Member Info for Blubay

MC - I have a different interpretation of the RNS wording. I read it as referring to the phase of testing of the ESP (prior to testing the flow rate of the well). I assume this phase covers the operations, as listed in the RNS, up to and including the point of opening the well. If it included the well test then I would expect those stages to be described. If that has gone to plan then I assume they are now in a position to begin testing the well, if the water management facilities are also ready to receive the outflow. I’m simply going from the list of operations defined in the RNS, rather than extrapolating beyond the text.

I read the wording of the RNS in a different way to you, that is all. I read that the equipment had been tested at surface prior to deployment, and that they had started to run the assembly down the hole in preparation for setting it at depth, final testing, and commencing of testing. It clearly states that the pump was not at target depth in the RNS.

"Once the ESP is set at the designated depth and the tubing hanger has been successfully tested, a final function test will be carried out before the well is opened and the pump activated. It is anticipated that this testing phase will take two to three weeks to complete."

So my assumption that it would take 2-3 weeks to deploy the pump, activate it and complete function testing, before commencing the commercial flow testing. I may be wrong of course. The only posts that seem to have been wrong so far were those encouraging buyers with early news predictions.

MC - "@Blubay s attempting a classic "moving the goalposts" tactic. By trying to redefine when the clock started, they are attempting to explain away the lack of an RNS today..."

I'm not the one moving any goalposts. You were the one who promised us imminent news start of last week and again this week. I wasn't expecting any news for 3-4 weeks from RNS personally, but happy to wait.

I think people are confusing the RNS date with the start of the pump test. The RNS was released after the delivery and surface checks of equipment and prior to deployment of the pump. They were running the complete assembly in the hole but hadn't lowered it to depth or tested it in position. The 2-3 week testing cycle only starts after that initial setup phase.

I'm not an expert but an update on initial production rate from Colorado would be helpful, although that might still need time stabilise. Also plans for tying in the next couple of wells or drilling infill, to bring the plant closer to its capacity. But we need to know also if BNL have made progress on their undersubscribed capital raise to bolster the development funds. Hard to predict what news we'll get when on the appraisal in Rukwa, maybe some kind of interim update on the initial flow rates and concentrations from the pump test. Consolidated news will probably take longer, combining those results with the most recent downhole data and the new hydrological studies that they commissioned.

BNL share price hasn’t moved, 0.004 is a sell and 0.005 is a buy. With a 20-25% difference on the spread no one is likely to trade any volume. If you buy at 0.005 you need the bid price to rise by 50% to realise any profit (from 0.004 to 0.006).

Don’t shoot the messenger. I’m simply quoting the company’s own summary of their internal modelling, which formed the basis of the feasibility study and which is assessed in the independent CPR. Unless you have access to inside information not released to the market, the ‘best case’ scenario is what they say it is. The unknowns are clearly outlined in the CPR. But if you prefer to pitch for a P10 scenario or a hypothetical claim then you should say so. If you have additional information then share your sources.

PS. The plant is not limited to 20,000 bbl/d, which you really should know. The proposed design capacity of the EPS plant is 100,000 bbl/d fluid processing and 500 Mscfd gas processing (nominally, drawing on five wells with a pumping capacity of 20,000 bbl per well per day).

Thanks, as announced with the EWT test results in 2024

"The well flowed naturally at a maximum flow rate of 2,701 barrels per day ("bpd") of fluid on a 36/64ths of an inch choke setting which equates to 834 standard cubic feet per day ("scf/d") of helium. 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"

The company's production modelling is based on a maximum 20,000 bbl/d liquid production, subject to the risks outlined in the CPR (and yes I'm aware bbl is typically an OG measure but it is one of the key variables in HE1's model so presumably it's still relevant). The ESP test phase should still give an indication of whether the target is deliverable.

I'm not arguing that 5.2% is too optimistic at all, it seems distinctly possible (although I disagree it can be treated as a baseline for commercial production, we can't know that yet). It would be great if it was higher.

Thinking ahead, what do people think would constitute positive results from the testing phase?

Presumably the three things to watch for are, (a) whether the pump can deliver sustainable flow rates comparable with the best case scenario, (b) whether the gas water ratio can be sustained or improved, and (c) whether the predicted average helium concentration can be achieved and sustained.

The modelling aims for 20,000 barrels per day (best case) to 12,300 barrels (lower case), with a gas water ratio of 1:4 (P50), and a helium in gas concentration of 5.2% (P50).

The liquid production is capped by the capacity of the pump. The GWR could come out better than predicted if more free gas can be flowed. The helium concentration readings have varied widely, so they could come out higher or lower (predicted range 3.3% to 8.3%).

Anything else?

We're not expecting test results Expo. We're waiting to hear that the pumping equipment has been successfully installed and prepared to open up the well and begin the testing phase.

