Member Info for Blubay

Come on Bobby, you know as well as anyone else that the CO2 flow from the Galactica wells is both far in excess of expectation and of a higher market quality (beverage grade). The farm in was negotiated on assumption of a roughly 2:1 net income stream for helium/CO2 but it now looks closer to 1:1. So there should be at least a 25% revenue lift over plan when that's realised, plus whatever premium is in play for short to medium supply shortages (and yes, there's a CO2 squeeze in some markets also).

I doubt they would publish that information. There isn’t a publicly traded market for helium so wholesales are by private contract and prices commercially sensitive.

I think that’s an unfoundedly negative view when there’s masses of news due imminently from Colorado over the coming weeks. The key milestone is the CO2 production coming on stream by June, which should hiked well above the original target at acquisition and potentially doubling the initial revenue. Then there’s the announcement of how the millions just raised will be allocated to field development and further increase in revenue. We should be getting that news of infill well drilling at Galactica or extension into Pegasus.

Just for reference/context. ITW1 was spudded in January 2024, to evaluate both the basement fault system and the conventional Karoo. TD for that drill was 961m. In August 2024 they deepened the well to 1129m. In February 2026 they tested the ESP but were unable to set it lower than 1,061m, at the upper end of the primary basement, due to ledges in the hole. They set a packer in the lower Karoo at 840m but were unable to isolate the basement from dilution during the test. After the ESP they announced that a new forward plan would be needed, targeting other locations in the licence area but then in the most RNS they stated that Itumbula/Tai remains the focus for their farm in proposal. That might perhaps suggest some new insight and modelling of the problem or feasibility?

That's not what happens though is it Stan, i's to do with the number of reports. Perfectly factual posts within the rules get reported and removed and criticisms of certain posters get removed, while blatant breaches of LSE rules don't get removed. I had two posts removed yesterday that were well within the rules.

Which I think is a sound long term business strategy. I’d rather see them make more near to market acquisitions/farms than wildcat operations. AIM explorers are the most high risk of all risk shares, great for volatility trading but not suited to investment. I like the fact that HE1 has the skill set/potential to move beyond the model of a junior explorer.

They’re simply saying they they’re looking for an industry partner rather rather than a bank or investment fund. That’s significant but covers a wide spread. HE1 was an industry led partner to BNL’s farm in, so it could cover any kind of player, big or small, from Rift to Renergen to Sinopec or Linde. Given the ambition to accelerate the project they may be hoping for the deeper of those pockets but I don’t think you can read off the type of partner from the language.

What’s your source for the 99.999% purity from Rukwa?

It’s not simply about the current conflict or the shipping. The immediate issue is the bomb damage to the main natural gas plants in Qatar, from which much of the strategic helium supply is a byproduct. We don’t know the precise scale of damage but it looks like it could take up to three years to restore full production. The second issue is simply the incentive to hedge against supply dependency on vulnerable natural gas production. Colorado answers short term demand in a safe jurisdiction and can be quickly ramped up. Rukwa would have significant long term strategic value for the East Asian market if proven.

The suggested timescale sounds plausible. They’ll need to design the programme of further appraisal, raise funds for that, mobilise the rig and long lead items, drill, well test, analyse, then mobilise another ESP test. But it’s interesting that they’re now talking about Itumbula-Tai rather than ‘other’ locations suggested in the RNS. That suggests they might have a more positive theory now on the test data. If they could prove reserves in the current basement fault by drilling on target then they’d be on a faster road to raising funds to develop the pilot production system, requiring another four or five wells on target and commissioning design and build of a processing plant. If they could find a partner to help drill the appraisal well before the end of this year, and achieve positive test results say early 2027, then they’d could be lined up to start drilling production wells during that year with a view to first gas processing after that. So 2-3 years seems reasonable for an accelerated roadmap if the appraisal went well and the fundraising was successful.

Looks like a sound business strategy of “preserving our existing cash reserves for production-ready milestones”, while finding an industry partner to help fund the further appraisal work needed in Rukwa, which is a longer game.

