Helix Exploration (LSE:HEX) - Strategic Producer Targets US Helium Supply Gap

Interview with Bo Sears, CEO of Helix Exploration

Our previous interview: https://www.cruxinvestor.com/posts/helix-exploration-lsehex-drilling-for-helium-to-commence-in-montana-targets-production-by-2025-5753

Recording date: 7th January 2025

Helix Exploration is positioning itself as a pure-play helium producer at a time when the market faces critical supply constraints. The company recently acquired a helium processing plant for $500,000, representing a significant discount to the $4 million cost of building a new facility.

The company's flagship Rudyard field in Montana has proven reserves of at least 300 million cubic feet of helium, valued at approximately $200 million at current market prices of $400-500 per thousand cubic feet (mcf). This valuation starkly contrasts the company's current market capitalization of £20 million. The field's production features a commercially attractive helium concentration of 1.1%, with inert nitrogen balance, simplifying the processing requirements.

Helix plans to bring its first well into production by mid-summer 2025, with the recently acquired pressure swing adsorption (PSA) plant being relocated to Montana. The company also plans to drill 2-3 additional wells in 2025, each costing $1.2 million to drill and complete.

The broader helium market context makes this development particularly timely. Helium is a critical, non-substitutable element for high-tech manufacturing, particularly in semiconductor production and MRI machines. Over the past two decades, the market has experienced several severe shortages, with prices spiking to $1,000/mcf during supply constraints.

Current market dynamics suggest these supply challenges may intensify. Major industrial gas companies, which historically controlled helium production as a byproduct of natural gas operations, are already operating at maximum capacity. Meanwhile, Russia's exclusion from Western markets has removed a significant supply source, while Algeria and Qatar remain the primary international producers.

The U.S. CHIPS Act is expected to drive increased domestic demand as new semiconductor manufacturing facilities are built. These facilities require substantial helium volumes for silicon wafer production, adding pressure to an already constrained market.

CEO Bo Sears said, "Without helium, we are living in the Stone Age. It is so valuable in chip manufacturing and in MRI scanners. The high-tech list goes on and on." The company's strategic advantage lies in its focus on primary helium production, rather than helium as a byproduct, and its ability to scale production through its modular PSA plant design.

This combination of proven reserves, near-term production capability, and favorable market dynamics positions Helix to capitalize on the growing demand for domestic helium supply in an undersupplied market.

View Helix Exploration's company profile: https://www.cruxinvestor.com/companies/helix-exploration

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