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Highlights:
- Dual Drilling Activity: Helix is actively drilling the Darwin well at Rudyard and testing the Clink well at its flagship Ingomar Dome project.
- Significant Share Gains Since IPO: Helix shares have surged 125% since April, raising its AIM valuation from £12 million to £30 million.
- Helium Market Potential: High demand and limited supply for helium create a lucrative backdrop for Helix’s Montana projects.
Helix Exploration PLC (LSE:HEX) has set a fast pace in Montana’s helium market, drilling its second well at the Rudyard project while advancing testing at the Ingomar Dome. The company, which debuted on the AIM market in April, has quickly gained traction among investors, with shares climbing by 125% since its initial public offering (IPO). Now valued at approximately £30 million, Helix is positioning itself as a key player in helium exploration, leveraging Montana’s resources to meet growing demand for this rare and strategically valuable gas.
Clink Well at Ingomar Dome: A Key Phase in Development
Helix’s flagship Ingomar Dome project is undergoing a crucial testing phase with the Clink well, which was recently deepened to target multiple helium-bearing formations. The well is currently being evaluated with cased-hole wireline testing from the bottom upwards, a process that allows for a thorough analysis of the reservoir potential. If results are favorable, Helix plans to move forward with an extended well test, during which any recovered gas will be sent for detailed composition analysis.
CEO Bo Sears remarked on the importance of the Clink well in a recent interview, noting that this phase will reveal the well’s production potential. Testing is set to cover multiple formations, including the Amsden, Charles, and Flathead, where prior assessments showed promising signs for helium extraction. Helix’s testing approach aims to maximize the well’s output potential by assessing each target zone individually before proceeding with an extended test.
Chairman David Minchin also provided insights into the testing program, describing it as a strategic move to advance the Ingomar Dome project. Given the helium-rich formations already identified, a successful outcome from Clink could position Helix for near-term production, enhancing its presence in the U.S. helium market.
Drilling the Darwin Well at Rudyard: New Potential Unveiled
Simultaneously, Helix has commenced drilling at the Darwin well, located in the Rudyard project area. This new drilling activity marks another milestone for the company, targeting stacked helium reservoirs within the Souris River and Dry Creek intervals. Past tests in the Rudyard region have shown helium concentrations of up to 1.3%, and preliminary estimates suggest that the P50 Gross Contingent Resources in the Souris and Red River zones could reach 484,193 Mcf.
The Darwin well is expected to take two to three weeks to complete drilling, after which Helix will conduct wireline logging. Based on these initial results, the company plans to undertake extended flow testing to evaluate production potential. The Darwin well is also being considered for casing, which would allow for further testing and production activities in the future.
Strong Market Demand for Helium Supports Helix’s Growth
Helium’s market dynamics create a favorable environment for Helix. As a gas that plays a crucial role in technology, medical, and industrial applications, helium is in short supply, with the U.S. acting as one of the world’s leading suppliers. The ongoing demand has kept prices elevated, with recent U.S. Geological Survey estimates conservatively placing helium at $420 per thousand cubic feet (mcf), while open market pricing can push that figure up to $1,000/mcf. This pricing scenario provides strong revenue potential for helium explorers, particularly in established regions like Montana.
Montana’s mature oil and gas infrastructure makes it an attractive location for helium exploration, with lower operating costs than other regions. Helix currently holds 52 leases across the Montana helium fairway, including the Ingomar Dome, and is well-positioned to capitalize on the state’s rich helium resources.
Rapid Progress and Strategic Value Catalysts Since IPO
Since its IPO, Helix has made swift progress in developing its projects, attracting investor interest and raising funds to fuel its operations. The company initially raised £7.5 million at an IPO price of 10p per share, which placed its valuation around £12 million. Today, Helix’s valuation stands closer to £30 million, reflecting both the advancement of its Montana projects and the market’s response to helium’s strategic importance.
In June, the company released a scoping study for the Ingomar Dome project, which assigned a net present value (NPV) of $303.1 million to the site, projecting it could generate over $600 million after expenses over a 29-year lifespan. The Rudyard project, acquired later in June, adds to this strategic positioning, giving Helix additional helium-bearing zones to explore and develop.
With drilling now underway at both the Clink and Darwin wells, Helix has a series of value-driving catalysts in place to close out 2024. Results from both wells are expected within weeks, setting up Helix for a potentially strong finish to the year.
Outlook for Helix and the U.S. Helium Market
As Helix accelerates its exploration in the Montana helium fairway, the company’s activities align well with the high demand and pricing structure seen in the helium market. By advancing testing and drilling operations across key formations, Helix aims to establish itself as a significant player in helium supply.
The U.S. market remains a critical focus, given its role as a major helium producer, and Helix’s Montana projects provide the company with a favorable entry point. With an expanding portfolio and ongoing well developments, Helix is well-positioned to respond to global helium demand while leveraging its established base of operations in Montana.
In summary, Helix Exploration (LSE:HEX) has made substantial progress since its IPO, with active development in two high-potential helium projects that could significantly impact its valuation and operational footprint. With the Clink and Darwin wells progressing towards results, Helix is gearing up for a pivotal year-end, further solidifying its position in the helium exploration space.
