Welcome to the Market Herald Video Q&A podcast. I’m Brieanna McCutcheon.
Ed Bereznicki is the President and CEO of First Helium and has joined us today to give us a brief update on ongoing and future activities of the company.
TMH: First Helium recently received an independent evaluation of its oil properties outlining a Total Proved plus Probable reserves estimate of around 5-hundred-thousand barrels of oil. Why is this so significant for the company?
EB: Yeah, Brieanna, I mean the first thing is it’s a 51-101 report done by a third-party evaluation engineer. It provides us an underlying base asset value for the company of approximately 33 cents a share basic. The report provides us with one proven undeveloped drill location which we hope to get to down the road and it also helps to confirm what we’ve seen elsewhere on the play. There are a number of LeDuc oil pools in the area, analog pools, eight individual wells over five pools that have produced over a million barrels of oil over time and of course they’ve also produced some water. This is important for us as we move forward to optimize our production at our oil battery and bring in some cost saving measures by turning one of our abandoned wells on the property into a water disposal well. This operation was included in our third-party independent engineering report. Over time, the wells are going to help us to continue to provide cash flow in support of our helium expiration and development program. Of course, we’ve got other exploration lands that could provide for additional oil exploration shots.
TMH: While oil prices have come down this year, they have rebounded…How does this factor into your business strategy going forward?
EB: Yeah, so oils had a great run, but helium is trading very high right now as well. Anecdotally it’s selling on the somewhat of a spot or demand market into the thousands of dollars range and a general industry consensus now over the next three years or so is the prices going to remain solid as Russia still faces sanctions due to the invasion of Ukraine and also, they are working to bring on some facilities that had some issues earlier in the year. Of course, we are a helium company. The cashflow from the oil wells will help us fund the exploration development of helium. One thing that I would like to point out, recently the Canadian federal government identified 31 critical elements which are critical to Canada’s future transition to a green economy and helium was one of those critical elements. Canada is ranked number five in global helium reserves. So, we look forward to what that might mean for helium producers going forward here.
TMH: In recent releases, the company talked about accelerating its plan to bring the 15-25 Helium well into production. Can you give us some insight on what’s happening currently so were up to date?
EB: No, no absolutely. We mentioned a little bit of an update in our last press release but just to remind investors, the 15-25 well was evaluated by our independent evaluator as well and assigned contingent resources. Based on current forecast, helium natural gas and liquids prices, which we do have some liquids in the 15-25 well, if we were to bring that on production today, it would be generating over $15,000 in daily sales revenue with no production decline for over 10 years and that’s roughly 5 to 6 million in annual sales at operating margins in the order of 50%. So put another way we’d be receiving a sales price of over $7.50 per MCF of raw gas produced. Obviously with these robust economics, we’d like to get the 15-25 well into production as soon as possible. One thing we have updated the market on recently here is that we have completed our FEED study or our Front-End Engineering Design study and we’re in the process of securing offtake, helium purchasing arrangements to help the support, the funding and the construction of the single well facility at 15-25.
TMH: The Southern Alberta Helium Exploration Play, or Lethbridge Project…Can you give us an update on that project?
EB: Absolutely. We had initially started looking at over 880,000 acres about a year and a half ago. Since then, we High graded that land to down to 276,000 acres, which is 60% covered by 3d seismic. This has saved us a tremendous amount of money and time in the typical exploration cycle. So based on some good work by our geosciences team, we have a location identified and surveyed that we’d like to get to later this fall. One of the neat things about this area, it’s in close proximity to some good activity by some industry peers. There is some production not far from us and some exploration successes recently announced.
TMH: Lastly, can you give investors some idea of what to look forward to in respect of First Helium’s activities over the next six months?
EB: So firstly, we’ll be sharing the results of the summer drilling program. Next thing we’d be updating or providing an update to investors on our offtake arrangements and kicking off construction of our 15-25 single well helium processing facility. Third, as I indicated earlier, we’re targeting one potential high impact location at Lethbridge and then lastly, we will continue working up our exploration lands for further exploration activity later on into next year.
Thanks again for joining us, Ed.
We’ve been speaking with Ed Bereznicki, the President and CEO of First Helium, You can follow the company on the TSX-V under the symbol HELI.
I’m Brieanna McCutcheon for The Market Herald. Thanks for watching.
For regular updates, visit https://www.firsthelium.com/
FULL DISCLOSURE: This is a paid article produced by The Market Herald.
