Brokerage firm SP Angel has kicked off coverage of Helix Exploration plc after the helium exploration and drilling group pulled off an oversubscribed, premium-priced AIM debut this week.
Helix raised £7.5 million in the equity raise at a 10p-per-share placing which initially valued the group at £12.2 million.
The funds will be used for scoping studies and initial exploration drilling targeting helium gas on its acreage in Montana, US
SP Angel analysts highlighted the potential of the helium sector to support Helix’s valuation going forward.
“Helium exploration plays are currently in vogue on the back of a forecast global supply shortage and rapid projected demand growth from high-tech sectors, which use inert helium gas for everything from the production of semiconductor chips to the purging of space rocket engines.”
SP Angel added that investment from the US CHIPs Act “should materially increase domestic demand for helium in the States”.
The company is gunning for its first gas sales to end users by the close of 2025.
“We expect the flow rate, concentration and estimated ultimate recovery (EUR) estimated from the well to be key in determining commerciality, as while drilling costs are relatively low and spot helium prices high, the cost of processing and concentrating the gas requires expensive equipment and has relatively high operating costs,” said SP Angel.
Helix’s shares have added 8% since Tuesday’s AIM debut.