Helium One Global (LON:HE1), the primary helium explorer, has provided a full project update, including an update on rig selection for the Company’s Phase II drilling programme due to commence in Q1 2023.
The Company has now signed a memorandum of understanding with Exalo Drilling S.A. (ORLEN Group) (“Exalo”) for the supply of a drilling rig to be utilised in the Company’s drilling operation on the Rukwa licence. This change of drilling contractor follows legal complications that the Company believes would have impacted upon the timing and availability of the previously announced Predator Rig.
Summary
· Selection of Exalo as preferred drilling contractor with MoU signed and final contract negotiation nearing completion.
· Target spud date remains Q1 2023
· Exalo is a reputable drilling company providing onshore drilling rigs and associated services with a fleet of 35 land rigs
· Rig to mobilise upon completion of current operation in southern Africa
· Helium One will be utilising an active rig and crew directly from a drilling campaign in the region with no need for lengthy rig assessment process
· The Rig can be broken down into 28 tonne loads, allowing rapid mobilisation
· The Rig will be transported together with the Baker Hughes integrated service package that is currently in use at the same location
· Use of Exalo for Phase II drilling programme is not expected to materially increase costs relative to use of Epiroc Predator 220 rig
· All Prospecting Licences renewed, demonstrating continued project support by the Government of Tanzania
David Minchin, Chief Executive Officer, commented:
“Helium One have been conducting background due diligence on the Exalo Rig for some time and, as it became apparent that legal issues would delay the mobilisation of the Predator Rig, the Company was able to advance discussions with Exalo and execute an MoU that will enable the Company to secure the Rig for the Rukwa drilling campaign.
“Under the terms of the MoU, the Rig will be mobilised directly from the current operating location to the Company’s licence in Rukwa. The Rig will be transported alongside the Baker Hughes integrated service package, which is being used at the same location, thereby avoiding a delay to the start of our drilling campaign.
“As the Rig is currently undertaking drilling operations a lengthy assessment process is not required, allowing the Company to execute final contracts without additional delay. The Rig has a larger 1200HP powertrain which will minimise the risk of downhole and operational issues and ensure that the Company has the best possible chance of identifying an economic helium discovery at Rukwa.”
“We look forward to finalising contract negotiations and welcoming Exalo on board as an experienced drilling contractor for our Phase II drilling campaign, targeted to commence in Q1 2023.”
Ian Stalker, Non-Executive Chairman, commented:
“Helium One management team have demonstrated a prudent approach to operational planning. It is a testament to the team and their approach that they had contingency measures in place to secure an alternative solution that allows for mobilisation directly from current operations, allowing drilling to proceed on schedule.
“Exploration at Rukwa has demonstrated all the geological qualities of an outstanding primary helium prospect. A successful Phase II drilling campaign at Tai, where numerous mud shows from previous drilling have identified subsurface helium on multiple horizons, will be the key to unlocking an entire helium province that can be a game-changer in new supply for this high-tech, high-value, commodity.
“With the Exalo Rig and Baker Hughes package secured, we look forward to a successful drilling campaign in 2023.”
Exalo
Exalo Drilling (ORLEN Group) is a one of Europe’s leading onshore drilling contractors with a fleet of 35 drilling rigs allowing for well drilling up to 8000m of depth. Exalo Drilling is a global brand with branches in Pakistan, Tanzania, Kazakhstan, Czech Republic, Chad, and a subsidiary in Ukraine. The company has over 70 years’ experience operating in countries throughout Europe, Africa, and Asia and are known internationally for the delivery of high-quality drilling and oilfield services.
The Rig will be released from southern Africa on completion of current operations. Thereafter, and dependent on local ground conditions, the Rig will mobilise directly to operations in Rukwa. The Rig can be broken down into 28 tonne loads for ease of transportation, allowing for year-round transportation in a range of weather and road conditions.
The Rig was Helium One’s first choice during research following the 2021 drill campaign but had already been contracted for operations elsewhere. As the Rig is already engaged in drilling activities that exceed the total depth anticipated at Rukwa there is no requirement for an independent rig audit.
The Baker Hughes integrated service package will be transported from the same location and at the same time as the Exalo 202 Rig, meaning that drilling operations will be able to begin as soon as the Rig is in place and accepted as ready to commence.
Drilling will target the Tai prospect where Phase II 2D Seismic provided improved resolution over a robust structural closure at Karoo level, and also identified a newly defined closure in the Lake Beds which was not previously tested. With 2021 drilling providing detailed information on reservoir and seal, and the identification of subsurface helium on multiple horizons which proves a working helium system, the Company is confident that Tai prospect gives the best opportunity to make an economic discovery that unlocks the potential of the Rukwa helium province.
Predator
Following completion of the ADC rig audit on the Epiroc Predator 220 in Kenya the rig owner was able to commence export proceeding to mobilise the Rig out of Kenya. However once export approval through the Kenyan Revenue Authority had commenced, and was proceeding as expected, an unrelated third-party instigated a claim against the owner of the Predator 220 Rig.
As the unforeseen legal dispute has capacity to delay the start of operations at the Rukwa project, the Company has decided to pursue the Exalo rig option. Subsequently an MoU has been signed with Exalo and the Company is engaging in contract negotiations.
Although considerable management time has been spent on evaluating the Predator Rig, the Company are pleased that our parallel workflow investigating the Exalo 202 Rig has allowed us to move from one rig to the other without delaying the programme and without an increase in costs relative to using the Predator rig.
Licence Renewals
Helium One is also pleased to announce that it has received renewal certificates for all licences subject to renewal in September and October 2022. Renewals cover more than 2,500km2 of licences in the Rukwa, Eyasi and Balangida project areas. We are grateful to the Tanzanian Mining Commission for their continued support and diligence in rapidly approving the renewal of these licences.
Helium One Global, the AIM-listed Tanzanian explorer, holds prospecting licences totalling more than 2,964km2 across three distinct project areas, with the potential to become a strategic player in resolving a supply-constrained helium market.
The Rukwa, Balangida, and Eyasi projects are located within rift basins on the margin of the Tanzanian Craton in the north and southwest of the country. The assets lie near surface seeps with helium concentrations ranging up to 10.6% He by volume. All Helium One’s licences are held on a 100% equity basis and are in close proximity to the required infrastructure.
The Company’s flagship Rukwa Project is located within the Rukwa Rift Basin covering 1,900km2 in south-west Tanzania. The project is considered to be an advanced exploration project with leads and prospects defined by a subsurface database including multispectral satellite spectroscopy, airborne gravity gradiometry, 2D seismic data, and QEMSCAN analysis. The Rukwa Project has been de-risked by the 2021 drilling campaign, which identified reservoir and seal with multiple prospective intervals from basin to near surface within a working helium system.
Helium One is listed on the AIM market of the London Stock Exchange with the ticker of HE1 and on the OTCQB in the United States with the ticker HLOGF.
