Helium One Global share price, company news, analysis and interviews

Helium One Global Ltd (LON:HE1) Chief Executive Officer David Minchin caught up with DirectorsTalk to discuss their latest project update, mobilising in the wet season, signing the MoU with Exalo and the company’s funding position.

Q1: David, could you just take me through this morning’s announcement and what it all means?

A1: The last 12 months have been challenging from an operational sense. We’ve made great strides forward in our subsurface understanding including a much improved refinement of the Tai prospect where we’ve identified untested closure in the Lake Beds and got a much better understanding of the geometry of the robust structural closure at the Karoo level. It’s de-risking something we already knew to be a working helium system.

From an operational point of view, and on the back of the Russian invasion of Ukraine, securing rigging services, against this headwind of record high global oil prices and natural gas demand, it’s been challenging.

What this announcement says, and I’m very pleased to be able to say this, is that we’ve now overcome all of those challenges. We have the rig and the service package all in place and secured to mobilise drilling in Q1 of 2023.

Q2: Are you able to mobilise this rig in wet season?

A2: Yes. As you know, Helium One are veterans of several wet seasons operations, don’t forget that we did our phase I seismic which we ran between February and May 2021 in the middle of the wet season. Our phase II seismic was mobilised in January of this year which was as the rains were falling and we also ran the ERT survey throughout the wet season and in saturated ground as we needed that saturated ground for the coupling of the geometric equipment.

As such, we’re in a unique position to understand what kind of conditions to expect in the field and the kind of challenges which a wet season operation will bring.

Drilling is very different but we are confident in the abilities of this rig and this team. The rig is able to break down into 28 tonne loads for transportation so it’s capable of mobilising during the wet season.

The untarmacked Mobma Road, which connects the site at Rukwa to the tarmacked Tanzam Highway, is where the problems would be. However, this is also the main road to the town of KamSamba and we’ve run trucks along this road all year round so we’re aware of what conditions and what challenges to expect.

Eventually, it all comes down to operational planning so our trump card in this is our Chief Operating Officer Colin Ivory, he’s got over 35 years’ experience of running remote oil and gas operational programmes and has operated everywhere from Canada to Congo. So, we have the experience, we have the knowledge and we have the team so we can get this done.

Q3: You mentioned confidence, are you confident that this will become a definitive contract?

A3: Yes, so we’re well advanced in our contract negotiations, we’ve exchanged draft contracts, for commercial reasons I can’t tell you about them but signing the MoU is that important step in securing exclusivity whilst we complete our final contract negotiations.

Basically, Exalo want to come to Rukwa and we want Exalo in Rukwa so we’re confident we can rapidly progress to final terms.

Q4: What can you tell us about Helium One’s funding position and how do you manage to fund the drilling?

A4: Over the last 12 months, we’ve been maintaining a very prudent approach to capital management, we’ve been keeping the burn rate low and we’ve been conserving capital where we can. It’s little things, economy flights, how we manage contracts, how we manage consultants, it’s all set the company ethos for stringent capital controls.

Because of that, we still have some cash in the bank, we’ve not been back to the market for nearly 18 months. Drilling is an expensive business however, capital invested in exploration has the potential to generate exponential returns on dollars spent in the ground. With nearly 3,000 square kilometres of the best exploration fairway for high grade primary helium in Tanzania, which by extension is the best exploration province for primary helium in the world. By drilling at Tai, we’re turning the key to unlock the value of the entire province, the entire 3,00 square kilometre fairway.

We’re excited to be back on the ground, we’re excited to be drilling, we’re excited for the year ahead and delivering returns to all the investors and shareholders who’ve been supporting us over the long road towards a discovery.

Helium One Global Ltd (LON:HE1) Chief Executive Officer David Minchin caught up with DirectorsTalk to discuss the completion of the rig audit, why it’s so good and the next steps.

Q1: David, could you just talk us to the rig audit and what it all means?

A1: So, it’s been a long process. It’s a very detailed inspection of every system in the rig so they go through everything from the top drive, the iron roughneck, the high pressure mud systems, the low pressure mud systems, and of course, importantly the rig engine itself. They’ve gone through a very detailed inspection of every single component.

The inspection itself was completed about a week and a half ago, we only got the final report last week, and we were able to put an RNS out on Monday morning because the result of this inspection has been that the rig is deemed as now fit for purpose and ready for field operation.

The final stage of the inspection was an 8-hour high pressure test where they put the rig under 2,000 PSI pressure to stimulate depths and pressures beyond which we are expecting to anticipate and meeting at Rukwa.

