The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Over £50m spent on exploration already between HE1 and Noble Helium..
HE1 not in much of a bargaining position for a JV given the cost of exploration to date.
So probably in the interests of HE1 shareholders to see the EWT be successful in which case HE1 should be in a stronger position to negotiate funding for the phase after the EWT be it jv for raise etc..
"The well successfully flowed a high concentration of helium to surface from Basement, at a measured concentration up to 4.7% helium"
That's from a HE1 RNS. "up to" I guess basically means maximum. These companies like GHY and HE1 should provide the average or all the readings not just the maximum for better transparency?
Https://www.asx.com.au/markets/company/GHY
"Hydrogen at up to 86% purity and helium up to 17.5% air-corrected purity"
Not bad results thus far and on Australian soil versus Tanzania for HE1..
For comparison HE1 potential was 4.7% helium and 2.2% hydrogen..
So GHY could have towards 100% of it raw gas having value versus 4.7% + 2.2% = 6.9% of the HE1 raw gas potentially having commercial value..
Anyway not a major move on GHY think some are keen to see a flow-rate from them to see if it can be extracted - permeability mentioned in the GHY Ann today..
Market research with Anish Kapadia as per the link
https://www.google.com/amp/s/www.marketwatch.com/amp/story/investors-see-opportunity-after-decadelong-helium-shortage-what-you-need-to-know-0d1dc0ce
8 Sept 2021 Hannah & Partner this same guy Anish Kapadia had a HE1 valuation of 25p when it was 9p at the time subsequently fell to about 0.16 at its lows HE1 it appears..
https://www.helium-one.com/investors/analyst-research/
Anyway the new article gives a bit of a market overview.
Avanti Helium Flows 20 million cubic feet/day with 1.0% Helium from WNG 10-21 Appraisal Well
So 20000mcf/day at 1% = 200mcf/day of helium
HE1 Itumbula 500mcf/day at 4.7% = 23mcf/day of helium but still needs to be properly appraised via ewt
But gives an insight into flow rate importance.. HE1 marketing 4.7% or x4.7 the 1% of Avanti is more than offset by Avanti flow-rate on this well being 20000mcf/day versus 500mcf/day or x40 in favour of Avanti.. So HE1 would need 8 or 9 wells to match the helium output from that one Avanti we'll at this stage - ewt pending where the flow rate can decrease or increase on the HE1 well through ewt..
Basil
4.7% 500mcf/day at US450mcf/day x 365 = US3.86m per year from that Itumbula well potentially...
Ewt needed to confirm the well in more detail
US4.5b in revenues for reference is equivalent to 116 wells running at US3.86m/yr in revenue each for 10 years.. So let's see how the ewt goes and some data from HE1 if the ewt is successful on potential scale of commerciality at Itumbula and contingent resource potential etc..
See Attached... Helium-3 super rare on earth and worth plenty. Easier to find on the moon however
https://www.washingtonpost.com/technology/2024/03/13/moon-mining-plans-interluner/
Noble 13/03/2024 Half Year Accounts
Exploration and Evaluation Expenditure
AUD 43,007,454 = £22,229,477
HE1 07 March 2024 Unaudited Interim Results
Intangible assets - Exploration and Evaluation assets
£32,385,522
Hence total spend about £55m between Noble and HE1 for exploration and evaluation it appears thus far?
Noble drilled two well Mbelele-1 & Mbelele-2 whilst HE1 has drilled Tai and Itumbula.. So maybe total of about 4 wells for £55m between the two companies? Due to the high costs I wonder how much collaboration and information sharing there is? Or are they competing with each other as first with a major breakthrough that results in contingent resources and eventually commercial reserves could be at an advantage over the other?
Anyway expenses seem high overall combined across both companies so they'd be hoping for a major breakthrough soon. HE1 maybe EWT testing proving what they have and for Noble proving up their shallow gas cap at a guess...
Any comments on these costs? £55m across about 4 drill targets between the two companies thus far?
@Crypt when HE1 was about about £5m marketcap not long ago it was a decent punt at those levels..
However at current levels the risk versus reward does not stack up against something like Renergen given a similar marketcap today and Renergen with already 13.6bcf of helium and 0.4tcf of methane proven commercial reserves worth billions..
13.6bcf at US450/mcf worth US6.12b in the ground for instance plus the 0.4tcf of methane..
Upside as high as 400bcf of helium for Renergen per the North American Helium Conference plus methane whilst HE1 prospective resources are 138bcf..
Plus Renergen pilot plant already producing LNG with liquid helium due soon and a much larger Phase 2 plant backed by the US Govt expected by about 2026-2027
The crazy thing comparing Renergen to HE1 now their marketcaps currently are similar.
Renergen was about a marketcap 4 times larger when the Reserves were proven up but due to pilot plant delays and Lassonde Curve maybe its fallen back..
At these levels Renergen is undervalued in my opinion and has ebitda of about £250m per year projected from 2026-2027 phase 2 and still only about 145m shares on issues but expect some dilution from an upcoming nasdaq ipo towards funds to build its Phase 2 plant - mostly covered by debt from the US DFC (US govt) and another bank loan..
In my opinion upside could be higher for Renergen from here and less of a risk versus HE1
"It should be noted those wells were only 100M apart but no production interference was detected during the test."
That's a good find LOTM as per the Renergen announcement "Ann: Quarterly Activities/Appendix 5B Cash Flow Report 31/03/23" they mentioned the Reserves Report (done by Sproule) assumed wells 300m apart and they had successfully drilled 5 wells 100m from each other without any indication the wells are communicating with each other..
