New Appraisal Well Showcases Significant Helium Potential in Minnesota

Source: Streetwise Reports 06/11/2024

Pulsar Helium Inc. (PLSR:TSX.V) has released further results from its ongoing exploration program at its wholly-owned Topaz project in Minnesota. What do these advancements means for the company’s future plans?

Pulsar Helium Inc. (PLSR:TSX.V) has released further results from its ongoing exploration program at its wholly-owned Topaz project in Minnesota, showcasing significant advancements. The Jetstream No. 1 appraisal well has demonstrated exceptional performance, with a flow rate reaching up to 821,000 cubic feet per day and helium grades between 8.7% and 14.5%.

These results highlight the well’s potential as a world-class helium resource. Notably, the well exhibited a bottom hole pressure of 162 psi and a remarkable 70% pressure rebound within the first hour of postflow shut-in, indicating substantial gas volumes. The absence of formation water during testing further underscores the well’s quality. Laboratory analysis conducted by an independent entity confirmed the high helium content, reinforcing the global significance of Jetstream No. 1.

The Jetstream No. 1 appraisal well, Pulsar’s inaugural well on the property, not only matched but surpassed the original 2011 discovery, which reported helium hosted in fractures. The ongoing analysis has identified additional fracture sets, enhancing the understanding of the well’s potential and providing Pulsar with the confidence to pursue deeper drilling. This continued exploration effort aims to test the entirety of the interpreted helium-bearing zone, as identified by comprehensive seismic surveys conducted by the company.

What’s Up With Helium?

Helium is a rare and non-renewable resource, crucial for various high-tech applications due to its unique properties, such as low boiling point and inertness. It is primarily extracted from natural gas reserves, with significant production challenges contributing to its scarcity. The increasing demand for helium in industries like aerospace, healthcare, and electronics highlights its critical importance and underscores the urgency to develop new sources to ensure supply stability.

The helium sector is experiencing robust growth, as reported by Yahoo! Finance, driven by its increasing application in various industries. The global helium market size was estimated at US$3,613.2 million in 2023 and is expected to grow at a compound annual growth rate (CAGR) of 6.7% from 2024 to 2030. This growth is attributed to the rising demand for helium in end-use industries such as aerospace, defense, medical, electronics, electrical, and energy sectors. Helium is an essential component in scientific experiments and research, particularly in fields like physics, chemistry, and materials science, ensuring continued high demand as scientific research advances.

Auctus Advisors Stephane Foucaud reiterated a target price of CA$1.80 per share, implying a total return of 112% from the share price at the time of the report of CA$0.85.

Helium is indispensable for numerous scientific applications, especially in fields like physics, chemistry, and materials science, where it supports ongoing research advancements.

The sector is becoming increasingly competitive, with both international and domestic companies striving for market share, as noted by Grand View Research. Notably, firms from Canada, Qatar, Russia, and India are bolstering their market positions amidst this competitive landscape.

Gasworld reported on the importance of helium. In the medical sector, helium plays a critical role in diagnostic equipment, notably MRI machines, and is vital for treating respiratory ailments. In the defense industry, helium is crucial for rocket engine testing, scientific balloons, surveillance aircraft, and missile guidance systems, among other applications. The increasing consumption of helium in the semiconductor industry and its growing utilization in the aviation industry are major factors driving market growth, as cited by Mordor Intelligence.

Company Catalysts

Several key factors are driving the momentum of Pulsar Helium’s Topaz project. The impressive flow rate and high helium concentration of Jetstream No. 1 place it among the top-tier helium wells globally, establishing a strong foundation for the company’s future endeavors. The identification of additional fracture sets through ongoing analysis has bolstered the project’s significance, offering promising targets for deeper drilling and expanded exploration.

Pulsar’s strategic initiatives include transferring all current data to Sproule International Ltd. for a comprehensive resource update calculation, which is expected to be completed in July. This will provide a detailed assessment of the project’s potential, informing future development plans. In parallel, the company is preparing for additional field activities, including seismic surveys and the interpretation of recently acquired in-fill Falcon airborne gravity gradiometry data. These efforts are geared towards enhancing the understanding of the subsurface and optimizing future drilling locations.

Pulsar plans to deepen the Jetstream No. 1 well and drill stepout wells later in 2024, aiming to expand the project’s resource base.

Expert Analysis

Response to Pulsar Helium Inc.’s recent developments at their Topaz helium project has been overwhelmingly positive. According to the Morning Energizer’s June 10 newsletter, the Jetstream-1 appraisal well at the Topaz project flowed to the surface at a maximum rate of 0.82 million cubic feet per day (mmcf/d) with helium concentrations between 8.7% and 14.5%, averaging 9.9%. Additionally, the well revealed associated major gases, including nitrogen up to 24% and hydrocarbons constituting less than 5% of the total gas content, with CO2 concentrations exceeding 70%, which could significantly enhance the project’s economics.

The report went on to explain that the data from Jetstream-1 will be analyzed by Sproule for an updated resource estimate, which will also include recommendations for future appraisal and development planning at the Topaz project in Minnesota/ Future work programs are proposed to assess the deeper potential at Jetstream-1, including drilling a nearby stepout well and conducting a 3D seismic survey to define the structural extent of the resource. The Energizer also noted that this is the first dedicated helium well drilled in Minnesota, with indications that the helium-bearing zone could extend laterally and at depth.

Auctus Advisors further supported the project’s potential in a June 10 report. Founding partner Stephane Foucaud noted that Pulsar Helium Inc.’s 0.75 mmcf/d gross gas flow rate from Jetstream-1 could imply yearly revenue of approximately 22 million. The initial flow rate of 0.15 mmcf/d increased to around 0.8 mmcf/d after a compressor was installed to reduce the flowing tubing head pressure, highlighting the well’s robust performance. Assuming a flow rate of 0.75 mmcf/d and a helium concentration of 12.5%, the well could generate significant revenue during its first year of production, suggesting strong project economics.

Foucaud from Auctus Advisors increased the chance of development for the Topaz project from 55% to 65%, with production expected to start in Q4 2025. The analyst also noted that the unrisked net asset value (NAV) for Pulsar Helium, based on a 5 mmcf/d development, exceeds US$2.00 per share, with an upside case leading to an overall unrisked NAV of approximately CA$4.15 per share.

Foucaud reiterated a target price of CA$1.80 per share, implying a total return of 112% from the share price at the time of the report of CA$0.85. [OWNERSHIP_CHART-10918]

Ownership and Share Structure

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( Companies Mentioned: PLSR:TSX.V, )