FULL DISCLOSURE: This is sponsored content for Total Helium.
Total Helium (TSXV: TOH) is set to file for permits for the next 28 wells it intends to drill at its flagship Pinta South Project, following the company connecting multiple new wells to production infrastructure since acquiring the project earlier this year.
The application for these permits follows a soil sample survey conducted that has shown promising results, suggesting several anomalies exist within the Shinarump formation and the deeper Coconino formation. The permits include 12 wells that are located on private lands, and a further 16 that are found on lands owned by the State of Arizona. Approvals are anticipated in 30 and 60 days, respectively, for those permits.
Drilling at Pinta South meanwhile is set to resume in mid-November, with an initial five wells planned. The resumption follows three wells that were drilled over the summer within the Shinarump formation, with the company stating that each well cost approximately US$220,000 to drill.
The Pinta South project, which was acquired by Total Helium in May for US$12.0 million, has seen significant development in recent months. At the time of acquisition, the project consisted of two producing wells (20% WI) with average daily gross gas production of 265 Mcf/d and helium concentrations over 8%. The purchase also included eight additional wells (50% WI) that were in the process of being connected to a helium processing plant.
Today, Pinta South overall consists of nine producing wells, and a further 10 that are in various stages of completion and pipeline connection following substantial development by Total Helium., including the completion of a six-mile underground pipeline. Gas is transported to a processing facility operated by Ranger Development, with an offtake agreement in place with Linde for the first ten wells, after which helium will be sold on the spot market, with current pricing on that market ranging from US$500/mcf to US$1,000/mcf.
Two of the connected wells are said to currently produce 232 Mcf/d consistently, with helium concentrations between 7.58% and 7.83%. Initial testing of three additional wells saw production rise to 450 Mcf/d, which is said to be inline with expectations.
Despite the quick development of the project, Total Helium indicated that efforts were slowed this summer following the monsoon season in Arizona that caused several flash floods, hindering completion and production efforts due to washed out roads. The event lead to roads being rerouted on site to mitigate future weather related delays, while pumping equipment and modified separation equipment has been implemented to reduce future production delays.
The company is also taking efforts to acidize two wells to improve connectivity and production rates.
Total Helium last traded at $0.20 on the TSX Venture.
FULL DISCLOSURE: Total Helium is a client of Canacom Group, the parent company of The Deep Dive. Canacom Group is currently long the equity of Total Helium. The author has been compensated to cover Total Helium on The Deep Dive. Not a recommendation to buy or sell. We may buy or sell securities in the company at any time. Always do additional research and consult a professional before purchasing a security.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.