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Just a couple more days… (again)

Published 06-NOV-2023 14:34 P.M.


7 minute read

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own at the time of publishing this article:

  • IVZ 5,896,999 shares and 2,837,289 options, and the Company’s staff own 161,667 IVZ shares and 51,679 IVZ options
  • NHE 3,650,926 shares and 2,437,037 options, and the Company’s staff own 54,339 NHE shares and 2,000 NHE options at the time of publishing this article
  • EXR: 4,777,858 shares and 1,071,429 options

The Company has been engaged by EXR, IVZ and NHE to share our commentary on the progress of our Investment over time.

On the weekend, we wrote about the potential of IVZ and NHE making key announcements on their drilling results today...

And this morning we got announcements from both:

Noble Helium (ASX:NHE) has announced that “preliminary results are pointing to a discovery”, but stopped just short of throwing out the official D-word just yet...

  • 45.7m interval (double what was expected),
  • 6 well developed reservoirs,
  • high porosity and mobility

NHE successfully brought samples to surface BUT said they just need to send the samples off to confirm helium content % in a lab before they are comfortable to officially declare a helium discovery...

Invictus Energy (ASX:IVZ) has announced that they have completed wireline logging with “multiple hydrocarbon bearing intervals” and they are about to attempt to bring a fluid sample to surface to declare a discovery (the final step), which they expect will take 2-3 more days...

So just when you think you can’t possibly wait any longer...

you need to wait a little bit longer.

And just to further add to the anticipation, Elixir Energy (ASX:EXR) has guided the market that they expect to commence their drilling campaign “early this week”...

Just before their drilling commences, today EXR announced that $14.6BN Origin Energy will pay them $1M for an information sharing agreement on EXR’s Daydream-2 appraisal well in Qld.

Quick reminder on what each company does:

  1. Invictus Energy (ASX:IVZ) - is drilling its second well into a 20 trillion cubic feet gas + 845 million barrel oil unrisked prospective resource in Zimbabwe, announced that:
  2. Noble Helium (ASX:NHE) - just finished drilling the first well at its helium project in Tanzania, targeting a 15.7 billion cubic feet unrisked prospective helium resource.
  3. Elixir Energy (ASX:EXR) - is about to drill an appraisal well into its QLD gas project, targeting a ~395 billion cubic feet contingent gas resource.

All three of the companies put out announcements today - here is our quick take:

On NHE’s announcement:

NHE is the first of the companies to put out ALMOST final results from its well.

And NHE reckons these preliminary results are “pointing to a discovery”...

We just need to wait for an offsite laboratory to confirm the helium % in the samples.

Then hopefully we see a discovery declared on this first of 10 geologically similar targets NHE has.

NHE’s first drill target is one of 10 similar targets along the “basin margin”, all sharing similar geological and structural properties.

What this means is that IF this drill target delivers a helium discovery (and we’ll soon find out), that implies that the other 9 targets have a similar chance of success.

It will essentially proves NHE’s hypothesis that there is helium in all the targets.

This is known in the industry as a “string of pearls” concept and NHE is just about finished drilling the first “pearl”:

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NHE hit net pay of ~45.7m across ~6 stacked reservoir zones.

Interestingly, that was almost double the ~20m that was used to estimate the 15.7BCF prospective resource for its Mbelele prospect.

Given NHE’s well was only drilled to ~450m of depth, that's ~10% of the well in net pay...

We touched on what a discovery looks like and what it can do to a company's share price here : The result that stops a nation

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NHE picked out three of the reservoirs for sampling and managed to get samples up to surface across the three.

But helium is a bit different to hydrocarbons... in that helium is a small % of overall gas found in the well, and needs special testing to confirm the % helium contained.

NHE has taken the lower risk, prudent approach to confirm the actual % helium content in a proper offsite laboratory BEFORE official throwing out the D-word.

So now the samples have been sent off to a lab for analysis, the company didn’t provide guidance on how long this will take.

Ultimately, the lab results will be what determines if NHE made a discovery or not.

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Again, IF this drill target delivers a helium discovery (and we’ll soon find out), that implies that NHE’s other 9 targets have a similar chance of success.

NHE is now 2/3rds of the way toward a discovery - it just needs the final lab results:

  1. ✅ Gross/Net pay numbers - NHE hit ~77.7m gross and ~45.7m of net pay across ~6 different reservoirs. Results are more than double the pre-drill expectation of ~20m.
  2. ✅ Sample the reservoirs and confirm helium grades - NHE produced samples to surface and has already sent them off for lab testing.
  3. 🔄 Declare a discovery - Lab results will determine this...

In today's announcement, NHE didn't give any guidance on when to expect results...

But NHE’s co-founder and CEO Justyn Wood mentioned it might be in a “couple of weeks” in the following video that was released about 15 minutes ago:

Justyn wood video


On IVZ’s announcement:

IVZ says it is now 2-3 days away from the final results from its well.

IVZ Drilling table.JPG

IVZ’s update today confirmed that the wireline logging program had been completed AND that “multiple hydrocarbon bearing zones” were found in IVZ’s two primary targets.

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Now, IVZ is 2-3 days away from finishing the sampling program, which is the last step where a company attempts to bring a fluid sample to surface.

IF IVZ can get a sample up to surface then it should be enough for the company to declare a discovery officially.

A basin opening discovery, hopefully accompanied with a photo of IVZ MD Scott Macmillian waving around a little vial of hydrocarbons.

Before the end of this week, we should know whether or not a discovery has been made...

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On EXR’s announcement:

We thought that by the time EXR started drilling its well, we would already have the final results (discovery or not) from both NHE and IVZ.

But with EXR expecting to start drilling “early this week” it looks like we won’t even have time to catch a breath before rolling into following EXR’s drill campaign progress and results.

EXR is about to drill an appraisal well into its QLD gas project, targeting a ~395 billion cubic feet contingent gas resource.

Ahead of their expected drill commencement (any day now) EXR just signed an information sharing agreement with $14.4BN Origin Energy.

The deal sees Origin contribute ~$1M in funding toward EXR’s well in exchange for sub-surface data from the Daydream-2 well.

EXR’s well sits inside licenses where Origin is looking into carbon capture and storage projects.

Origin’s interest in the data is because they are looking at carbon capture and storage potential over two greenhouse gas licenses that are pending (covering EXR’s project area).

The deal makes sense in the context of the “Energy Super Basin” concept, which we touched on in a previous EXR note.

At a very high level, an energy super basin is where large hydrocarbon resources are co-located with clean electricity supply and Carbon Capture and Storage facilities.

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Given Shell is also active in the region, there is a chance EXR’s project ends up sitting inside a super basin controlled by the majors in Australia...

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EXR expects its drill program early this week.

So, the wait continues for the final results from IVZ and NHE, and we expect EXR to enter the drilling fray any day now...

While the agonising wait continues, here are our overviews of each company:

What a discovery could mean for Invictus Energy (ASX:IVZ) - Just days away now... the IVZ result we have been waiting for

What a discovery could mean for Noble Helium (ASX:NHE) - NHE about to drill the world’s largest prospective helium resource

What success looks like for Elixir Energy (ASX:EXR) - EXR drilling for gas in the coming weeks...

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.