REG - Helix Exploration - Acquisition of Rudyard Project

Helix ExplorationAnnouncement

20/06/2024 07:00

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RNS Number : 1373T  Helix Exploration PLC  20 June 2024

20 June 2024

Helix Exploration PLC

 

("Helix Exploration" or "Helix" or the "Company")

 

Acquisition of Rudyard Project

Fee Shares

Issue of Equity and Total Voting Rights

 

 

Helix Exploration, the helium exploration and development company focused on
helium deposits within the 'Montana Helium Fairway', is pleased to announce
the execution 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(1): 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

( )

(1) 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 CO(2) 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.

 

Next Steps

 

The Rudyard acquisition is a significant step forward for the Company.  The
acquisition of a deposit with identified helium with Contingent Resources
provides a direct pathway to establish Helix Exploration as a helium
producing, cash-flowing company.

 

Appraisal drilling is planned to commence in Q3 2024 utilising rig and
equipment to be mobilised from and immediately following our drilling campaign
at Ingomar Dome.  Appraising the discovery with a 30-day flow test will move
these contingent resources into the appropriate reserves classifications and
allow detailed engineering and plant construction to commence.  The Company
intends to use the planned appraisal well as a production well, reducing
capital costs into production.

 

The expansion of Helix Exploration's portfolio with the addition of Rudyard as
a potential second future production hub compliments the Company's current
development plans for its Ingomar Dome project.  Diversity of risk allows the
Company additional leverage in negotiating debt finance terms and direct
offtake agreements with major end-users.

 

The Company remains fully funded to drill and appraise the Rudyard Project.
By virtue of the low acquisition cost no fundraise will be associated with the
commencement of this farm-in transaction.

 

Contingent Resource

 

The Company engaged Aeon Petroleum Consultants Corp. ("Aeon") to act as
independent expert in to estimate the contingent and prospective resources of
helium over the Rudyard Project.  The report was compiled by James Weaver, a
petroleum engineer with 45 years of industry experience in economic analysis,
production optimisation and reserves estimation and evaluation.

 

Estimates of contingent resources were prepared by Aeon using the stochastic
method and application of appropriate geologic, petroleum engineering, and
evaluation principles and techniques that are in accordance with practices
generally recognised by the petroleum industry and in accordance with
definitions established by PRMS.

 

The stochastic method is based on assigning a statistical distribution to each
of the various parameters of the volumetric calculation of recoverable helium
and varying them in a Monte Carlo simulation.  Parameters for area,
thickness, porosity, water saturation, gas expansion factor, recovery factor,
hydrocarbon content, and helium content were estimated from measurements taken
at adjacent discovery wells.

 

The Souris River and Red River formations lie as stacked reservoirs in two
co-joining anticlinal structures.  As the deposition of rock within each
formation are independent, each of the formations was modelled separately as
shown in the table below. Resources are reported for the entire closure
including areas which are outside of the acquired leases of the Rudyard
Project.

 

               Helium Contingent Resources (Mcf)
               1C (P90)          2C (P50)          3C (P10)
 Reservoir     Gross    Net      Gross    Net      Gross      Net
 Souris River  91,752   78,907   248,493  213,704  689,403    592,887
 Red River     100,899  86,773   235,700  202,702  561,082    482,531
 Total         192,651  165,680  484,193  416,406  1,250,485  1,075,417

 

In the opinion of Aeon, to upgrade these Contingent Resources to Reserves,
production rates over time must be confirmed by additional testing. Although
production rates seen on DSTs have been high, the production rate and pressure
decline has not been evaluated over time. A confirmation of these rates will
move these contingent resources into the appropriate reserves classifications.

 

Prospective Resource

 

Additional upside has been recognised by Aeon in the Dry Creek Formation.
Dry Creek was intersected in historic drilling, is considered to occur within
the same anticlinal closures as Souris River and Red River Formations, but was
not tested in any Drill Stem Tests.  As such resources in the Dry Creek
Formation are considered as Prospective until a flow test can be conducted.

 

                        Helium Prospective Resources (Mcf)
                        1C (P90)        2C (P50)         3C (P10)
 Reservoir              Gross   Net     Gross    Net     Gross    Net
 Dry Creek (risked)(1)  38,510  33,119  82,063   70,574  169,445  145,722
 Dry Creek (unrisked)   52,754  45,368  112,415  96,677  232,116  199,620

 

(1) Risked data includes a chance of geological discovery of approximately
0.73.

