Significant Additional Production Revenue
Anticipated in Q2/2022
CALGARY, AB, March 23, 2022 /CNW/ - First Helium Inc.
("First Helium" or the "Company") (TSXV: HELI) (OTC: FHELF)
(FRA: 2MC), today announced that it has drilled, completed and
tested the Company's second exploration well on the Company's
Worsley Property (the "4-29"). Upon completion of well
operations, the 4-29 well flowed 467 barrels per day ("bbl/d") of
~35 -degree API light oil from the Leduc Formation, representing an
oil cut of 67% over a test period of 48 hours on a minimal
drawdown. First Helium is preparing to bring the 4-29 well into
production in early Q2 2022.
- Preparations are underway to perform a minor expansion at the
Company's existing oil facility to put the 4-29 well into
production, with first cash flow expected by mid-second quarter of
2022;
- Oil production from the well will be transported by truck to
select receipt terminals and marketed via third-party marketing
agreements; and
- Cash flow from the well will be deployed to accelerate the
exploration and development of helium gas over the Company's 79,000
acres of land along the Worsley Trend as well as cover ongoing
corporate costs.
Management Commentary
Ed Bereznicki, President &
CEO of First Helium stated, "We are extremely pleased with the
performance of our second discovery well, the 4-29. Given current
commodity pricing of approximately WTI US$85 to US$90 per
barrel, and our estimated field netbacks of CA$82 to CA$88 per
barrel, we expect the well to pay out in approximately 4-6 months."
Mr. Bereznicki added, "Based on the current implied production
trading multiples for Canadian light oil producers, this well
represents a significant potential increase in asset value for
First Helium shareholders. Capturing the aggregate value of this
exceptional exploration success, along with potential development
locations will enhance the Company's ability to deliver on its key
strategic objective of exploring for and developing helium
production in the Worsley Trend."
David Safton, Vice President,
Geoscience commented, "The results of the 4-29 well provide
additional confirmation of our geologic model over the prolific
Worsley Trend and bolsters our confidence in our exploration
strategy for the region. Our estimate that approximately 20%
of Leduc wells along the Worsley
Trend present as oil wells, and 80% as gas wells with a high
probability of potential helium content, highlights the Worsley
Trend as a very attractive helium exploration area."
4-29 Highlights
Drilled based on a detailed 3D seismic evaluation, the 4-29
confirms the Company's geologic model over the area; based on the
Company's assessment of economic Leduc wells along the Worsley Trend,
approximately 20% have been light oil producers, the balance have
been natural gas producers. Key features of the 4-29
include:
- Production tested at 467 barrels per day of ~35-degree API
light oil, flowed over a period of 48 hours, representing an oil
component of 67%, and a water component of 33% following recovery
of completion fluids, with minimal drawdown;
- At a total drill and complete cost of approximately CA$2.2
million, production test results for the 4-29 suggest that it is an
exceptional vertical oil well in the WCSB;
- The 4-29 will provide the Company with flexibility in securing
funding to continue with its primary strategic objective which is
to explore and develop its landholdings on the helium rich Worsley
Trend; and
- The Company intends to engage its independent reserve
engineering consultant to evaluate the 4-29, along with the
Company's first discovery, the 1-30 well, for inclusion in year-end
corporate contingent resource and reserve estimates in accordance
with 51-101 guidelines. This would include an independent estimate
of the net present value of the reserves associated with the 4-29
and 1-30 wells, respectively.
Next Steps
Based on a further evaluation of these exploration results,
First Helium will be confirming its drilling program at
Worsley for Q2 and Q3 2022, which
will include:
- Prioritizing its drill prospect inventory for helium, favoring
locations which may also provide exposure to the potential for
light oil accumulations;
- Selecting its next helium drill location and commencing
drilling in late Q2 or early Q3 2022;
- Evaluating a number of lower cost well bore re-entries on the
existing Worsley land base;
and
- Evaluating further potential light oil development locations in
the vicinity of both the 4-29 and 1-30 wells in connection with
exploring alternatives to monetize their collective asset
value.