So it’s passed that, all of components work as a system, the rig is in a good condition and it’s ready to go.

Q2: Why is this rig so good for Helium One’s programme?

A2: So, the Epirock Predator 220 is really the perfect rig for the remote working operation so it’s a lightweight truck mounted conventional oil and gas rig. The truck mounting is important because it means it’s very easy to move it and to mobilise it to remote locations and to move it between well locations. Despite being lightweight and small size, the rig is heavyweight in terms of its capability, it has a 950 horsepower engine and the mass is rated to 100 tonnes. That means it’s able to drill 8.75 inch hole all the way down to 2,500 meter. This is more than capable of achieving everything that we need in a cost effective, timely manner.

Q3: What are the next steps for Helium One?

A3: The next steps is the mobilisation, and we have a team in Kenya at the moment working on that work. The plan is to get the rig into into Tanzania ahead of a rainy season so we can set it up with mast up, waiting for the Baker Hughes equipment to be released from its current operations in Africa. The latest on that is that’s scheduled to be released in December so it looks like we’re all set to go for a January or February start date as planned.

Helium One plc (LON:HE1) Chief Executive Officer David Minchin and Drilling Superintendent Mike Williams caught up with DirectorsTalk for an exclusive interview to discuss how the rig is progressing, the recent visit to the rig, what’s happening on site and being on track to drill this year.

Q1: David, how have things been progressing with the rig?

A1: Things are going very well. We’re progressing towards the independent audit, we’re working with the rig owners through pre-inspection checklists to make sure the rig is ready and on track for our 2022 drilling campaign.

We’re in the process of making some minor enhancements which need to be done before the rig audit is finalised to ensure that everything is working properly and it’s all suitable for the helium exploration campaign that we’re undertaking this year.

Q2: Mike, you’ve been to see the rig recently. How did it look?

A2: The rig is in good condition which is why I was able to recommend it to David and the Helium One board.

Now, obviously we don’t know everything about the rig until we put the mast up and run it under pressure, this is the purpose of the external rig inspection to test all the operational aspects of the drilling rig under mechanical load for a prolonged period of time.

It’s a common due diligence in the oil and gas industry and certainly something that I would recommend  to any operator conducting land drillings in a remote location such as Rukwa.

Q3: So, what’s been happening on site since you visited?

A3: The rig continues to be a hive of activity as the rig owner goes through the pre-inspection checklist provided by our inspection company, ADC. We all know the importance of mud to a successful drilling operation so we’ve requested the complete strip down and rebuild of the mud pumps and fluid system. Atlas Copco have been onsite to provide a software update on the rig control systems as well as an inspection of the rig carrier and Mantrac have inspected and serviced the electrical generator on site.

We have daily calls with the rig owner to keep abreast of developments and to get up to date media files, for instance the main engines running under load or the rig carrier road test.

In parallel, they have been preparing all of the export paperwork such as providing bills and materials with serial numbers and full spare part inventory to ensure that once we get the green light, we can mobilise as soon as possible.

All the work we are currently doing is vitally important to ensuring the rig is in the best condition it can be prior to mobilisation as it’s much easier to make any tweaks in the year than it is at the site.

Q4: Are Helium One still on track to drill this year?

A4: (David): There’s a few steps to go yet before we can contract the rig, we know that things always take longer in Africa than you anticipate when you start these things but I’ll be flying out soon to finalise the rig and supervise the mast up before the inspection. Mike is going to join me when the rig inspection begins soon after that.

Interestingly, the rig isn’t actually on the critical timeline for drilling this year because it’s already in East Africa, therefore it’s a quick and easy logistically to get it into Rukwa. However, inspecting and contracting the rig is the trigger to mobilise all the long lead third party services such as wireline tools and testing equipment etc.

(Mike) Yes, very much so. We’ve been planning around any potential logistical choke points and have already mobilised some long lead items such as the casing strings and the drill bits because we wouldn’t want the operation to be delayed by congestion for example, at the port of Shanghai.

Helium One Global Ltd (LON:HE1) Chief Executive Officer David Minchin caught up with DirectorsTalk for an exclusive interview to discuss 2021 achievements, the exploration programme, what investors should be looking out for in 2022 and where further growth will be coming from.

Q1: David, Helium One Global has announced full year results, can you just talk us through the last year, what you’ve achieved or delivered and why you’ve called it such a transformational year?

