Helix Exploration Bolsters US Helium Assets with Strategic Acquisition

• Helix Exploration, a helium explorer listed on the London AIM market, has acquired the Rudyard Field project in Montana.
• The company's main focus remains the Ingomar Dome Project, with plans for a $2.5M appraisal well in Q3.
• Helix aims to minimize dilution by using debt financing for future development, including a potential $12.5-15M pressure swing absorption plant.
• The US helium market is experiencing a shortage, with increasing demand due to factors like the CHIPS Act.
• Helix plans to move quickly from exploration to production, with potential for rapid cash flow generation.

About Helix Exploration

Helix Exploration is an emerging player in the helium exploration and production sector, with a primary focus on developing assets in the United States. Listed on the London AIM market, the company is led by CEO Bo Sears, who brings extensive experience in the helium industry. Helix Exploration's strategy centers on identifying, acquiring, and developing helium-rich properties in geologically favorable areas, with the ultimate goal of becoming a significant contributor to the US helium supply chain.

Interview with Chief Executive Officer, Bo Sears

Recent Acquisition Expands Portfolio

In a recent development, Helix Exploration has announced the acquisition of the Rudyard Field project in Montana, a move that significantly expands its asset base and potential production capacity. This strategic acquisition, located just 40 miles south of the Canadian border, adds a known helium resource to the company's portfolio and complements its flagship Ingomar Dome Project.

Bo Sears, CEO of Helix Exploration, explained the rationale behind the acquisition: "It's a project I've known about for quite some time. It all stemmed from research long ago. Texaco had drilled a well in 1960, found inert gas at high volumes, prodigious volumes with 1.3 to 1% helium. They plugged the well and went home because they were not after gases that would not burn."

The Rudyard Field acquisition was executed through a combination of a low upfront cash payment and share issuance, demonstrating the seller's confidence in Helix Expiration's vision and expertise. This structure aligns the interests of both parties and conserves capital for development activities.

Ingomar Dome Project Remains the Flagship

While the Rudyard Field acquisition is an exciting development, Helix Exploration remains firmly committed to its Ingomar Dome Project. The company is on track to drill an appraisal well in Q3 of this year, with an estimated cost of $2.5 million. This well is crucial for gathering essential data on flow rates, decline curves, and overall deliverability, which will inform future development decisions and potentially unlock financing options.

Sears emphasized the importance of the Ingomar Dome Project, stating,

"Ingomar is our marquee project. It is the one with the most expanse. So it is the one we are focused on primarily. That is not to say we are not going to allocate some resources to Rudyard. We should. We need to. The fact of the matter is we are still in a shortage today and we need more molecules to fill that need."

Development Strategy & Capital Efficiency

Helix Exploration's approach to development is characterized by capital efficiency and a focus on rapid progression from exploration to production. The company's strategy involves a phased exploration process, starting with a single appraisal well to gather critical data and delineate the field. Based on initial results, the company can flexibly choose to drill additional wells or move directly to production. Helix Exploration is also considering the potential deployment of a small, modular pressure swing absorption (PSA) plant to begin helium production quickly. This approach allows for organic growth, using early production revenue to fund further development and expansion. By implementing this strategy, Helix Exploration can minimize upfront capital requirements while maintaining the flexibility to scale operations based on resource potential and market conditions.

Financing Strategy

Helix Exploration is taking a strategic approach to financing its operations, with a strong emphasis on minimizing shareholder dilution. The company recently raised £7.5 million ($9.4 million) through a share placement, providing capital for near-term exploration activities.

For future development, particularly the construction of processing facilities estimated to cost between $12.5-15 million, Helix Exploration is exploring debt financing options. This approach is common in the industry and allows the company to leverage its assets without diluting existing shareholders.

Sears highlighted the company's financing strategy:

"We want to cash flow as quickly as possible and we want to do that without diluting our shareholders for certain. We have contacted many debt financiers. We believe, and that's a very common approach in my industry, there's a lot of plants today that are debt financed and they do really well."

Market Dynamics & Demand Outlook

The helium market in the United States is currently experiencing a significant supply shortage, creating a favorable environment for new producers. Several factors are driving demand, including the semiconductor industry's growth, spurred by the passage of the CHIPS Act, which incentivises US semiconductor manufacturing – a process that requires substantial amounts of helium.

The limited domestic supply is another factor, with major producers like ExxonMobil's Labarge Field operating at maximum capacity. Geopolitical concerns are making reliance on foreign sources like Qatar and Russia increasingly problematic. Additionally, helium's unique properties make it essential in various industries, including medical imaging, aerospace, and scientific research. This supply-demand imbalance creates a robust pricing environment and ensures a ready market for new helium production.

Production & Processing Considerations

Helium production presents unique challenges and opportunities. Unlike traditional natural gas, raw helium has no value at the wellhead and requires processing to create a marketable product. This characteristic has several implications for producers.

Firstly, investment in processing infrastructure is essential for value creation. Once processed, helium commands premium prices, potentially leading to attractive profit margins. Securing offtake agreements with end-users or industrial gas companies is crucial for project financing and development. Helix Exploration is actively working on offtake solutions, which will be critical in securing project financing and moving towards production.

Timeline & Next Steps

Helix Exploration's near-term focus is on the appraisal well at the Ingomar Dome project, scheduled for Q3 of this year. The drilling and testing process is expected to take approximately three weeks, with results informing the company's next steps. Potential outcomes include immediate development if results are highly positive, allowing the company to move quickly to drill additional wells and install processing infrastructure. Alternatively, a more measured development plan might involve additional appraisal drilling before committing to full-scale production.

The company is also considering a modular production approach, which would involve deploying a small-scale PSA plant to begin generating cash flow while continuing to assess the resource. The company's decision-making process will be driven by a combination of technical results, market conditions, and financing considerations.

The Investment Thesis for Helix Exploration

• Exposure to the growing US helium market, characterized by supply shortages and increasing demand
• Strategic asset base with two promising projects in Montana
• Experienced management team with a track record in helium exploration and production
• Capital-efficient development strategy focused on rapid progression to cash flow
• Potential for high margins due to the premium pricing of purified helium
• Near-term catalysts with appraisal drilling scheduled for Q3 2024
• Focus on minimizing shareholder dilution through strategic use of debt financing
• First-mover advantage in a sector with limited pure-play investment options

Helix Exploration represents an intriguing opportunity for investors seeking exposure to the dynamic US helium market. The company's strategic acquisition of the Rudyard Field, combined with its ongoing development of the Ingomar Dome Project, positions it well to capitalize on the growing demand for domestic helium supply. With a clear path to near-term production and a focus on capital efficiency, Helix Exploration has the potential to deliver significant value to shareholders.

The upcoming appraisal well at Ingomar Dome Project will be a critical milestone, providing valuable data that will shape the company's development trajectory. Investors should closely monitor the results of this drilling program and subsequent corporate developments as Helix Exploration works to establish itself as a key player in the US helium industry.