The output capacity on the plant is around 72Mscf per day (2,200 per month), so we're probably on the way to half of that already. Selling that gaseous output to offtaker around $450 per Mscf might give initial sales potential above $5m per annum gross, rising closer towards $10m as the next wells are tied in. If wholsale prices continue to recover that should be certainly achievable. That should guarantee at least the baseline return projected at the project acquisition of $2-3m net accrual per partner per year just from the first stage helium, hopefully same again from the CO2, plus further field expansion. I'm not as sure about some of the larger numbers being touted for initial sales. More information on infill drilling and tie ins would be helpful, and whether there's potential to increase the Pinon plant capacity, or whether that comes down to the second plant being installed (I think three plants envisaged for the full development?).

How long do you think it will take to scale up the Pinon plant to full capacity? At the moment it's gathering gas from the first three wells, J31, J4 and J29. I think the combined raw gas flow from those wells totals around 950Mscfd initially up to a maximum projected 1500Mscfd (so, between 50-75% plant capacity, or roughly an output of 25-35Mscf of refined helium per day to the tube trailer). I think they planned to tie in five wells initially with the other two for expansion.

State 16 SWSE 3054 6 Mar 25 2.17 61.56 250 – 350 441

Jackson 31 SENW 3054 14 Mar 25 2.20 69.00 300 – 400 500

Jackson 4 L4 3154 1 Apr 25 1.18 85.93 250 – 350 450

Jackson 29 SWNW 3054 22 Apr 25 3.30 48.66 350 – 450 550

Jackson 27 SESW 3054 30 Apr 25 0.41 98.31 350 – 450 550

Jackson 2 L4 3154 15 May 25 1.22 77.77 300 – 400 500

State 9 SWSE 3054 9 Jun 25 1.52 80.48 400 – 500 600

The tube trailers carry compressed gas at c.98% purity (using compressors in the final stage of onsite processing). The trucks deliver this to either gaseous helium customers (as low grade helium) or to liquification plant customers (for production of 99.999% high grade helium). The compression is achieved onsite by running compressors. There's a commercial process flow chart on slide 19 of BNL's presentation. The high grade CO2 will be liquified onsite.

https://www.listcorp.com/asx/bnl/blue-star-helium-limited/news/new-corporate-presentation-first-production-update-3296361.html

Certainly HE1 is the cleaner horse for the race, no doubt about it. HE1 primary asset has always been its ready ability to access capital risk markets, however painfully in the past, just as it's been one of BNL's weaknesses. I might disagree about HE1 being 'the bank' as I think there's actually a business strategy option in which HE1 could function primarily as a finance partner for near to market prospects, rather than as a primary explorer (I'm sure it wouldn't be LB's preferred model but I can imagine SC pursuing that direction). Either way, I don't doubt that HE1 could step in again if needed to fulfil the project, although no idea whether that would be received as friendly or hostile. I'm unsure how much helium profit is priced in from phase one or phase two development, whether that remains on track without the full BNL fundraise, or whether the joint parties remain funded for the infills to bring the CO2 on stream (which is potentially the larger part of profit initially).

Sorry, yes it's a price floor not a price ceiling. Under the exchange rules the shortfall shares can't be issued for 'less' than the offer price, so there would be headroom for them to rise but the immediate barrier to that is the spread.

The problem for BNL is that their share price fell so far in the past that it ran out of decimal places on the ASX exchange. At a listed price of 0.004 / 0.005 the spread is +25% or -20% on every trade. That's why there's no liquidity, buyers at 0.005 risk a 20% loss if they sell and can only profit if the offer price ticks up to 0.006 (which is 50% above the current offer). It's just not an attractive trade. If they could do a 10 for 1 share consolidation then there would be more mileage for risk speculators and generate more liquidity.

"As for the A$0.005 'ceiling,' that logic expires on Monday when the shares are allotted. "

That's incorrect. A period of three months is allowed to complete the sale of shortfall shares on condition they are not priced above the offer price. Therefore the offer price remains in force until the remaining 80% of allotted new shares are sold, or for three months until they cease to be available for sale, whichever is the sooner.

BNL's aim was to raise a broadly equivalent amount as HE1 already raised for the next stage of Galactica development. They're at least half way short of their share at this point, so either they raise the rest, or HE1 contributes more (in exchange for a larger share of the profit), or the later parts of the development plan get scaled back.

I’m sure that’s what they’re hoping for. Share price has been a stubborn obstacle for them, maybe due to the huge spread resulting from its previous collapse. Unfortunately once they ran out of decimal places so the only increments available are 20-25% moves. A share consolidation would help liquidity.

Crypt - "The results are great for us. We have a fully funded partner at zero cost to HE1."

What do you mean? It's a minor disaster for BNL and has implications for the project development plan. They've raised only about 20% of their fundraise target, yielding just over AUD$1m (c. $700k) with a shortfall of approximately AUD$4.4m (c. $3m), and that's before paying the costs of the raise. ASX rules prevent them from listing the shortfall shares at less than the offer price, so they have three months to find buyers at that price or seek shareholder approval to re-run the exercise. Let's hope HE1 might be able to help them using their experience in capital markets, or perhaps move more aggressively to fill the funding gap another way to their advantage.