Helium concentrations 37x above background levels

Investment Memo: GGE 2022

Objective #1: Drilling first helium well

This morning, our 2021 Catalyst Hunter Pick of the Year Grand Gulf Energy Ltd (ASX:GGE) announced that it had detected helium concentrations ~37x higher than the background levels right above the primary helium target GGE is drilling towards.

This effectively means, GGE is detecting helium in parts of the well where no helium is expected to be found. The significance of this is that the presence of helium in and around the main target area (Leadville formation target) could be an indicator that there is a working helium system at depth.

Today’s announcement also gave us an update on the progress of the drilling program, with GGE confirming that:

• Drilling is currently completed to a depth of ~8,070 feet, with cement casing down to that depth currently ongoing.
  
• The primary Leadville Formation helium target is at an anticipated depth of ~8,300 feet and the next phase of drilling will be drilling into this zone.

Effectively, GGE is now likely a few days away from drilling into its main target zone at its pure play helium well in Utah, USA.

In our last note on GGE, we set some expectations for the drilling results which can be seen below:

• Our base case target is for GGE to prove there is a helium system present at the project. If GGE intercepts a helium structure, it can be followed up with additional drilling programs.
  
• An exceptional result for us would be if GGE returns >0.4% helium concentration in the raw gas stream at a flow rate of 10mmcfpd of raw gas. In our opinion, this would constitute a commercial discovery and could immediately be tied into the offtake partners processing facility, moving GGE from explorer to producer.

To read more about how we came up with this, check out our last note for GGE here: GGE’s Maiden Helium Drilling Event has Begun - Here’s what we are looking for next