that this could increase to 20,000 bpd of fluid with artificial lift in the development phase. On this basis, the Company estimates the actual flow rate would increase to 6,176 scf/d of helium, when applying an average concentration of 5.5% helium"

On that basis the ESP test might have yielded approximately 4,632 scf/d from 15,000 bpd of fluid, if the gas ratio and helium concentration remained the same. The helium concentration was pretty similar (a bit less) but the gas ratio only sustained one fifth of the EWT result so, possibly only one fifth of the helium per barrel of fluid. It's not a great idea to extrapolate like that from headlines but on the back of an envelope it's less than 1 mscf/d at 15,000 barrels and bit over at 20,000 barrels.

Helx - it’s 6x the water not 6x the helium

If you’re going to extrapolate from the ESP results you would have to reduce the estimated helium yield by more than 90%, compared to the model used for the feasibility study (based on the EWT). But hopefully it could be much improved if they can do it again without flooding the well.

I think the strategy is clear and reasonable - pushing with development of Galactica to maximise the Pinon plant capacity for CO2 and helium production as quickly as possible, maximise income from that. Develop a new plan for the additional appraisal activity needed in Rukwa, prioritising the least dilutive options for joint finance initially. Makes sense. Hopefully they are also looking at further acquisition opportunities closer to market.

I totally agree that the results support the stated forward plan in the RNS to progress with further exploration and appraisal. The fractured basement play is an exciting and innovative approach. If it works it’s game changing. At the moment the results do not yet support the previous plan in the CPR to move into early stage production. If they did then the RNS would say this. I don’t think it can be clearer.

Then why did they not announce this? The whole purpose of the test was to try and increase the GWR and the helium concentration in the hope of advancing from contingent resources to bookable reserves. That has not yet been proven so they now plan to drill more appraisal wells in other parts of the licence area. There’s a very plausible hypothesis to explain the collapse of the GWR at higher flow rates but it has to be evidenced with further appraisal.

Expo, they cannot develop the EPS on the basis of those ESP results because it’s nowhere near the parameters of the planned scenario for feasibility.

Can you point to the misinformation? Which bit do you mean?

The RNS announcing the sustained flow from the discovery EWT established the belief in a maximum production rate (although that was just the maximum pump capacity). It said they believed that if they could pump 20,000 bbl/d then they might yield 6.1 mscf/d helium. The CPR accepted that ‘best case’ for the purpose of ‘scenario planning’ but preferred the more cautious low case of 12,300 bbl/d for resource estimation. The ESP test sustained more fluid than the low case, but less than the best case. However the key purpose of the test was to examine the gas composition at higher flow rates. The hope was to increase the gas water ratio and the helium concentration. The latter did not increase but held up OK. The former simply collapsed, but there may be an explanation for this. They need to drill more wells to find out.

The stock market doesn’t publish information on buys versus sells, only trade times and prices. Ever trade has a buyer and a seller. You can only infer whether a trade price was nearer the bid or ask price at the time. Some blocks have traded in an ambiguous zone where sells might get flagged as buys. Some brokers and MMs may also transfer shares among themselves in ways that are difficult to interpret from the trade prints.

The feasibility study for commercial scenario planning, as modelled in the CPR, was based on pumping 20,000 bbl/d from a typical well, at 25% gas to water ratio, with a helium concentration of 5.5% in that gas. The ESP test yielded an average of 15,000 bbl, at 5% ratio, containing 5.4% helium.

I trust you thanked him last time for his commentary on the CLN share buying whale, while you held your shares all the way down from 0.9p to 0.3p?

As MC said, he was at the AGM where he got inside information about the good intentions of the CLN ‘investors’. He went in deep with multiple brokers to buy multi millions in the retail offer and said he wouldn’t sell a single one of those shares. His long professional expertise allowed him to tell us that no CLN holder could possibly sell any of their shares. When they did sell he identified the whale who was buying them all up. When the price collapsed he said he’d actually made more money trading the drop than he’d lost by holding, which must have been a lot. Now he’s found another whale buying everything while the price falls. It’s truly intriguing.

The purpose of the ESP test was made very clear before it started. To quote the December RNS…

“We remain hopeful that by being able to increase the flow rate from this discovery well using an ESP, we will see increases in the helium concentration and gas-water ratio.”

The test did not demonstrate this, unfortunately.

Certainly on a balance of probabilities it’s hard to imagine a ‘whale’ who got the nod on those test results last Thursday leaping in to buy up the company

I think it more likely there’s been a managed distribution to derisk an accumulated position, by a market maker or broker who was holding stock in anticipation of demand on results. Someone in the know anyway as the trading started two days before the RNS. The pattern of block distribution has been quite similar to that carried out during the CLN process. Possibly reconciling negotiated cross trades between affiliated parties, possibly under the same roof. But just idle speculation, time will tell. I’m not expecting a TR1 but you never know 😊

What's your current estimate of the size of the buyer's accumulation to date, prior to seeing a TR1? What about the new MM, could they also be a large accumulator building up their own book in anticipation of demand from either investors or shorters?

Definitely looking forward to first helium sales from Colorado and confirmation of the dual flow of high grade CO2 processing. That's a huge milestone. It would be great to confirm the remaining tie ins or infills and confirm the first plant is approaching its production capacity.