A1: It’s been an amazing roller coaster of a ride over the last twelve months or so. If you remember, I joined the company back in August of 2020 when we were a private company with large aspirations but no money and no team. Since then ,we have raised £6 million on IPO, we’ve then been able to raise £10 million and 3.5 times our admission price six months after we listed, we’ve conducted an aggressive exploration campaign including over 400 line kilometres of 2D seismic and our maiden exploration campaign which delivered exceptional value in bringing proof of concept.

We had technical issues with the hole which meant we weren’t able to test it but in demonstrating a working helium system with everything there; excellent quality reservoir, thick sealing units and multiple helium shows from basement practically all the way up to surface, we’ve come a long, long way.

As we’ve grown, so has the team of experts that sit behind me. We’ve got high quality rift basin geologists such as Lorna Blaisse, Mark Beeson, and Sam Girling joining the team recently as our Principal  Geophysicist. Our operational crew has strengthened significantly with Colin Ivory, with over 45 years in the oil and gas industry, now heading up our operations as COO, Mike Williams as our Well Planning Engineer, Chris Eyre our new CFO.

We’ve transformed ourselves from a start-up with concept to being an operating exploration company who’s out there getting the job done.

Q2: Can you summarise the exploration programme from last year, what it means and what’s its actually showing you?

A2: We commenced in mid-February with a 2D seismic, we started off with 150 line kilometres and we added another 50 kilometres to that once we were in operation to bring it up to 200 line kilometres. That identified for us the Tai prospect, which is this beautiful robust three-way dip closure, it really stands out in the seismic as a must drill target so naturally, that was the one we went to and drilled when we commenced our exploration drilling in 2021 with the first slim line rig.

That showed multiple helium shows in mud, the first one coming less than a week after we started, only 70 metres deep with 2.2% helium gas in the mud. We were then able to announce further gas shows in the red sandstone where we really weren’t expecting to identify helium gas shows, that was a low order secondary target and it was beneath a quite thin intraformational claystone. As we got down into the top Karoo, we identified a very efficient seal which was 130 metres thick claystone at the top Karoo.

Helium is a very elusive gas, it tends to leak from things so to identify these big thick sealing units was a bonus for us and to identify the intraformational clays, have also got the capacity to be effective, is demonstrating that the helium can be trapped. We have a working system with reservoir and seal and the multiple helium shows.

We’ve all been over the technical issues we had towards the end of that hole with the washouts and the slim line design just not really helping us to eb able to perform an effective test. Unfortunately, we never were able to flow any gas to surface or even properly wireline the main reservoirs in Karoo which is a shame because that still remains our primary target and is untested.

We’ve moved onto phase II exploration though because we’ve been given the confidence from our initial drilling campaign with the proof of concept to allow us to move on because we’re still super excited about what there is to be found. Don’t forget, we’ve got the largest undiscovered high grade primary helium resource in the world and we can’t wait to get our teeth stuck back into it.

So, we’re starting with another 200 line kilometres of seismic on the northern extensions of the Itumbula and Tai structures. These are structural highs that were identified followed by gravity gradiometry which we believe are acting as conduits for helium migration and charge. On the initial results, we’re reviewing internally hoping to make an announcement in the next few weeks on multiple leads, it’s a very interesting data set.

We’ve commenced ERT, we’ve seen the results of our Multispectral Satellite Spectroscopy study and of course, the QEMSCAN results, all of which is building multiple layers of data which we integrated to assist our decision-making process and really understand the geologic risks in each of the prospects which we are evaluating. So, when we bring our big rig out over the summer of ’22, best geological information and the right team in place to deliver our discovery year in 2022.

Q3: Just looking forward into 2022, what should investors be looking out for and where do you see Helium One Global’s growth coming from?

A3: We’ve still got $9.7 million in the bank as of the end of December so that’s after the 2D seismic was completed, so we’re in a strong position to move forward.

In the next few weeks, as I said, we’ll be announcing the results of our initial review on the 2D seismic and also hoping to announce an MoU with a conventional rig provider. That’s really going to build the project up so you can see exactly what we’ll doing, where we’ll be drilling, why we’ll be targeting the targets that we target so super exciting the next few weeks and months coming up.

Of course, over the summer, we’ll have that big rig on the ground drilling 8.5 inch hole down to basement, it’s a conventional rig, a conventional set of wireline tools, everything that’s normal in terms of design in making a gas discovery and gives us the best possible opportunity for 2022 to be really a game-changing year.

I said 2021 was a transformational year for the company because we grew from being a private start-up to being an operating exploration team, 2022 could be another transformation year for us as we’ve got all the components parts in place to make our discovery and to turn ourselves from an explorer to a developer.