Helium shows 17x higher than expected above primary target

Yesterday our 2021 Catalyst Hunter Pick of the Year Grand Gulf Energy Ltd (ASX:GGE) put out a drilling update for its Jesse1#A pure-play helium well that is currently being drilled in Utah, USA.

In yesterday’s announcement, GGE confirmed that it had detected helium concentrations of up to 17x background levels across several zones OUTSIDE of the primary target area.

The significance of this is that the helium shows above the primary Leadville formation target could be an indication of a working helium system at depth.

GGE also gave an update on the drilling operations announcing the following:

• Drilling has currently reached a depth of ~5,875 feet.
• The primary Leadville Formation helium target is at an anticipated depth of ~8,300 feet and GGE plans to drill down to a ~8,100 feet depth before running casing and preparing to drill into the primary target.

Yesterday’s announcement is therefore a positive first signal, indicating that GGE is drilling in the right spot to make a commercial helium discovery.

We are now waiting for the drilling program to reach the primary target and see how the results from flow testing compare with the expectations we set in our last note.

Below is what we want to see from the drilling results:

• 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 10mmcf per day 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 and how we go about setting expectations going into these type drilling programs, check out our last note for GGE here: GGE’s Maiden Helium Drilling Event has Begun - Here’s what we are looking for next