Helix Exploration acquires Rudyard Project in Montana

LONDON: Helix Exploration, a company focused on helium deposits within the ‘Montana Helium Fairway’, has executed of a Farm-In agreement whereby the company has acquired a 100% working interest in 5,600 acres in Hill County, Montana, (“Rudyard”, or the “Rudyard Project”) from Adam Standiford, a consultant to the Company for $250k in cash and shares.

In addition, Mr Standiford will also receive 600,000 new ordinary shares in the Company at a price of 10 pence per share as an introducer fee pursuant to his consultancy agreement detailed in the Company’s admission document (“Fee Shares”).

Helium has been proven from two wells in a 640-acre section on the northern anticline and adjacent to the Rudyard Project, both of which tested favourably for helium grade and overall flow rates though these wells are not included in the current Rudyard Project acquisition. 

Highlights

·    Acquisition of a discovery with previously identified helium: Domal anticline with helium gas up to 1.3% Helium (“He”) flowed to surface from two wells drilled adjacent to the Rudyard Project

·    Contingent Resources: of 484,000Mcf (0.48Bcf) He gross with in-situ value of >$250 million at helium price of $550/Mcf

·    Additional upside: in untested Dry Creek Formation within the Rudyard Project

·    Low acquisition cost: of $250k paid as $100k in cash and $150k in shares with an additional equity issue as introducer fee

·    Expanded portfolio: Rudyard compliments the Company’s Ingomar Dome Project with additional low-risk resources and second potential future production hub

·    Existing infrastructure: assists low-cost development into commercial production

·    Fully funded Q3 2024 appraisal drilling: rig and services will move to Rudyard immediately after completion of drilling at Ingomar Dome in Q3 2024

Contingent Resources are those quantities of helium estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects, but which are not currently considered to be commercially recoverable owing to one or more contingencies.

Bo Sears, CEO of Helix Exploration, said: “Expanding our helium exploration portfolio is a strategic priority for Helix Exploration. The Rudyard Project represents an exciting addition that complements our flagship Ingomar Dome Project, which we expect to begin drilling in Q3 2024.

“The Rudyard Project has demonstrated commercial quantities of helium rich gas and we believe there is untapped potential in the deeper formations that have not been fully explored. With access to critical infrastructure like the BNSF rail line and 3-phase power, the Rudyard Project gives us an excellent opportunity to grow our helium business and diversify our asset base. We are thrilled to add this project to our portfolio and look forward to unlocking its value for our shareholders.”

David Minchin, Chairman of Helix Exploration, said: “The acquisition of the Rudyard Project significantly de-risks the Helix portfolio with the addition of proven helium and Contingent Resources providing a direct pathway to commercial production.  It is testament to the strength of Helix’s management team and deep experience of our CEO Bo Sears that Helix has been able to secure Rudyard for a total consideration of only $250k, and that the majority of this consideration is paid in shares.

“At IPO we announced that Helix was fully funded for two appraisal wells.  We are now delighted to confirm that our second fully funded appraisal well will be placed in Rudyard where an extended flow test will allow us to convert Contingent Resources into Reserves and fast-track the project towards commercial production.”

Details

Helix has acquired over 5,600 acres within a previously tested and identified helium structure in the Rudyard area of Hill County, Montana, which has previously tested up to 1.3% helium at significant flow rates.

The Rudyard Project consists of three stacked reservoir horizons within two co-joined domed anticlinal structures underlain by the Great Fall Tectonic Zone, a major structural zone which acts as the migration pathway for helium released from ancient continental crust.  Helium occurs in non-combustible gas associated with nitrogen with very low CO₂ and <5% natural gas identified in all assays.  Gas is identified in reservoirs at target depths between 5,000ft and 5,500ft (1,500m – 1,700m), being some 3,000ft shallower than target depth at Ingomar with associated saving in exploration and development costs.

Helium has been proven from two wells in a 640-acre section on the northern anticline and adjacent to the Rudyard Project, both of which tested favourably for helium grade and overall flow rates.  These wells are not included in the current Rudyard Project acquisition.  The acquired leases of 5,600 acres cover the majority of the closure therefore management do not consider the excluded 640 acres to be of economic significance.

The first well, drilled by Texaco in 1960, encountered non-combustible gas containing significant amounts of helium in two Drill Stem Tests (“DST”). Specifically: DST #4 flowed 0.90% helium from the Souris interval at 5,068′ to 5,125′ (1,545m – 1,562m) at a rate of 1,150mcf/d. DST #5 flowed 1.30% helium from the Red River interval at 5,203′ to 5,283′ (1,586m – 1,610m) at a rate of 3,060mcf/d.

The second well was completed by a private company in 2012, which tested 0.9% helium with a flow rate of 2,500mcf/d, indicating a strong reservoir and the potential for higher absolute overall rates. Helium grades of 0.9% – 1.3% are considered highly commercial and, based on assumptions for CAPEX and OPEX drawn from the Ingomar Scoping Study, would produce attractive NPV8 numbers across a range of production scenarios.

Infrastructure in the area is plentiful, in part, thanks to extensive historical oil and gas development nearby. Roads, rail and three phase power are all easily accessible at site, allowing for rapid and low-cost construction of a simple pressure swing adsorption plant and rapid commercialisation of the Project.

Deal Terms

Building on the management team’s extensive knowledge of Montana and connections formed over the last 25 years Helix has acquired the Rudyard acreage for a consideration of:

·    £79,000 (USD$100,000) paid in cash and;

·    £118,000 (USD$150,000) paid as 510,000 new ordinary shares at a price of approximately 22 pence per new ordinary share (valued at 20 day VWAP of the ordinary shares of the Company) (“Vendor Consideration Shares”).

The Company has a period of three years to drill two earning wells.  Each well will earn the Company a 100% working interest in petroleum, natural gas and helium in 2,800 acres below the base of the Sawtooth Formation (a current and historic natural gas producing reservoir) to be held by the Company in perpetuity.

With total consideration at 0.1% of the in-situ value of Contingent Resources and 60% of the acquisition price paid in new ordinary shares, Helix has ensured that the vendor is well aligned with the interest of the Company and its shareholders.