A few more names have been added to London’s crop of small-cap helium explorers in recent weeks, establishing the UK’s junior bourse as the ‘home of helium plays’.
On Tuesday, it was the turn of Mendell Helium (AQSE:MDH) – the name given to a reboot of Aquis-quoted Voyager Life PLC (AQSE:VOY), which is acquiring Kansas-based M3 Helium Corp and its six-well project.
Three of M3’s wells are already producing helium and generating revenue, which quickly makes it a notable addition to the clutch of companies vying for investor attentions.
Also this week, Predator Oil & Gas Holdings PLC (LSE:PRD) jumped on the bandwagon after a review of its oil and gas acreage in Morocco outlined untested potential for 100 to 600 billion cubic feet of helium.
It adds to the likes of Zephyr Energy PLC (AIM:ZPHR, OTCQB:ZPHRF), Mosman Oil and Gas Ltd (AIM:MSMN) and 80 Mile Plc (LSE:80M) (formerly Bluejay Mining) which are also identifying helium angles in their asset portfolios.
AIM’s pure-plays are HeLIX Exploration PLC (AIM:HEX) and Helium One Global Ltd (AIM:HE1, OTCQB:HLOGF), which are advancing primary helium exploration projects in Montana and Tanzania respectively.
Then there’s Georgina Energy PLC (LSE:GEX) which is to take a cost effective approach to helium exploration and development, by re-entering historic wells in Western and Central Australia.
Meanwhile, listed in Canada is Royal Helium Ltd (TSX-V:RHC, OTCQB:RHCCF) which is focused on the Steveville Helium facility in Alberta, where it is already producing purified helium.
A compelling commodity story
As global industries grapple with supply constraints and surging demand for critical gases, helium is emerging as a standout investment opportunity.
The noble gas, essential for applications ranging from medical imaging to semiconductor manufacturing, is projected to see its demand double in the coming years.
Helium's unique properties—non-reactive, low boiling point, and the second lightest element—make it indispensable for advanced technologies.
It's crucial in cooling MRI machines, enabling space exploration, and manufacturing fiber optics and microchips. Despite its importance, helium is non-renewable on a human timescale and cannot be manufactured artificially, leading to chronic supply shortages.
Historically, helium has been sourced as a byproduct of natural gas extraction, predominantly from the United States, Qatar, and Algeria.
However, geopolitical tensions and production cuts have tightened global supplies.
The shutdown of the U.S. Federal Helium Reserve and disruptions in Qatar have exacerbated the scarcity, pushing prices upward and prompting end-users to seek more reliable sources.
Pivoting from hydrocarbons
The global push for cleaner energy and sustainable practices has put pressure on traditional hydrocarbon industries.
Regulatory changes, investor scrutiny, and societal shifts towards decarbonization make diversification not just strategic but necessary for survival.
Helium, devoid of carbon emissions and critical for green technologies like nuclear fusion research, presents an attractive alternative.
Moreover, helium commands a higher price per unit compared to natural gas, offering better margins.
The specialized market, less saturated than oil and gas, may allow small-cap companies to establish themselves more prominently and attract investment based on growth potential in a niche sector.
Parallels with the hydrogen revolution
The trend mirrors the recent surge in hydrogen investments.
Hydrogen, particularly green hydrogen produced via renewable energy, is heralded as a cornerstone for a sustainable energy future.
Like helium, hydrogen has seen increased attention due to its applications in energy storage, fuel cells, and as a feedstock for industrial processes.
Both gases are benefiting from a global emphasis on energy transition. Investors are keen on companies that are early movers in these spaces, anticipating that they will ride the wave of growing demand and supportive policy frameworks.
Small-cap explorers venturing into hydrogen and helium are often viewed as high-reward opportunities, albeit with inherent exploration and market risks.
Investor takeaway
The predicted doubling demand for helium presents a compelling case for investment, particularly in companies positioned to bring new supplies to market.
Small-cap explorers offer exposure to this high-growth sector, with the potential for significant returns as projects advance from exploration to production.
But, investors should remain cognizant of the risks associated with resource exploration, including geological uncertainties, regulatory hurdles, and market volatility. Due diligence and a balanced portfolio approach remain essential.
