Auctus Advisors is upbeat on Imperial Helium Corp (TSX-V:IHC, OTCQB:IMPHF) following production testing at the firm's two wells in Alberta, Canada, which confirmed the potential deliverability of between 10 and 15 million cubic feet of gas per day (mmcf/d).
The Blow-out Zone (BOZ) horizon at the IHC-Steveville-3 well flowed 5-8 mmcf/d during clean-up at sustained pressure, noted the Auctus analysts.
"The results of the test suggest that the BOZ horizon could flow at 5+ mmcf/d with no decline for a period of three years," they added.
In addition, the gas composition encountered at the BOZ horizon at IHC-Steveville-3 was similar to the gas encountered in the same horizon at IHC-Steveville-2, said the analysts.
"This suggests that the BOZ reservoir is communicating between wells. Given that the two wells are 4.2 km apart, this could have important positive implications for the resources volume. An interference test (ongoing) between both wells would prove that hypothesis," they added.
READ: Imperial Helium hails production testing from Alberta wells, which confirms sufficient deliverability
The analyst firm noted that pending the flow test of the SSZ zone in the IHC-Steville-2 well, the result of the interference test in the BOZ horizon and the publication of a resources report, it was not changing its target price for Imperial Helium stock of C$0.80 per share, with the shares currently changing hands at C$0.26.
The Auctus analysts added that as well as the result of the interference test between both wells, an independent resources report, the next steps were also the testing of the SSZ zone in IHC-Steveville-2 and acid stimulation of the BOZ horizon in IHC-Steveville-2.
The analysts said they continue to estimate the value of Imperial Helium, based on only two development wells in the BOZ and the SSZ, at C$0.30 per share - 50% above the current share price.
Proving-up a three well development with 8 mmcf/d per well would boost this figure to up to around C$0.85 per share, they added.
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