CALGARY, ALBERTA, January 31, 2023 – Global Helium Corp. (“HECO” or the “Company”) (CSE: HECO, OTC: HECOF) is pleased to provide an operational update highlighting recent drilling activity, along with confirming receipt of an Evaluation of Contingent Helium Resources related to the Company’s second half 2023 drilling on its core Manyberries asset situated in the Medicine Hat region in Southeast Alberta.
During the second half of 2023, HECO drilled and completed two exploratory wells on the Manyberries helium trend, the first of which is located at 09-04-12-04W4 (“09-04”), with the second located at 10-08-012-04W4/00 (“10-08”). The 09-04 had an absolute open flow test (“AOF”) of 11.6 MMcf/d and a stabilized flow test of 2.8 MMcf/d from the Beaverhill Lake Formation, with 1.1% helium. The 10-08 well sustained reasonably high near-wellbore damage as a result of drilling fluid and cement entering the formation during drilling operations and, as such, it could not be tested from the same interval as the 09-04 well, despite showing net gas pay in the logs. However, HECO was able to test a thinner, stratigraphically lower porosity streak in the 10-08 well which confirms the presence of Helium. Test results from the 10-08 well showed a stabilized flow rate of 0.4 MMcf/d from the thinner Beaverhill Lake Zone at 0.65% helium. With the drilling and testing of both the 09-04 and 10-08 wells now complete, HECO has satisfied the terms of the Farm-in and Option agreements as announced January 17, 2023 and January 10, 2023. The Company now has a 75% lease interest in 22 sections of helium prospective land in the Manyberries area.
Jesse Griffith, CEO of Global Helium, commented, “The results and learnings from our first two exploration wells have exceeded our expectations. The geologic data and helium concentrations we’ve encountered support the viability of further development in this area and we are proceeding with the necessary steps for expanded operations along with the planning of future production facilities. We look forward to keeping our shareholders updated on HECO’s continued progress.”
With the success realized to date at HECO’s Manyberries asset in Alberta, the Company has prudently undertaken a review of its acreage portfolio to ensure resources are allocated to the highest potential return projects. Due to increasing helium activity by peers in Saskatchewan, there is a meaningful amount of seismic and geological data available. After extensive review of this data, HECO will be prioritizing its Saskatchewan landholdings, with this process allowing management to focus on the high-graded Saskatchewan and proven Alberta land base, which offer greater prospectivity and value potential. As a result of this undertaking, HECO successfully streamlined its land holdings from approximately 1.8 million acres to approximately 660,000 acres. This enables the Company to eliminate $550,000 in permit leasehold obligations over the next two years, while still maintaining a majority of the land that HECO deems prospective for helium development.
Helium Contingent Resource Report Prepared by Independent Evaluator
HECO is also pleased to share summary estimates from its Contingent Resource Report prepared by McDaniel & Associates Consultants Ltd. (“the McDaniel Report”), an independent qualified reserves evaluator, dated January 16, 2024, for the Company’s first helium wells at 09-04 and 10-08, drilled in the Beaverhill Lake Zone on the farm-in land block of Perpetual Energy Inc. (TSX: PMT) (“Perpetual”) (the “Farm-in”) within the Manyberries helium trend.
Estimated Company Share of Unrisked Helium Contingent Resources as of December 31, 2023
|Category / Level of Certainty
|Gross (MMCF) (1),(2)
(1) Contingent resource volumes reported only correspond to the 09-04 well as the 10-08 well was unable to test at a stabilized economic rate. Recoveries noted here may not be representative of full pool development or the total pool gas initially-in-place (“GIIP”). The Contingent Resources have been risked to account for a 80% chance of commerciality.
(2) Contingent Resources include the working interest reserves before deductions of royalties payable to others and includes expected processing of five percent with a one percent helium concentration.
