Helix Exploration (LSE:HEX) - Strategic Acquisition, Aiming for Near-Term Production

Company Interviews

Interview with Interview with Bo Sears, CEO of Helix Exploration

Our previous interview: https://www.cruxinvestor.com/posts/helix-exploration-lsehex-new-us-focused-helium-explorer-5186

Recording date: 20th June 2024

Helix Exploration, a helium explorer listed on the London AIM market, is positioning itself to capitalize on the growing demand for helium in the United States. CEO Bo Sears discusses the company's latest acquisition and its strategy to become a significant player in the helium market.

The company's recent acquisition of the Rudyard Field, located just 40 miles south of the Canadian border, marks an important step in Helix's growth strategy. This project, with known helium concentrations, complements the company's flagship Ingomar Dome project in Montana. Sears emphasized that the Rudyard Field acquisition was "the right project at the right time," providing geographical diversification and the potential to bring more helium to market.

Helix's primary focus remains on the Ingomar Dome project, where the company plans to conduct a well appraisal in Q3 of this year. This crucial step, estimated to cost around $2.5 million, will provide vital data on flow rates, decline curves, and overall deliverability. The information gathered from this appraisal will be instrumental in guiding future development decisions and potentially attracting further investment or debt financing.

The helium market is currently experiencing a supply shortage, creating a favorable environment for new producers. Sears highlighted the increasing demand driven by the U.S. CHIPS Act, which is promoting domestic semiconductor manufacturing – an industry that requires significant amounts of helium. This market dynamic presents a compelling opportunity for Helix to establish itself as a key domestic helium supplier.

Investors should note Helix's strategy to minimize shareholder dilution. The company is exploring debt financing options for future development, including the construction of a pressure swing absorption plant estimated to cost between $12.5 million and $15 million. This approach aligns with the interests of potential investors, aiming to maximize the value of their holdings while enabling the company to develop its assets and bring helium to market.

The economics of helium production differ from traditional oil and gas, as the value lies in the processed and purified product rather than the raw gas. This necessitates investment in processing facilities, but also presents an opportunity for higher margins once production is established.

Helix's management demonstrates a clear understanding of the helium market and the technical aspects of exploration and production. Sears' experience and insight into the industry provide confidence in the company's ability to execute its strategy effectively.

For investors considering the helium sector, Helix Exploration presents an opportunity to gain exposure to a critical resource with strong demand fundamentals. However, as with any resource investment, risks such as exploration uncertainty and market volatility should be carefully considered. The upcoming well appraisal at the Ingomar Dome project represents a key catalyst that could potentially de-risk the project and increase company value.

As global helium demand continues to grow, particularly driven by high-tech industries and technological advancements, companies like Helix that can successfully bring new helium supplies to market may be well-positioned to benefit from this critical resource shortage. Investors should closely monitor the results of the upcoming well appraisal and the company's progress in securing favorable financing for future development.

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