FULL DISCLOSURE: This is sponsored content for Total Helium.
Total Helium (TSXV: TOH) is expected to resume trading on the TSX Venture Exchange on Monday following a several week halt. The halt was put into place in late March, following the news that the company would be entering into a major joint venture for large scale helium production in Arizona.
The joint venture agreement pertains to the Pinta South Helium Project, which covers 27,192 acres in the Holbrook Basin of Arizona. The property currently contains over 150 potential drill sites, with production already underway from two wells.
The gas field currently features helium concentrates of 5-8%, a very high concentration, with the gas stream primarily consisting of nitrogen, which enables inexpensive processing. Furthermore, the primary target formation is shallow, enabling low drilling and completion costs, which is estimated at just $220,000 per well. A gathering system and helium processing facility is already in place, enabling for the quick scaling of production.
This JV is a great complement to Total Helium’s strategy of acquiring producing assets as we build upon our existing relationship with our industrial gas partner. I have the utmost respect for our joint venture partners, Butler Minerals and Mid America Exploration, who are proven helium finders and producers. It is my belief that this joint venture will create significant value for our shareholders for many years to come.CEO Robert B. Price, commenting on the acquisition of the Pinta South project.
As part of the joint venture partnership, Total Helium has acquired a 20% stake in two wells that are currently producing at an average daily gross rate of 265 Mcfp/d with helium concentrations above 8%. Also acquired was a 50% stake in eight existing wells that are currently in the process of being connected to a processing plant, with the company having a 50% working interest in all future wells drilled at Pinta South.
In exchange for the working interest, the company paid a total of US$12.0 million, of which US$8.0 million was paid in cash and the remainder was paid via the issuance of 10.8 million common shares, with the transaction closing on May 1.
As part of the transaction, Total Helium has committed US$2.0 million towards a capital development program. The current plans call for the company to drill and complete ten wells, bringing the project to a total of 20 producing wells this year.
Total Helium last traded at $0.52 on the TSX Venture.
FULL DISCLOSURE: Total Helium is a client of Canacom Group, the parent company of The Deep Dive. 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.