HeLIX Exploration PLC (AIM:HEX) has enhanced its portfolio with the addition of the Rudyard helium asset in Hill County, Montana.
The acquisition cost was a combination of $250,000 in cash and 600,000 shares for Rudyard, an asset that comprises 525 million cubic feet (mm cf) of helium and 2,176 mm cf of natural gas in the Souris River and Red River formations.
The purchase of Rudyard aligns with Helix's strategy to balance its exploration-heavy portfolio with development-ready assets.
This move not only adds significant value but also provides near-term cash flow potential, analysts at Oak Securities said. Helix plans to leverage its equity to preserve cash resources for further development and exploration activities, particularly at its existing Ingomar Dome asset.
Oak Securities valued the acquisition at $85.5 million, with $76.5 million attributed to contingent resources and $8.9 million to deeper exploration potential.
This transaction significantly increases Helix’s overall valuation and represents a major step forward for the company, Oak said, upgrading its valuation of Helix to $145 million, or 93p per share, reflecting a premium of over 300% above the current share price of 20.2p.
Oak employed a discounted cash flow (DCF) valuation methodology to assess the Rudyard asset. This approach considers the critical factors impacting asset value, including commercial risks. The valuation reflects the potential of reclassifying contingent resources to reserves once a development plan is finalised.
The Rudyard asset’s development programme is expected to accelerate cash flow generation, potentially within 18 to 24 months, the analysts said, a notably shorter timeline than that anticipated solely from the Ingomar Dome asset.
Helix's portfolio now includes a mix of contingent and prospective resources. The contingent resources in the Souris River and Red River formations total 525 mm cf of helium and 2,176 mm cf of natural gas. The prospective resources, which include the Dry Creek formation, add 67 mm cf of helium.