“I am pleased to share HECO’s first resource estimate from the McDaniel Report which demonstrates our progress to date in developing the emerging and exciting Manyberries helium trend,” continued Griffith. “This initial assessment of the Beaverhill Lake Formation marks a key step in advancing this asset from a discovery through to reserves, and we are pleased with the numbers despite the estimate not reflecting any Contingent Resource value for the 10-08 well. Regardless, we have successfully proven the aerial extent of the helium resource in place and look forward to continuing our work to expand the size of this asset moving forward.”
Building on HECO’s momentum exiting 2023, the Company remains committed to ongoing asset development, value creation and prudent capital allocation through 2024. With a healthy cash position of approximately $2.8 million at year end, the Company has sufficient financial flexibility and working capital to advance its immediate strategic initiatives. HECO’s near-term focus will be on facilities planning for the Medicine Hat area based on the Company’s results achieved to date in Alberta, along with pursuing potential offtake partners. Management is also exploring options to fund development of its streamlined Saskatchewan landholdings, along with existing drill-ready opportunities in Montana.
Additional Information and Cautionary Statements
- The resource is contingent on funding for development and production.
- There is uncertainty that the project will be commercially viable to produce any portion of the Contingent Resources.
- The estimates presented in this release are based on data and test results from one well. There is potential for future drilling activity to materially impact the estimated volumes based on additional geological data and production testing. Estimated pool volumes may increase or decrease in the future.
- The Contingent Resources estimated for 09-04 and offsetting locations relies on comparisons to analogous wells, and no production data is available from the well included in this estimate.
- The reader is cautioned that disclosure of helium in place volumes is not included in National Instrument 51-101 guidelines.
Information Regarding the Contingent Resources
The effective date of the Contingent Resource estimate is December 31, 2023 and was prepared in accordance with the COGE Handbook.
This news release discloses estimates of the Company’s Contingent Resources. The Company defines Contingent Resources are those quantities of gas estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development but which are not currently considered to be commercially recoverable due to one or more contingencies. There is uncertainty that it will be commercially viable to produce any portion of the resources.
The resource estimates presented above are subject to certain risks and uncertainties, including those associated with the drilling and completion of future wells, limited available geological, prices of the various raw gases and geophysical data and uncertainties regarding the actual production characteristics of the reservoirs, all of which have been assumed for the preparation of the resource estimates.
The resources are classified as development pending.
Contingent Resources do not constitute, and should not be confused with, reserves. Contingent Resources are defined as those quantities estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. There is a range of uncertainty of estimated recoverable volumes. A low estimate (“1C”) is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate, which under probabilistic methodology reflects at least a 80% confidence level. A best estimate (“2C”) is considered to be a realistic estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate, which under probabilistic methodology reflects at least a 50% confidence level. A high estimate (“3C”) is considered to be an optimistic estimate. It is unlikely that the actual remaining quantities recovered will exceed the high estimate, which under probabilistic methodology reflects at least a 10% confidence level. There is uncertainty that it will be commercially viable to produce any portion of the resources.
All of the resources classified as contingent are considered to be discovered, and as such have been assigned a 100% chance of discovery but have however been risked for the chance of development. The chance of development is defined as the likelihood of a project being commercially viable and development proceeding in a timely fashion. Determining the chance of development requires taking into consideration each contingency and quantifying the risks into an overall development risk factor at a project level.
Contingent resources can be sub-classified based on project maturity. COGEH (Section 1.3.6 Project Maturity Sub-Classes) discusses what the typical progression is, as follows:
- Initial assessment to confirm the reservoir as a known accumulation with the potential for development. During this process, the project maturity may be Development Unclarified while additional information, in particular test or pilot data, is being acquired. For conventional accumulations, this data-gathering stage may be a short time (e.g., with a drill stem test prior to rig release), but for unconventional accumulations, this may take considerable time, even years, and involve pilot tests; and
- Once the appropriate information to pass beyond development unclarified has been collected and analyzed appropriately, a project may be classified as either:
- Development Pending, where resolution of the final conditions for development is being actively pursued (high chance of development). (If a project cannot be developed within a reasonable timeframe, consideration should be given to reclassification as development on hold); or
- Development On Hold, where there is a reasonable chance of development, but there are major non-technical contingencies to be resolved that are usually beyond the control of the operator; or
- Development Not Viable, where no further data acquisition or evaluation is currently planned and hence there is a low chance of development.
