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Strong communication from our neighbours Noble two days ago. They seem to see a multi $bn asset. GLA.
https://m.youtube.com/watch?v=KAx7DYwXztk&feature=youtu.be
Blue. Agreed downhole samples and RFT pressures are needed for reserves CPR and calibrating commerciality/NPV. We did however not know the Karoo would be twice the thickness in 2021! This is the deepest we have drilled with high precision gas monitoring. Noble mud gas and downhole samples does also provide some benchmarking that we did not have in this basin until a few weeks ago. Furthermore, the basement penetration and evidence of fractured reservoir/source directly under the Karoo is arguably a step change in derisking this as a discovery.
Confident in the mud gas shows described by HE1. Noble reported only 3x background at much shallower depth. They have stated the downhole samples look like they are coning in the middle of their range, which is a discovery. If HE1 is 2x Noble at much greater depth, I can understand why Lorna was smiling when talking about increasing frequency and quality of shows when briefing the market at TD. Twice the thickness of reservoir in Karoo, with shows all the way down to the basement. Potentially a > $1bn asset if you benchmark the mud gas data against Noble.
There is also a whole lithium angle enabled by the oil and gas preditor rig for HE1. Just look at which majors have partnered with onshore Lithium explorers/producers in the Europe geothermal space. Deep Helium targets enable effective calibration of where the Lithium is in Tanzania.
Rukwa Tai-3 is in my books a producer keeper if we see anything above 0.8% at depth. The decision HE1 is probably making this weekend is whether to deepen into Basement and complete/test or suspend as is with liner. CPR with PUD reserves next year could significantly help the company raise Debt instead of drawing down more on Equity to drillout other targets the Tanzanian regulator is keen on.
Tai-3 mud gas data comparable to Gold Hydrogen with their basement Helium discovery: "the associated gas revealed an air-corrected helium content of up to 3.6% with the remainder being nitrogen. This suggests that the basement is generating helium in significant amounts, and that the overlying weathered zone may act as a reservoir retaining the helium in commercial concentrations."
That would put the He resource in the Karu above the 3U (3bcf) as just over 1% was assumed in 2023 CPR. Double the Karu reservoir thickness, double the He concentration = 6bcf? 75% recovery factor = 4.5 bcf? 450 $/mscf = $2bn? 10 wells at $8m a well plus a processing plant at $50m. Sounds fairly healthy economics.
The two most prolific He reservoirs in the states were less than 10%.
First thing in 2024? Proved Undeveloped Reserves (PUD) CPR update with downhole samples? Debt (e.g. CAPEX for a process plant and export) to be financed against reserves point forward? Could move very quickly into production with Bondholders over Equity.
> 2-3% He is what I calculate at 1400m pressure/temperature based on 30 ppmv mud gas He concentration at surface.
We'll verify compositon (He grade) and partial pressure at rigsite. Lab will provide verification and more detailed compositon with isotope analysis (understanding He source and calibrating basin model). Lab will also provide standard pvt experiment and assay detail if there are any heavy metals / water condensate etc. Should be enough from rigsite for discovery, although He1 may want to rubber stamp for proved undeveloped reserves.
The real value is in casing off what they have drilled minus the collapse at the bottom and then drill down through into the basement with a follow up well test. This is what we did in Lancaster (hur) and Clair (bp). The fractured basement likely drains overlaying fractured cover as per HUR 2021 CPR reserves. The He is also likely higher grade and partial pressure in the basement.
· The Company has now successfully pulled the drill string out of hole at Tai-3
· Wireline operations and initial logging underway
· Downhole sampling to commence once logging is complete, with capability for onsite analysis
What the PBLJ was good for was appraising fractured basement/cover West of Shetland. I thought you might have had drilling experience there, but alas it must have been another Joe I was talking to during the well test.
· Whilst drilling into Basement, a fracture zone was encountered, which yielded elevated helium readings at the top of the Basement and led to partial losses of drilling mud
Lets get the pipe out the hole first, but ... thinking ahead ... once we have a well-oiled drilling machine and few Helium discoveries with production, the preditor rig could be used in tandem to explore for geothermal lithium locally? Testing the basement and characterising water chemistry basin mechanisms could put He1 with a proprietary dataset? Must be a stack of targets without a capable local rig waiting for the next $/Li upcycle? BD spin out of a Li1 JV?
Agreee that samples are king.
However there is useful info in the mud gas. The GGE example you reference at x15 is for one small zone which represents a maximum He concentration for the whole well. Furthermore this zone does not appear to have been sampled? Apples for pears?
Key is that we have had consistent repeatable measurements above x6, which is higher insitu concentration the deeper the interval (higher pressure and expansion).
Agreed in principle. That's also assuming hydrostatic. If there is any height of gas column the pressure and concentration should be higher. The mud gas does also dilute things- although not an absolute measurement, the increasing trend with depth is good relative measurement and what we want to see.