Helium One (LON: HE1) shares are up 4% on London this morning. The announcement driving this is twofold, they’ve found helium tells in their drilling so far - and also the drill has broken down. Which does lead, rather, to thinking that this is a comedy of errors. For everytime HE1 seems to get to the stage of proving their concept they encounter a technical problem. News this summer from Helium One: “Helium One (LON: HE1) shares are down 12% today. HE1 shares are down because they're having problems getting hold of a drilling rig. Which, when you're intending to drill for gas, is something of a problem - no drilling rig, no drilling, obviously. The more specific problem seems to be that they chose the wrong subcontractor: “Helium One Global (AIM: HE1), the primary helium explorer in Tanzania, provides a rig update in relation to the Company's contractual relationship with SOFORI taking into account today's announcement by Noble Helium (ASX: NHE). The Company has previously issued a number of deadlines to SOFORI but continues to have concerns about the lack of operational and contractual progress required under the terms of the non-binding Letter of Intent ("LoI") and, pursuant to legal advice received by the Company, have issued SOFORI with a rectification notice.””
They hired a rig which never turned up. At which point they bought a rig, which broke, was repaired and they were able to start drilling.
Helium One Global share price from Google Finance
Today: “Tai-3 well has successfully encountered helium shows whilst drilling in the Lake Bed Formation and the Karoo Group. The Basement reservoir target has come in deep to prognosis and is yet to be reached; this has extended the drilling period. Well depth is currently at 1,445m measured depth ("MD"), with well total depth ("TD") now expected to be at ~1,550m MD. On Sunday 29th October, whilst drilling the final section, the rig encountered a mechanical and an electrical fault which resulted in a temporary rig shut down to allow for troubleshooting and repairs. Once drilling recommences, the Basement target should be reached quickly and this will be followed by a comprehensive wireline programme to fully evaluate the helium shows encountered whilst drilling.” They’re really not having much luck with their drilling rigs now, are they?
We should perhaps emphasise that the basic geologic idea seems very sensible to us: “It's a daughter product - the alpha particle - from the radioactive breakdown of uranium and thorium And there's an awful lot of rock out there with low levels of U and Th in it - 50 ppm, 100 ppm, that sorta level. The helium that is produced tends to accumulate - that which doesn't just disappear into the atmosphere - with natural gas. Near all natural gas contains some helium, those TX and OK wells were just very rich in it. But, of course, it takes a lot of money to extract that He from the CH3. Helium One is on the track of high He natural gas in Tanzania. Seems logical, the local rock is high in U and Th so we might well find goodly amounts. So the plan's a good 'un, right?”
Indeed, the plan’s a good one. It depends upon the gas reservoir being impermeable enough that the helium hasn’t bled off over the years. Which is why the drilling to test that of course. We tend to think there will be helium there. What will then matter is if it is economic which is something none of us knows as yet.