In general, contingencies which prevent Contingent Resources from being classified as reserves are grouped under three categories: economic contingencies, non-technical contingencies and technical contingencies. Economic contingencies are applicable only in the case of sub-economic Contingent Resources. As all of the Contingent Resources disclosed in this news release are classified as economic Contingent Resources, there are no economic contingencies in respect of such resources. Non-technical contingencies include factors such as required corporate or third party (such as joint venture partners) approvals, legal, environmental, political, social license and regulatory matters or a lack of infrastructure or markets. Technical contingencies are applicable where there is a technology currently under development that would be required to classify the Contingent Resources in question as reserves. None of HECO’s estimated Contingent Resources are subject to technical contingencies.
Significant positive factors relevant to the estimates include:
- commercial success of drilling
- corporate commitment to develop plays over a reasonable time frame;
- significant well control and offsetting economic well production;
- proximity to infrastructure for production growth and central market hubs; and
- low political risk as all reserves and resources are located in North America.
Significant negative factors relevant to the estimates include:
- potential for low commodity prices impacting the economic viability and development of certain areas;
- access to and amount of capital required to develop resources at an acceptable cost;
- significant production growth and access to infrastructure capacity;
- development uncertainty relating to surface access matters.
Estimates of economic Contingent Resources are based on existing access to infrastructure capacity and the current regulatory frameworks in which HECO operates.
One hundred percent of the Contingent Resources disclosed in this news release are located in the Manyberries helium trend in the Medicine Hat region of Southeastern Alberta and are classified as Development Pending with a Chance of Development of 80%. There are no technical contingencies preventing the classification of contingent resources as reserves as all economic Contingent Resources are considered “discovered” and are based on established technology. The non-technical contingencies that must be resolved before these resources may be classified as reserves are the establishment of processing and sale agreements, and corporate commitment to develop these assets in a timely fashion.
About Global Helium Corp.
Global Helium is one of Canada’s largest helium exploration and development companies, focused on the exploration, acquisition, development, and production of helium, done right. The Company has carved out a differentiated position through a unique Farm-In Agreement with industry veteran, Perpetual Energy Inc., through which HECO can access approximately 369,000 acres in Alberta’s Manyberries helium trend via joint venture. The Company has also captured 100%-owned permits encompassing over 660,000 acres prospective for helium in Saskatchewan’s well-established helium fairway and has recently acquired three significant assets with proven helium tests in the State of Montana. HECO brings a seasoned team of industry professionals and technical experts who have established connections with North American and international helium buyers. Learn more at https://globalhelium.com/ and follow us on LinkedIn and Twitter (now X).
For further information please contact:
Jesse Griffith, President & CEO
Telephone: +1 705-5076 ext. 1
Forward Looking Statements
No securities regulatory authority has reviewed nor accepts responsibility for the adequacy or accuracy of the content of this news release.
This news release contains forward-looking statements and other statements that are not historical facts. Forward-looking statements are often identified by terms such as “will”, “may”, “should”, “anticipate”, “expects” and similar expressions. All statements other than statements of historical fact, included in this internal announcement are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company’s expectations include the failure to satisfy the conditions of the relevant securities exchange(s) and other risks detailed from time to time in the filings made by the Company with securities regulators. The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company.
The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this internal announcement are expressly qualified by this cautionary statement. The forward-looking statements contained in this internal announcement are made as of the date of this internal announcement and the Company will update or revise publicly any of the included forward-looking statements as expressly required by applicable law.
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