So the last Reserves Report done by Sproule for Renergen back in 2021 had 13.6bcf of helium and 0.4tcf of methane. Enough for their Phase Two project to supply about 8% of the global helium market..
As the globe uses only 6bcf of helium per year and Renergen already proving up enough for their current plans they haven't done another Reserves Update..
But when Sproule does an update for Renergen that 13.6bcf of helium could be a fair bit higher based on wells 100m apart rather than their assumption of 300m apart. Also Sproule only includes an area with shallow wells at 3% and low flow rates of about 125mcf/day. Renergen hit a sandstone zone with 12% helium and 850mcf/day flow rates so that zone could be substantial potentially also and not included in the Sproule reserves Report for Renergen.
See the link below to the 2023 North American conference page 41 that highlights that Renergen could have a staggering 400bcf of helium in its project area.
Who knows if HE1 can prove up its geology to eventually declare some proven commercial reserves of helium. Renergen meanwhile has proven up its geology and could have massive upside to prove up more commercial reserves of helium long-term.. If HE1 can get enough helium proven up like Renergen to underpin a major global helium project they'll be doing well.
https://issuu.com/rmagdenver/docs/program_book_1.18.23
@onsolidground
"Investing Goals do you think that Noble might have been one of the interested parties that Lorna Blaisse dropped in here last interview that had phoned and were looking to view our hot stacked Rig?
Recent successful drill - far deeper than Nobles shallow well focus - fit for purpose - 70km away - locally sourced."
Yes anything is possible. Rig hire cost itself is only a portion most of the cost is from the contractors however?
Given HE1 has to ship stuff in for the EWT I'd say they don't want to risk the drill for other parties in the meantime?
Both HE1 and Noble might also be waiting for a wet season to pass so no action for either till Q3?
Joe yes however it's the high cost of drilling that increases the risk of dilution for early investors.. Still money to be made if timed right however on HE1 going off past history..
Take this extract from this article on Renergen nearby to Tanzania in South Africa well costs:
"the costs are only $80,000 per well."
Helps explain why Renergen still only has about 140m shares on issue after being able to define reserves of 13.6bcf of helium and 0.4tcf of methane.. And plan on supplying about 8% of global helium from about 2026-2027.. Whilst HE1 now has 3.7b shares on issue..
Unfortunately Noble and HE1 have had much higher drill costs and yet to define any contingent resources let alone commercial reserves thus far.. Hopefully for them there large raises yield some contingent resources and/or proven commercial reserves soon otherwise more dilution given the many million per well they seem to be spending..
https://www.energyvoice.com/oilandgas/africa/238489/room-to-run-for-renergen/
Joe see from 52.15 in this Pulsar video.. They claim only $2m for their Minnesota well whilst $15m for others elsewhere? Maybe referring to Noble and HE1 wells costing $15m each? Anyway wells can be less than $0.5m if shallow and hard to generalise big variations?
But Noble and HE1 both seem to be in the higher cost range per well this far?
https://m.youtube.com/watch?si=48qJe-X8JBu9NXPl&v=ptzy3AHHRLc&feature=youtu.be
"John (muppet) noble raised 14 mil for 2 well tests = 7 mil each. HE1 want to EWT itum 1 and either finishing Tai3, which will then need well testing = 7mil. Or drill an appraisal well = min 6mil, which will also have to be well tested"
Joe is that the Dec 12 Noble raise? If so look at their presentation that day. 14m was actually to cover 7.5m in cost overruns from previous well? Aud4.5m is said to be for Mbelele appraisal and testing which they want to do with a lower cost drill as I guess the shallow 85m gas cap is the priority..
But if they go for too cheap a rig maybe they'll encounter issues too if not fit for purpose,
https://www.asx.com.au/markets/company/nhe
Thinking about it decay of uranium and thorium and ideally rocks one billion years old highlights how slow accumulations of helium can take to build up. So you'd want the helium trapped underground and not seeping out?
Also 55.30 very interesting the guy who was the HE1 co-founder talking up positive Pulsar didn't have helium leaking out of ground.. ie sounds like he's not a fan of helium seeps like at Itumbula for HE1?
Pulsar yet to flow test which sounds like the May time frame.. They claim only US2m per well versus US15m elsewhere? Is that referring to Noble and HE1? See 52.15 into the video. These guy(s) are ex-HE1 and co-founder(s) of HE1 back a decade or so ago
https://m.youtube.com/watch?si=48qJe-X8JBu9NXPl&v=ptzy3AHHRLc&feature=youtu.be
https://m.youtube.com/watch?si=D03MS22kX4WvMT4f&v=EMb7pToPOuY&feature=youtu.be
Comments from about 3 months ago on hotcopper nhe - basement plays appear to be tricky to navigate?
"Basements are tricky to assess. They have low porosity and very low perm in the matrix and rely on fractures for production. If they did not have total losses when drilling basement, then doubtful there would be much production capable from the basement."
https://hotcopper.com.au/threads/ann-mbelele-2-operations-update.7694446/page-182?post_id=71193451
"Pulsar Helium. They had helium flow to the surface as a result of the volume of air they pumped into the well, lasted 5 hours"
If flow over a short period like 5 hours isn't sufficient then note 1.20 into the HE1 video. HE1 have flowed helium only over unspecified shorts periods via dst.. So an extended well test will be important to confirm what HE1 can flow over an extended period of time by the look of it. So that confirmation could be a decent HE1 price catalyst down the track potentially in conjunction with other data on resource size in the area etc..
https://youtube.com/watch?v=r8VLUWiQ_hI&si=Bx3vLYdo5UdvSBU5