Helix Exploration - Capitalizing on the Critical Helium Shortage with Montana's De-Risked Ingomar Dome Project

• Helix Exploration, led by CEO Bo Sears and Chairman David Minchin, listed on London's Stock Exchange, raising £7.5 million for helium exploration in Montana.
• The company's Ingomar Dome project has been substantially de-risked by historical drilling, which identified gas in all target reservoirs.
• Helix plans to drill an appraisal well in Q3 2024, with the option for a second well, and aims to be in production by the end of 2025.
• The company is considering various financing options for its pressure swing adsorption plant, including debt, leasing, and pre-selling helium.
• Helium is in critical short supply, with prices increasing by an average of 20% CAGR over the last decade, and the market is dominated by an oligopoly of major industrial gas companies.

About Helix Exploration

Helix Exploration, a helium exploration company, made its debut on the London Stock Exchange, raising £7.5 million to fund its exploration activities in Montana. The company, led by CEO Bo Sears and Chairman David Minchin, aims to capitalize on the growing demand for helium, a critical component in various industries such as MRI, semiconductor manufacturing, and fiber optics.

Interview with Chairman David Minchin & Chief Executive Officer, Bo Sears

Ingomar Dome Project

Helix's primary focus is the Ingomar Dome project in Montana, which has been substantially de-risked by historical drilling. Known as the 'Montana Helium Fairway' the Ingomar Dome project sits in a helium system extending from Saskatchewan to Wyoming. The project area has several historical wells that have proven the subsurface structure and identified gas in all target reservoir horizons. The Hillerson 1 well, drilled in the 1940s, found 195 feet of gas in the Amsden formation, the topmost of the company's stacked plays. Another well drilled 30 years later identified 175 feet of gas in the Charles formation, while the Treasure 18-1 well, located 6.5 miles off the crest of the closure, found 145 feet of gas in the Charles formation and 10-26 feet of gas in the Flathead formation, the main reservoir horizon for helium across the Montana helium fairway.

Exploration & Development Plans

Helix plans to drill an appraisal well at Ingomar Dome in Q3 2024, with the option to complete a second appraisal well before moving into the feasibility stage. The company has received quotes for about $2.5 million to drill and test a vertical well down to 8,000 feet, which can test all the stacked reservoirs in one well. Bo Sears, the company's CEO, stated, "It all starts with the drill bit." The data obtained from the appraisal well will be used to design a bespoke pressure swing adsorption plant, tailored to the gas composition and flow rates.

Financing Options

Helix is considering various financing options for its pressure swing adsorption plant, which is estimated to cost between $12.5 and $15 million. The plant is expected to produce around 55,000 MCF of compressed helium gas per year at a 1.5% feed grade. With a selling price of $550 per MCF and an OPEX cost of $50 per MCF, the company anticipates a cash flow of $25 million before royalties and taxes from a single modular plant. David Minchin, the company's Chairman, noted, "If the equity market isn't open for us, and the best way to maintain NPV per share is to look at non-dilutionary funding, there's lots of options available to us." These options include debt, leasing, and pre-selling helium to buyers who are willing to pay now for helium delivery in 12 months.

Helium Market

The global helium market is currently facing a critical shortage, with prices increasing by an average of 20% CAGR over the last decade. The market is dominated by an oligopoly of major industrial gas companies, none of which are actively exploring for helium. Bo Sears emphasized the importance of new helium supplies, stating, "Any helium found is going to help, especially in the United States, fill those supply gaps that continue to arise." The majority of helium supply comes as a byproduct of natural gas production, with the LaBarge field in Wyoming and the North Field in Qatar providing over 50% of the world's helium. However, these sources are not driven by the economics of helium, and expansions to existing facilities have been repeatedly delayed.

The Investment Thesis for Helium

• Helium is a critical component in various industries, including MRI, semiconductor manufacturing, and fiber optics, with no substitutes available.
• The global helium market is facing a critical shortage, with prices increasing by an average of 20% CAGR over the last decade.
• The market is dominated by an oligopoly of major industrial gas companies, none of which are actively exploring for helium.
• Helix Exploration's Ingomar Dome project in Montana has been substantially de-risked by historical drilling, which identified gas in all target reservoirs.
• The company plans to drill an appraisal well in Q3 2023 and aims to be in production by the end of 2025, with various financing options available for its pressure swing adsorption plant.
• Investors should consider Helix Exploration as a potential opportunity to gain exposure to the growing demand for helium and the potential for significant returns in a market facing critical shortages.

Key Takeaways

Helix Exploration's successful listing on the London Stock Exchange and the substantial de-risking of its Ingomar Dome project in Montana position the company well to capitalize on the growing demand for helium. With a critical shortage in the global helium market and prices increasing by an average of 20% CAGR over the last decade, Helix's plans to drill an appraisal well in Q3 2024 and be in production by the end of 2025 present a compelling investment opportunity. The company's experienced management team and various financing options for its pressure swing adsorption plant further strengthen its potential for success in the helium market.