 

Resources are categorised as follows - Contingent Resources are a lower risk
category than Prospective Resources:

·    Prospective Resources are those quantities of helium estimated, as of
a given date, to be potentially recoverable from undiscovered accumulations by
application of future development projects.

·    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.

 

Admission

 

Application will be made to the London Stock Exchange to admit the Vendor
Consideration Shares and Fee Shares to trading on AIM ("Admission"). Admission
of the new Ordinary Shares is expected to occur on or around 28 June 2024. The
new Ordinary Shares will rank pari passu with the existing Ordinary Shares.

 

Total Voting Rights

 

For the purpose of the Disclosure and Transparency Rules, following the issue
of shares detailed above the enlarged issued share capital of the Company will
comprise 123,350,000 ordinary shares of 1p each. The above figure may be used
by shareholders as the denominator for the calculations by which they will
determine if they are required to notify their interest in, or a change to
their interest in, the Company, under the Disclosure and Transparency Rules.

 

Qualified Person Statement

 

The technical information contained in this disclosure has been read and
approved by Jim Weaver, P.E., who is a qualified Petroleum Engineer and acts
as the Qualified Person under the AIM Rules - Note for Mining and Oil &
Gas Companies. Jim Weaver is the Chief Executive Officer for Aeon Petroleum
Consultants Corp. which has been retained by Helix Exploration plc to provide
technical support.

 

This announcement contains inside information for the purposes of the UK
Market Abuse Regulation and the Directors of the Company are responsible for
the release of this announcement.

 

 

 

Enquiries

 

Helix Exploration

 Bo Sears       via Camarco
 David Minchin  info@helixexploration.com (mailto:info@helixexploration.com)

Cairn - Nominated Adviser

 Liam Murray          +44 (0)20 7213 0880
 Ludovico Lazzaretti
 James Western

 

Hannam & Partners - Joint Broker

 Neil Passmore              +44 (0)20 7907 8502
 Andy Crispin
 Spencer Mignot

 SI Capital - Joint Broker
 Nick Emerson               +44 (0)14 8341 3500
 Renato Rufus
 Nick Briers

 

OAK Securities - Joint Broker

 Jerry Keen   +44 (0)20 3973 3678
 Henry Clark

Camarco - Financial PR

 Emily Hall     +44 (0)20 3757 4980
 Tilly Butcher  helixexploration@camarco.co.uk (mailto:helixexploration@camarco.co.uk)

 Billy Clegg

 

 

Notes to Editors

 

Helix Exploration is a helium exploration company focused on the exploration
and development of helium deposits within the 'Montana Helium Fairway'.
Founded by industry experts with extensive experience of helium systems in the
US, the Company's assets comprise of 52 leases over the Ingomar Dome; a large
closure of 16,512 acres with P50 unrisked prospective helium resource of
2.3Bcf and upside of 6.7 billion cubic feet. Historic drilling and/or testing
has identified gas in all target reservoir horizons.

 

Helix Exploration will focus on a drilling campaign and early production at
the Montana Ingomar Dome Project.  An aggressive development timeline will
see a drilling campaign targeted for Q3 2024 and first helium production
targeted for Q4 2025.  Helix is committed to open and transparent
communication with investors and the wider market as the project progresses
through development.

 

The Company's Admission Document, and other information required pursuant to
AIM Rule 26, is available on the Company's website at
https://www.helixexploration.com/ (https://www.helixexploration.com/) .

 

 

Caution regarding forward looking statements

 

Certain statements in this announcement, are, or may be deemed to be, forward
looking statements. Forward looking statements are identified by their use of
terms and phrases such as ''believe'', ''could'', "should" ''envisage'',
''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect",
''will'' or the negative of those, variations or comparable expressions,
including references to assumptions. These forward-looking statements are not
based on historical facts but rather on the Directors' current expectations
and assumptions regarding the Company's future growth, results of operations,
performance, future capital and other expenditures (including the amount,
nature and sources of funding thereof), competitive advantages, business
prospects and opportunities. Such forward looking statements reflect the
Directors' current beliefs and assumptions and are based on information
currently available to the Directors.

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