Helix Exploration PLC (AIM:HEX, OTCQB:HHEXF) has delivered some encouraging news from its Inez-1 well at the Rudyard field in Montana.
The company has drilled and tested the well, finding around 140 feet of good-quality rock that shows clear signs of gas, what the team calls a “gas effect”, in two important layers known as the Souris and Red River formations.
If you’re wondering how they know what’s down there, Helix has used petrophysical logs, which are basically high-tech measurements taken inside the well, to compare Inez-1 to its earlier Linda-1 discovery nearby.
The results look promising: the rocks match up closely, suggesting more of the same gas potential, says broker SP Angel.
"[This is] a good operational update from Helix," the broker added.
The next step is flow testing, starting in early August.
This will reveal how much gas the well can actually produce, as well as the amount of helium, a valuable commodity, mixed in.
Meanwhile, construction of the processing plant is on track, with groundwork nearly done and concrete pouring due soon.
In June, Helix raised £4.5 million to drill two more production wells and fund the new gas processing plant.
If these new wells perform as well as previous ones, each could generate $4 million a year in cash flow at current prices, a strong start for a company valued at just over £50 million.
Helix aims to bring five production wells online at Rudyard as soon as plant construction and regulatory checks are finished. Each additional hole has the potential to generate $4 million in cash flow at current prices.
Early gas sales would give the business a self-financing boost and open the door to further exploration, acquisitions, and growth as a strategic supplier of helium in the US market.
"The company remains focused on first gas production at the Rudyard project, where early cash flow would enable the freedom to pursue exploration and M&A, self-financing development and growth into a strategic helium producer for the US market," said SP Angel in a note issued on Friday.
In short, the pieces are falling into place for a very interesting next chapter.
The shares were up 4% at 25.69p.