Bo Sears, CEO of HeLIX Exploration PLC (AIM:HEX) provided updates on the company's ongoing activities at the Klink #1 well.
Sears elaborated on the recent successful re-entry into the well, which had faced initial challenges due to shale, and the subsequent deepening by 500 feet. This marks a critical phase in HeLIX’s exploration journey, as the company prepares for flow testing to assess the well's potential.
HeLIX Exploration is particularly optimistic about the future, given the region's largely untapped reserves of helium and hydrogen. These two gases are in high demand, with helium especially playing a vital role in industries like semiconductor manufacturing.
In this Q&A, Sears discusses the technical progress at Klink #1, the potential impact of helium and hydrogen reserves, and the broader market trends that make this an exciting time for the company.
Proactive: HeLIX has some exciting news regarding the Klink #1 well. Could you start by reminding us of the significance of this well and the area where it's located?
Bo Sears: Of course. Klink #1 is a well we drilled earlier but had to re-enter because of some issues with shale. We encountered shallow sloughing of the formation, which required us to bring in another rig to get everything stabilized. We were able to control the situation and even deepen the well by another 500 feet. Despite the initial hurdles, this well has a lot of potential, and we’re optimistic about what we’re seeing.
Proactive: It sounds like your team really handled the situation well. Now that the well has been deepened, what are the next steps?
Bo Sears: Thank you—it’s definitely been a team effort. Now that we’ve reached our target depth, the next step is to perforate the zones we’ve identified as interesting and begin flow testing. This is where we’ll see what kind of production we can get out of the well, and it’s a key phase for us.
Proactive: Flow testing is crucial. Can you walk us through what this process entails and what you're hoping to learn from it?
Bo Sears: Sure. Flow testing involves measuring gas flows at different rates to get a sense of reservoir pressure and production potential. We’ll take readings at various intervals to allow the well to stabilize, which helps us accurately gauge what we have in terms of gas production. It’s a methodical process but necessary to ensure we’re getting reliable data before moving forward.
Proactive: And if the flow tests meet your expectations, what comes next?
Bo Sears: If the tests are positive, we can then start planning for production. It’s important that we do this safely and professionally, of course. We need to be sure of the gas flow rates and pressures before we make any definitive plans, but early signs are encouraging.
Proactive: That’s great to hear. You mentioned earlier that the region is underexplored, particularly for helium and hydrogen. How significant are these reserves to HeLIX Exploration's future?
Bo Sears: Very significant. This region hasn’t historically been known for oil or gas production, but we knew from early geological work that there were likely inert gases here. Sure enough, we’ve encountered substantial helium and hydrogen reserves. What’s really exciting is the overpressure reservoirs we’re seeing, which indicate strong potential for commercial production. As we were drilling, we were getting excellent gas kicks with 11-pound mud—definitely a good sign.
Proactive: Helium, in particular, seems to be in high demand right now, especially in industries like semiconductor manufacturing. Could you talk a bit about the current market dynamics for helium?
Bo Sears: Absolutely. Helium is critical for a range of industries, with semiconductor manufacturing and medical imaging being two of the biggest consumers. What’s interesting is that while people often associate helium with balloons, that’s actually a very small part of its use. With the U.S. Chips Act pushing semiconductor production back to the U.S., there’s growing demand for a stable domestic supply of helium. This is a great opportunity for us because prices are strong, and we’re well-positioned to meet some of that demand.
Proactive: It sounds like an exciting time for HeLIX Exploration. Bo, thank you so much for the update. We’ll be following the progress closely and look forward to more news from Klink #1.