First Helium To Develop New Shallow Heavy Oil Discovery

First Helium (TSXV: HELI) appears to be going through a slight identity crisis, announcing this morning that it has made two discoveries at its Worsley project in Alberta. The discoveries follow the drilling of two wells within the project.

The first discovery is that of shallow heavy oil, which was encountered in both the 7-15 and 7-30 wells that were recently completed. The 7-30 well is said to have produced 50 barrels of 15-degree API oil over a period of two days following acid stimulation, demonstrating cold flow oil capability. The 7-15 well meanwhile also produced small quantities of heavy oil without stimulation, leading to the well being shut-in for further evaluation once spring break-up is complete.

The Heavy Oil Zone has now been encountered by First Helium in several existing wellbores on the Worsley land base, with the zone said to “represent the potential for a large, attractive, lower-risk oil development opportunity.” Initial estimates suggest 5 million barrels of original oil are in place per square mail, which can be accessed by proven horizontal drilling techniques.

Evaluation work is now underway for the development of the play, which First Helium believes contains an attractive rate of return based on estimates and short payback periods. A nearby oil battery and water disposal facilities owned by the company are expected to reduce operating costs as well. Next steps here consist of bringing the 7-30 heavy oil zone into production, and the drilling of a horizontal test well to kickstart development, both items of which are scheduled for the third quarter.

The second discovery is that of a helium enriched natural gas play, with the 7-15 well also encountering the Blue Ridge formation. The formation reportedly flowed natural gas that had helium content of 1.0%, confirming the extension of the the play concept that was established on the West Worsley lands.

Across the formation, the 5-27 well is cased and ready for completion at West Worsley, while a company-owned pipeline network provides a development for the development of the Blue Ridge opportunity across Worsley. Next steps for the formation include completing the 5-27 well and preparing an area development plan with potential project partners.

“While our primary oil target in the Leduc formation did not test as commercially viable, our secondary target for heavy oil has exceeded our expectations for inflow of cold flow heavy oil from a vertical well bore. We are very excited to proceed with the development of this potentially large, shallow heavy oil play utilizing contemporary horizontal drilling methods. [..] In addition to the heavy oil play, we are pleased to confirm the extension of our Blue Ridge helium enriched natural gas play to the eastern block of First Helium’s land base,” commented Ed Bereznicki, CEO of First Helium.

First Helium last traded at $0.045 on the TSX Venture.

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Information for this briefing was found via Sedar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.