Over Q2 and Q3 2022, the Company will evaluate alternatives for
monetizing the intrinsic asset value of both 4-29 and 1-30 to
further its strategic helium exploration and development
objectives. This may include entering into hedging
arrangements to guarantee predictable levels of cash flow for
ongoing project development and the possible underpinning of helium
gas processing facility financing alternatives.
ABOUT FIRST HELIUM
Led by a core Senior Executive Team with diverse and extensive
backgrounds in Oil & Gas Exploration and Operations, Mining,
Finance, and Capital Markets, First Helium seeks to be one of the
leading independent providers of helium gas in North America.
Building on its successful 15-25 helium discovery well at the
Worsley project, the Company has
identified numerous follow-up drill locations and acquired an
expansive infrastructure system to facilitate future exploration
and development of helium across its Worsley land base. Cash flow from its
successful 1-30 and 4-29 oil wells at Worsley will help support First Helium's
ongoing helium exploration and development growth strategy.
First Helium holds over 79,000 acres along the highly
prospective Worsley Trend in Northern
Alberta, and 276,000 acres in the Southern Alberta Helium
Fairway, near existing helium production. In addition to
continuing its ongoing exploration and development drilling at
Worsley, the Company has
identified a number of high impact helium exploration targets on
the prospective Southern Alberta Helium Fairway lands to set up a
second core exploration growth area for the Company.
ON BEHALF OF THE BOARD OF DIRECTORS
Edward J. Bereznicki
President, CEO and Director
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX) accepts responsibility for the adequacy or accuracy of this
release.
FORWARD-LOOKING AND CAUTIONARY STATEMENTS
This news release contains certain statements or disclosures
relating to First Helium that are based on the expectations of its
management as well as assumptions made by and information currently
available to First Helium which may constitute forward-looking
statements or information ("forward-looking statements") under
applicable securities laws. All such statements and disclosures,
other than those of historical fact, which address activities,
events, outcomes, results, or developments that First Helium
anticipates or expects may or will occur in the future (in whole or
in part) should be considered forward-looking statements. In some
cases, forward-looking statements can be identified by the use of
the words "expect", "will" and similar expressions. In particular,
but without limiting the foregoing, this news release contains
forward-looking statements pertaining to the timing and rate of
production of the 4-29 and 1-30 discovery wells, respectively;
anticipated cash flows; the entering into of off-take marketing
arrangements; the use of funds and the Company's strategy. The
forward-looking statements contained in this news release reflect
several material factors and expectations and assumptions of First
Helium including, without limitation: that First Helium will
continue to conduct its operations in a manner consistent with past
operations; the general continuance of current or, where
applicable, assumed industry conditions; availability of debt
and/or equity sources to fund First Helium's capital and operating
requirements as needed; and certain cost assumptions.
Forward-looking statements are based on estimates and opinions
of management at the date the statements are made and are subject
to risks, uncertainties and assumptions, including those set out in
the Final Prospectus dated June 28,
2021 and filed under the Company's profile on SEDAR at
www.sedar.com. Readers are cautioned that actual results may
vary materially from the forward-looking statements made in this
news release. Risks that could cause actual events or results to
differ materially from those projected in forward-looking
statements include, but are not limited to, risks associated with
the oil and gas industry; the ability of First Helium to fund the
capital and operating expenses necessary to achieve its business
objectives; the impact of the COVID-19 pandemic on the business and
operations of First Helium; the state of financial markets;
increased costs and physical risks relating to climate change; loss
of key employees and those risks described in the Final Prospectus
dated June 28, 2021. First
Helium does not undertake any obligation to update forward looking
statements, except as required by applicable securities laws.
Investors should not place undue reliance on forward-looking
statements.
SOURCE First Helium Inc.