Noble Helium (ASX: NHE) shares are down 16% today. The cause for this fall in NHE shares does seem to be more than a little overdone. On the other hand there’s a pair of companies trying much the same thing in much the same place and they both seems to be struck by repeated missteps and misspeaks. It’s as if there’s some little gremlin affecting helium exploration in Tanzania. Odd, very odd, but there it is.
As we’ve said before about Noble Helium: “It's worth pointing out that helium is the one non-radioactive element that we, humanity, use which is not in fixed supply. It's actually generated by the radioactive breakdown of thorium and uranium. The Earth's original endowment boiled off into space billions of years back.
“So, the geology, find some nice U and Th rich rock which is also covered by an impermeable to gas layer. The helium created by the radioactive breakdown should therefore be trapped, in pockets, below that top layer. Both Helium One and Noble Helium are reporting that this is true in the Rukwa area of Tanzania. And, given what we know about the geology there, we'd expect them to be right too. So, happy days, right? A helium supply that can be drilled for and everything's great?”
We’re fine with the basic logic being used and expect - expect, not just hope for - there to be some helium there. Whether there will be enough to make it economic, that’s the thing we’re all trying to find out.
Noble Helium share price from Google Finance
Today’s issue is that they made an information release: “MDT sampling and mini-DST runs are expected to take a number of days, after which Mbelele-1 will be plugged and abandoned as planned, with Mbelele-1 not designed to be a future production well.
The Marriott rig will then be rigged down and along with the SLB equipment moved 4km to
commence drilling at the Mbelele-2 site.” Something the market then read as, well, there’s no helium there. So this was swiftly followed by a second announcement: “The testing programme of the Mbelele-1 well is NOT completed. The wireline logs run by SLB have
identified multiple zones of interest where stacked, interbedded sandstone-clay formations are coincident with helium shows above background detected in the mudgas.” That is, the drilling programme is finished, but the testing of what we’ve drilled has not. We therefore expect the helium levels to be announced in the near future.
As we say, Noble Helium is doing pretty much the same thing as Helium One, same plan, same geology, same country and not that far from each other either. There have been errors at Helium One: “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).”
Hiring a contractor who doesn’t turn up, then your own bought rig breaks down. Sure, none of these change whether there’s helium in Tanzania or not but they’re not good looks all the same. Perhaps there really are some gremlins out there in rural Tanzania?