As the world accelerates towards advanced technologies and sustainable energy solutions, helium and hydrogen stand out as critical elements.
Companies that successfully navigate the exploration and development challenges may not only contribute to meeting global demand but also deliver substantial value to shareholders.
Where you can invest …
In no particular order, here’s a rundown of London’s crop of small-cap helium plays.
Helium One – 1.12p per share, £57mln mkt cap
Helium One Global Ltd (AIM:HE1, OTCQB:HLOGF) recently submitted a mining licence application for its southern Rukwa helium project in Tanzania, supported by a detailed feasibility study and commercial development plan. The application, now under review by the Tanzanian Ministry of Minerals and Mining Commission, also includes an environmental and social impact assessment, which is awaiting approval.
The Rukwa project is Helium One Global Ltd (AIM:HE1, OTCQB:HLOGF)'s flagship helium exploration initiative in Tanzania, supported by promising helium concentrations near surface seeps and a detailed development plan aimed at addressing global helium supply challenges.
The company recently completed extended well testing at its Itumbula West-1 well, achieving a maximum helium flow rate of 834 cubic feet per day, with the potential to increase to 6,176 cubic feet per day using artificial lift. Helium One's projects, including Rukwa, Balangida, and Eyasi, are located near surface helium seeps, showing promising concentrations, as the company moves forward with its plans to address global helium supply constraints.
Helix Exploration – 20.2p per share, £23mln mkt cap
HeLIX Exploration PLC (AIM:HEX) has made notable progress in its operations at the Ingomar Dome project in Montana, identifying elevated helium shows from key formations including the Amsden, Charles, and Flathead. The company has secured a contract with Precision Drilling, aiming to re-enter the Clink #1 well in October 2024 to conduct further testing and flow analysis, with the potential to deepen the well based on initial findings.
The Ingomar Dome project is Helix Exploration’s flagship helium exploration initiative, focused on identifying commercially viable helium deposits within the Montana Helium Fairway, supported by extensive historical and ongoing drilling efforts.
Additionally, Helix expanded its footprint at the Rudyard project by acquiring an additional 1,074 acres. The Rudyard site, which already boasts a helium discovery, now covers 6,674 acres and holds significant helium resources. The company is on track to begin appraisal drilling later in 2024, with first gas production targeted for late 2025.
Zephyr Energy – 3.5p per share, £54mln mkt cap
Zephyr Energy PLC (AIM:ZPHR, OTCQB:ZPHRF) opened up its helium exploration opportunity with its farm-in agreement at the Salt Wash project, located three miles south of its core Paradox Basin assets.
This project offers a potential net helium resource of 0.07 to 0.19 billion cubic feet from the Leadville Formation and additional exploration targets with a prospective net resource of up to 0.66 billion cubic feet. The company has identified helium as a value-added opportunity, though it remains a secondary focus alongside its broader oil and gas developments.
Operations at Salt Wash include preparing the drilling pad for the Commitment Well, which will target both hydrocarbon and helium resources. Initial drilling operations are expected to begin in the first half of 2025, with the project offering an estimated net present value of up to $120 million depending on helium prices. Helium from nearby operators in the Paradox Basin is already being produced commercially, and Zephyr aims to leverage this proven potential for future helium production.
Georgina Energy – 9.31p per share, £9mln mkt cap
Georgina Energy PLC (LSE:GEX) is advancing its helium exploration efforts, particularly through the development of the Hussar and Mt Winter prospects in Australia.
The Hussar Prospect in the Officer Basin hosts a significant helium resource, with unrisked prospective recoverable resources of 155 million cubic feet of helium, alongside hydrogen and natural gas. The company is preparing for the re-entry and deepening of the Hussar-1 well, which is expected to begin by the end of 2024, aiming to access the subsalt formations where helium is trapped. This project is supported by reprocessed seismic data and logistical improvements, including the construction of a nearby airstrip.
At the Mt Winter prospect in the Amadeus Basin, Georgina Energy is also planning to re-enter and deepen a previously drilled well to target helium, hydrogen, and natural gas in the subsalt formations. The project is moving through the permitting process, and drilling is expected to begin following approval in September 2024. Both projects place Georgina in a strong position to capitalize on the growing global demand for helium.