Nice to see a couple updated confirmations in those CEO comments.

I guess their job is to run the company not to provide an emotional support service for nervous PIs. We're only in mid April and there's been 11 RNS announcement this year already, that's more market updates than many companies.

As they said in that RNS, they need to go away and write a new forward work plan, analyse and model data, select new drilling targets, revise their engineering assumptions and methods, make new cost estimates, plan logistics, prepare a new business case, present that to potential farm in partners. You wouldn't expect them to have all that covered in a few weeks. Anyone who thinks the doors to some magical data room opened on 17 February are pulling your leg. People constantly complaining about what companies do with the salaries, that's what they're doing.

RNS - "The Company will now continue to evaluate the results of this test. In particular, it will seek to increase its understanding of the sources and interaction of the helium enriched fluids that have been identified. This will require further drilling and testing, which will likely focus on primary fractured Basement targets at other locations across the 480 km2 Mining Licence area. A number of these targets have already been identified by the Company, and many of these are at shallower depths where the Basement is juxtaposed against faults.

During this evaluative phase, the Company will also consider additional data acquisition options which will enable a more detailed evaluation of Basement fractures and connectivity. Future work programmes will need to focus on appraising the full potential of the Basement helium play."

I don't see any goalposts being moved, what are you referring to? Nothing's changed, the ESP results are just what they were on announcement, two parts success and one part failure, two steps forward and one step back. That's pretty normal in O&G exploration, nothing to get exercised about and we move on with expectation of a further programme of data collection, drilling and appraisal, hopefully with a supportive industry partner to share the risks. It's an innovative and risky venture and like everyone else I hope it reaches a very positive conclusion. In the meantime, Colorado is going great.

For the avoidance of doubt, from the 16 February RNS

"The ESP was set 1,061m measured depth ("MD") within the fractured Basement, which was the lowest point at which the ESP could be set in open hole at the time of running in. This depth was slightly shallower than planned due to open hole ledges and the pump was positioned at the upper end of the primary Basement target. A packer was set in the lowermost Karoo Group at 840m MD to reduce comingled flow, but due to the nature of the high NtG2 and connectivity in the Karoo reservoir, the data suggests that isolation of Basement was not fully achieved."

As they said when starting the ESP test - "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". That was the aim of the test.

The test went well on two out of three counts, fluid production was well above the low case production scenario (short of the high case they used for the feasibility study), the helium concentration held up very well under pumping, but the gas water ratio collapsed. They have a good hypothesis about why that happened, so they no need to test that with further programme of work.

As the chairman said:

"The testing delivered consistent and reliable operational performance, with ESP flow rates exceeding expectations and sustained helium concentrations in line with anticipated ranges. Whilst the gas water ratio was towards the lower end of the expected outcome range, the results provide valuable technical insight and further support the Company's understanding of the subsurface system."

And the CEO:

"We now need to increase our understanding of the Basement fault and fracture play, where we believe there is the potential to increase GWRs and helium concentrations. In order to do this, a further work programme will be required"

I don't think they can be much clearer.

The pump was set short of its target depth in the well due to ledges in the bore. That meant it was nearer to the upper boundary of the basement and Karoo layers than intended. They tried to isolate the basement fluid system but they weren't able to prevent dilution from water above. They can theorise about whether that's an engineering challenge or a geological one (too much porosity to stop water drawing down under negative pump pressure). We know the readings increased with depth back when they were deepening the well in 2024, and from the EWT. They haven't said whether they started off with higher helium readings when pumping that diminished or whether the high sample concentrations were sporadic.

With all due respect, I don’t believe the project is at a risk stage where a Tier 1 global gas field developer would farm in. It’s possible but unlikely. I don’t believe that’s what they mean by an ‘industry partner’.

I also think you’re jumping the gun on the June statement as the plant will only be transitioning to higher production with the CO2 coming online. There should be some initial revenue from Q2 but I wouldn’t really expect much of a settled income pattern before Q4 and the AGM update. Announcement of first conteact sales would be very helpful though.