Member Info for DropD

... looking forward to around 10 wells in production. That could be $40m pa pretax profit. At p/e of 5 that gets Trek close to his £1 per share valuation. Say half gets given back as divs, that could be 10p per share pa. I'd be v happy with all of that!

Inexplicable but determined seller with us. Makes no sense to me with what we've got and what's round the corner. Still, what's sold is bought so reinforces support around current levels..

Yes indeed: 'The Helix team has a lot of experience. They have already outpaced many of their helium startup competitors. If I were investing in a helium startup, I would strongly consider Helix as a benchmark for the performance of the others. '

Kaeren I completely agree. Don't be a hostage to fortune. Anyone who knows anything about HEX knows they are going flat out to get to profitable production. This must be the fastest ever transformation of a mining co from ipo to explorer to producer - certainly is in my experience. And we know that Bo Sears will (i) do it all properly and (ii) communicate progress effectively and in a timely way. There is a huge amount to look forward to with HEX in short, medium and long terms, under the leadership of probably the most respected person in the He industry. Let's enjoy it all!!

Such excellent news. Confirms the hypotheses about the continuation of the geology through to the southern dome and of the helium bearing zones, and that the He is there in similar concentration. To me (non geologist!) this confirms the southern dome likely to be open for our business, and that our hopes for expansion of field, resource and production are well-founded.

Well done once again Bo and team

4x revenue very low given effectiveness of HEX, quality of mgt, relatively straightforward business model and growth plan, likely bigger resource than currently modelled, safe jurisdiction, high and rising demand for He ...

Pre-tax income based on $500/msf, but opinions seem to be higher price will be achieved, esp with US-based reliability of supply guaranteed.

I believe they will be able to add new production wells to their network quickly.

And with high enough production they'll be able to justify the liquification plant which opens the door to considerably higher prices.

All above is why I'm optimistic Trek's £1 will be achieved quicker than some may expect!

Obv all imho! GLA

Upward pressure, over 25.5p to sell now, I'm guessing Ask will push above 26p soon.

Kaeren - very good post, and I agree. This is still early stage, pre-production, with a whole variety of news expected in coming weeks and months, so of which could be hugely positively significant for HEX and shareholders.

So though its on a good run at the moment, I think every chance this will continue through the year.

Jiskoot - thanks for finding and sharing. Should we read anything positive into this e.g. Bo not shy about including Inez #1 in the vid and declaring it part of the Helix He-production backbone? Not long to wait as Inez drilling confirmed started on 22nd June...

Thanks MG, good link. Hoping forward momentum remains with HEX and sp pushes ahead tomorrow either because we have positive news from Inez #1 or in anticipation of it. Could be a great week. GLALTHs

Reserved - thanks. Of course they're moving straight on from Inez to well #5. Success at Inez pretty much guarantees it at #5 too. Arguably more importantly though success with these 2 wells confirms likely prospectivity and productivity of the southern dome to add to that already established for the northern. This opens the doors for as many wells as Bo can drill, as quickly as he wants. And we know they are making good progress with the processing infrastructure to join it all up and getting first He to market by end summer.

I guess Inez #1 drilling may be around half way through by now. Very excited to hear progress. Positive outcome will have a huge impact on the company. GLA LTHs

Thanks for your v informative posts Tiburn. A tremendously exciting year ahead for all involved in HEX. I guess Inez and well #5 are v important for the suggested strategy and rapid expansion as they'll confirm the potential productivity on the southern dome as well as informing calcs for the increased resource?

Yes indeed!

Are we thinking they'll probably complete this and maybe well #5 before doing the resource update?

They will soon be 50% up. Not a bad few days work. Their investment has provided a real boost to sentiment and awareness. Also provided confidence in financial underpinning / support for HEX, and potentially provides future funding options if required. Another masterstroke by Bo!

Tiburn - model with $1000/mcf He selling price, 9 wells, 10% tax, p/e 8, gives target sp £2.07 and nearly £48m pa annual earnings which would fund further well development etc... Same caveats etc as I offered before!

3LB - IHNC mixing up £ and $ in his analysis (making sure we're awake!). $4m is approx £3m at current exchange rate. He @ $500 is about £384

Tiburn - re your post fri 17:08. I know it's hypothetical as all references to 4 Brainstorm wells at the moment are just guesses / hopes ... But I've put 9 wells into my model. BigBiteNow also said yesterday's broker update said tax rate to use in 10% on advice from the company.

With 9 wells producing at rates similar to wells #1-3, ave pre-tax income $4m per well, 10% tax, p/e 8, gives sp of just under £1.04. Annual earnings per share would be about 13p = about £24m pa. This could be enough to fund both further well development and pay initial dividend (though as mentioned yesterday I suspect Bo will prioritise rapid progress towards target number of wells over divis in short term).

I'm aware its unlikely a company jumps instantly to a target p/e, the market usually needs to see a period of solid performance and delivery. With HEX I suspect that could be a relatively short period - I am very confident Bo and team will deliver.

GLA LTHs

BBN - you posted that while I was working on the following, so some overlap, and some additional info I haven't included, but for comparison:

I’ve got a simple p/e calculator set up. The numbers are eye-watering (perhaps its too simple!).

Starting with revised initial base case = 5 wells, average $4m pretax profit per well (i.e. after production and corporate costs etc), initially negligible tax, very conservative p/e of 6, gives sp 48p.

I think this is what is now being targeted as the initial campaign this summer, assuming wells #4 and #5 are as good as the first 3.

I’m struggling to find p/e ratios for pure-play helium producers. There are a number of factors in HEX’s favour though – product demand high and growing, limited competition, reliable jurisdiction and markets, straightforward production, huge reserves, fantastic knowledgeable and driven management with a lot of their own ‘skin in the game’. All of these in my view contribute to justifying a higher p/e.

In my model, increase to 8 wells, same ave. profit per well, allow 15% tax, p/e of 8, gives sp of 87p. This could be the scenario as we approach year end.

The $4m figure is based on $500/mcf sales price and production rate of 2000 mcf/day. I think it’s been mentioned that significantly higher prices can be achieved and the wells to date have flowed naturally at much higher rates, suggesting higher production could be achieved if required. So there is potential for increased profitability.

8 wells together will generate around $2.7m of pre-tax free cash flow per month. More than enough to fund further drills and expansion, and potentially also allowing dividend payments (though I think Bo will want to get closer to his vision of full production before starting divis)

Just for fun I plugged 20 wells, into my model, p/e 8, allowing 20% for tax and royalties (accept this may be low), gives sp of £2.05! At that point free cash generated is around 25p per share per annum; no further drilling required so a large proportion potentially comes out as divis.

GLA LTHs!

Thanks guys. So $4m less estimate for tax is a figure we could use for earnings in a p/e calculation?

Does anyone know / have a view about whether the projected $4m annual income per well is gross or after all costs (other than taxes which from memory were specifically excluded in this estimate)?