Mendell Helium – 3p per share, £1.3mln mkt cap
Mendell Helium PLC (AQSE:MDH), formerly known as Voyager Life PLC (AQSE:VOY), is advancing its helium operations through its option to acquire M3 Helium Corp, a helium producer with interests in six wells located in Kansas. Three of these wells, Peyton, Smith, and Nilson, are already in production, while a fourth well, Rost, is expected to begin production soon.
The company recently completed a larger frack operation at the Nilson well, designed to boost helium output, and M3 Helium has access to both a local gathering network and on-site purification plants for efficient processing.
M3 Helium's wells are located in the Hugoton gas field, one of the largest natural gas fields in North America, and the Fort Dodge area, where the Rost well has recorded helium concentrations of 5.1%. With existing infrastructure nearby, including a partnership with Scout Energy Partners for processing, M3 Helium is well-positioned for further expansion. Mendell Helium has extended its option to acquire M3 Helium until January 2025, reflecting the company's strategic focus on growing its helium operations.
80 Mile Plc – 0.29p per share, £6mln mkt cap
80 Mile PLC (LSE:80M) is actively exploring helium resources, focusing on its Outokumpu project in Finland, where naturally occurring helium and hydrogen have been identified within its licensed areas.
The company has expanded its corporate strategy to include the development of industrial gases, reflecting the increasing global demand for helium, particularly in critical industries such as healthcare and aerospace. Work is ongoing to further assess the gas potential at Outokumpu, with planned field activities aimed at advancing this opportunity.
Additionally, the company's post-period acquisition of White Flame Energy strengthens its commitment to helium and industrial gas development.
Royal Helium – 6 cents per share, C$19mln mkt cap
Royal Helium Ltd (TSX-V:RHC, OTCQB:RHCCF) is focused on becoming a leading helium producer in North America, with current operations centered at the Steveville Helium facility in Alberta, where it is already producing purified helium.
The Steveville facility is ramping up towards its nameplate capacity of 15 million cubic feet of raw gas per day, positioning the company to meet the growing demand for helium in various industries, including healthcare and technology.
Additionally, Royal Helium holds extensive helium permits and leases in southern Saskatchewan and southeastern Alberta, making it one of the largest helium leaseholders in these regions. The company’s strategic repositioning includes disciplined capital allocation and the establishment of a technical committee to enhance the operational efficiency of its helium projects, particularly at Steveville.
Mosman – 0.03p per share, £4.65mln mkt cap
Mosman Oil and Gas Ltd (AIM:MSMN) is advancing helium opportunities particularly with its 20% working interest in the Vecta Helium Project in Colorado, USA. The company is progressing toward drilling at Vecta, with plans to commence operations between October and December 2024.
This project is a key part of Mosman’s strategic shift towards helium exploration, aimed at tapping into the growing demand for the gas.
In addition to its US activities, Mosman is advancing its EP(A) 155 project in Australia's Northern Territory, where it holds a 100% interest. The project, currently progressing through the approval process, has the potential to significantly contribute to Mosman's helium portfolio. Depending on farm-in agreements, Mosman’s interest in this project could reduce to 25% or 10%, with the option to be carried through the drilling phase.
Predator Oil & Gas – 9.56p per share, £44mln mkt cap
Predator Oil & Gas Holdings PLC (LSE:PRD) only recently revealed its helium exploration potential through the MOU-5 prospect in the Guercif region of Morocco. The independent report by ScorpionGeoscience has estimated potential helium resources of 104.31 billion cubic feet (BCF) in the P50 case, and up to 598.88 BCF in the P10 case, with helium concentrations ranging between 1.298% and 4.066%.
The MOU-5 well is set to test the effectiveness of helium charge and retention in the structure, with full funding secured for the project.
The geological setting at Guercif presents several analogues to other major helium-producing fields, such as Algeria’s Hassi R'Mel and the Hugoton field in the USA. Predator's management sees significant potential to add value from helium production, with MOU-5 offering multiple migration pathways and strong structural traps within its large closure.