The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
They have raised £35m and drilled how many wells at Tai and itumbula?
In the US they can drill for about US400k for shallow helium wells about 300m deep that historically produced at like 8% and 0.75mmcf/day at Model Dome.
So to limit dilution ideally if drilling is expensive get a well with a higher flow-rate and/or reduce the spend per well where possible..
Noble focus and best chance to quickly monetise is the shallow gap cap. They Noble also mention longer term seeking to drill deeper maybe as the only place to flow helium to surface in the area is from the basement by HE1 at Itumbula.. No doubt they will be watching the HE1 ewt at Itumbula closely
https://www.linkedin.com/posts/noble-helium_managing-director-and-ceo-shaun-scott-provides-activity-7172733124542492672-v3Ih?utm_source=share&utm_medium=member_android
HE1 already did x23 from its low of about 0.16p to 3.7p. That's the easy move based on speculation from a low marketcap of about £5m with about 3.4b shares on issue at the time to about £125m marketcap..
If successful HE1 the next move up to £150m + needs something tangible to underpin it like eventually proving up some commercial "reserves" etc. and at scale
500mcf/day at 4.7% isn't bad..
HE1 presentations showed they wanted to be able to do one 40ft liquid helium per day. If that flow rate and helium concentrations can be sustained it'll take about 45 days or so to fill one 40ft iso container of liquid helium..
So extended well test vital to understand if that 500mcf/day at 4.7% stays consistent over a longer period or drops off? And if they can boost the flow-rate somehow..
Then further understanding what's underground in terms of helium in the area they could potentially extract and how many wells..
So if the EWT goes well is that the official discovery at that stage. So assuming the EWT is successful then they can start working on resource potential for a maiden contingent resource maybe..
Concerns are costs? These aren't cheap shallow wells like the US that have similar 500mcf/d flow rates at 5% with nitrogen costing maybe US300k per well.. These are deeper and costing what a few million per well? So HE1 needs to show they can keep costs down per well too ideally...
Eventually if successful HE1 prove up some "reserves" after a few more wells then offtakes along with the reserves can underpin finance for a production plant etc..
Just a potential paymthway above and still awhile to go I reckon in a success case
Conversion table here..
You'll find 23,5000scf = 23.5mcf of helium equivalent to about 110kg of helium or over 800 litres.. at least what I ended up with if accurate
https://keengas.com/gases/helium/
And you need to think gaseous helium for a balloon so in scf like this:
"The standard balloon size is 11 inches, which takes . 5 cubic feet of helium. For example if you have 1000 balloons you would need 500 cubic feet of helium"
So yes I get about 47000 balloon from 23500scf of helium
1 to 745 is the expansion ratio liquid to gaseous helium I think..
You don't put liquid helium into a balloon it needs to be expanded out to gaseous helium
"You seem confused between a discovery and commercial discovery."
See figure one at the link.
https://www.spe.org/en/industry/petroleum-resources-classification-system-definitions/
By definition nothing is proven "commercial" until upgraded into the "reserves" category..
If you have "discovered" status some prospective resources can be upgraded to contingent resources but thats still in a "sub-commercial" category.. Only if successful what's eventually upgraded into "reserves" are proven as being commercial..
Hence no such thing as a commercial discovery unless confirmation of immediate "reserves" being certified if you strictly follow the figure one at the link
3.35 into the video she said something like it's the extended well test that will demonstrate to us that we have a discovery here...
Still needs this extended well test to prove up its a discovery sufficient enough to declare in an RNS ?
Many have believed there already was a discovery even though not mentioned in an RNS..
Noting an official discovery needs to be industry standards sufficient enough that it has the potential to be commercialised later etc..
Hi Basil yes having hydrogen maybe a decent part of the reason HE1 ran off its lows of about 0.2p..
Next step let's see if HE1 comes up with a 2U prospective resource for the hydrogen. Then it can be compared versus GHY for instance which has a 2U of 1.3 billion kg for instance to see how it stacks up.
Basil I worked out yesterday 500mcf/day raw gas flow with 2.2% hydrogen only equates to about 30kg a day of hydrogen. Hydrogen doesn't go for like 100 times the price of nat gas but maybe two or three times the prices of nat gas I believe..
Hence 4.7% helium is worth much more than 2.2% hydrogen.. So really hydrogen to be a decent factor for HE1 ideally they find a sweetspot somewhere with a higher concentration of hydrogen.
Helium iso container about 1000mcf at US500/mcf weight about 5000kg of liquid helium so about US100/kg I think? Whilst hydrogen sells in the range of maybe US10/kg ?
