HeLIX Exploration PLC (AIM:HEX) has passed another important milestone on the road to its first helium well, with drilling expected to get underway in the third quarter.
It did so by sharing with the market the results of an independent analysis, or scoping study, of its assets along Montana Helium Fairway.
The study indicates a net present value (NPV8) of $303.1 million using a helium price of $550 per thousand cubic feet (Mcf) and a helium grade of 1.5%.
It highlights an initial capital expenditure (CAPEX) requirement of $19.7 million - bang in line with estimates. The project is expected to generate net revenue of $605.6 million after CAPEX, operational expenses (OPEX), taxes, and royalties over a 29-year life of the mine (LOM).
Bo Sears, CEO of Helix Exploration, said, "We are delighted with the results of this Scoping Study that demonstrate the potential for exceptional economic returns across a range of modelled scenarios."
The number crunchers evaluated the Ingomar Dome Project, which shows high returns and low capital requirements.
CEO Sears said: "Rapid payback and free-cash-flow estimates of over $40 million a year release a range of finance possibilities to provide initial CAPEX requirement."
Aeon Petroleum Consultants produced the report with James Weaver leading the evaluation. Weaver has 45 years of experience in economic analysis, production optimization, and reserve estimation.
The scoping study used various technical parameters to determine recoverable helium resources per well. It combined production data from historic wells within Helix's leases and analogous nearby fields to develop a detailed production plan.
The optimised schedule includes initial production in 2025 from three wells supplying a 10,000 Mcf per day inlet pressure swing adsorption (PSA) plant. This approach reduces initial CAPEX and increases the project's NPV on a per-share basis.
Self-funded expansion to a 20,000 Mcf per day plant is planned for 2027, with additional wells to maintain production rates. Seven more production wells will be drilled between 2030 and 2035 to sustain pressure and flow to the plant.
Recovering byproduct natural gas from specific formations to feed into an onsite co-generation facility offers significant operational expense savings.