"Agreed. Why do folk think they aren't doing the EWT until Q3? Is it a funding thing, long lead item thing, or something else? "
Could also be waiting till Q3 to get past rainy seasons?
Could be plenty of day traders or short term traders oblivious of the potential of not much happening to Q3 and thought things could be happening much faster
Triumph I reckon a few don't know the difference between mcf and mmcf ... m being Roman numerals for a thousand
Easy mistake for anyone new to the terminology thinking mcf means a million standard cubic feet when actually it's a thousand cubic feet
The below is an extract from next investors in regards to Noble. I think both Noble and HE1 have had costly drilling campaigns and both yet to declare a discovery in an rns or announcement I believe.. Hence concerns of plenty more spending and dilution moving forward.. Hence the below emphasises that if Noble as only needing to drill 85m to a potential gas cap can secure a much cheaper rig that will help their cause.. HE1 too should if possible show a cheap potential pathway moving forward to limit dilution
What we want to see next from NHE:
We are hoping the NHE share price can start coming off its lows in the near term as we wait for:
Confirmation that a less expensive drill rig has been secured: Shallow holes can be done cheaper, which requires fewer dilutive capital raisings for existing shareholders. NHE had a high cost of drilling its first two shallow wells using the “Rolls Royce” of drill rigs and large crews. We think the market will reward NHE if they prove drill costs can be materially reduced.
https://nextinvestors.com/articles/nhes-probable-free-gas-cap-6x-bigger-than-expected-this-upcoming-drill-will-find-out/
500mcf per day raw gas flow currently = 0.5mmcf/day
If 5% helium at US500/mcf = US12,500/day helium revenue potential from the well
If 2.5% hydrogen that's 12.5mcf/day of hydrogen.
12500 x 0.00236 = 30kg of hydrogen per day
At US10/kg thats US300/day of hydrogen potential from the well
So if the above is correct hydrogen percentages ideally need to increase to boost revenue potential as they appear low versus the helium
Feel free to correct my calculations if incorrect. Assumed US10/kg for the hydrogen so happy for what others think hydrogen can go for..
https://www.uigi.com/h2_conv.html
If it was shallow and didn't flow they use vacuum pumps I think..
Deeper wells maybe see the 26 Feb announcement "Jesse Leadville Ideal for Stimulation - Gas Flowrate Upside"
By engaged industry experts haliburton they potentially can go from 1mmcf/day to maybe 5mmcf/day via acid stimulation
https://www.asx.com.au/markets/company/GGE
Noble figures are them holding a carrot that "potentially" they have a free gas cap which could hold 2bcf or more of free helium gas. Enough to support a ten year project at 0.2bcf of production per year..
They haven't managed to get a free gas sample yet or flow tested it so it's potential only. They need to drill down about 85m in the next few months to determine exactly what they have do Noble.
If they do prove up 2bcf of free gas that flows well Noble will do well but time will tell.
For anyone referencing GGE please note this article extract "If commissioned to be built today, the Lisbon Valley Gas Plant would cost approximately $400 million to build inclusive of the helium plant, according to the company."
GGE has a helium plant right next to it which would cost US400m to build today including the helium plant..
https://www.moabtimes.com/articles/lisbon-valley-gas-plant-now-selling-purified-helium/#:~:text=If%20commissioned%20to%20be%20built,in%20phases%20over%20the%20years.
500mcf/day×0.047×365 = 8578 mcf/yr = 8.578mmcf/yr = 0.0086 bcf/yr of helium
So significantly lower than 0.2bcf/year if calculated correctly
Blubay GGE Grand Gulf Energy is right near to a Paradox Resources - Lisbon helium plant which has spare capacity.. That plant would cost a few hundred million to build today I think
So bear in mind HE1 is in Tanzania a long way from any helium processing plants.
PS GGE are looking at increasing the flow-rate to 5mmcf/day currently per their recent announcements
Cup of coffee best flow-rate I've seen is 20mmcf/day or 20000mcf/day of raw gas by Air Products Model dome. Only 0.4% helium for them but flow rate is 40 times that of HE1 so more than offsets the helium concentration being about 12 times better for HE1 than Air Products who supply NASA etc.. in the US..
If a deep expensive well my guess is you'd like 5mmcf/day of raw gas flow.. If a shallow cheap well than 0.5mmcf/day is ok I guess.. A few cheap wells at 0.5mmcf/day around 4% in the US that use IACX cheap processing plant to get gaseous helium