Noble Helium signs LOI for a rig ahead of Q3 drilling

Today, our helium Investment, Noble Helium (ASX:NHE), signed a letter of intent (LOI) for a drill rig.

This moves NHE an important step closer towards its primary objective this year - a two well drilling program in Q3.

The rig is a Drillmec HH102 oil and gas rig which can drill to 2,500m, more than double the depth of NHE’s deepest planned well (Pegere-1) - so it's more than capable of doing the job.

Today’s letter of intent was signed in cooperation with NHE’s neighbour in Tanzania, London-listed Helium One - NHE signed a cooperation agreement with Helium One in February to source a rig for both companies’ upcoming drill programs.

NHE says the cost savings from the rig sharing agreement are “significant”, and we see this LOI as evidence that the cooperation agreement is working.

With this drilling program, NHE is targeting an unrisked mean recoverable helium volume of 16.5Bcf.

For some context on what a “good result” might look like, NHE has previously referred to a benchmark of 6Bcf recoverable helium as a “company maker”.

That 6Bcf is almost equivalent to total global helium demand in 2022.

That gives a good sense of the potential scale of NHE’s drilling program, the impact it could have on the helium market - and the potential for NHE to secure the future of helium with a globally significant resource.

Of course, this all hinges on drilling being successful (see Investment Memo risks section).

We know that high tech industries rely on helium - this includes computer chips, space travel, MRI machines and particle accelerators like the Large Hadron Collider.

We also know that a recent helium shortage which emerged in the middle of last year (referred to as Helium Shortage 4.0), caused prices to skyrocket, and some end users of helium had to simply shut down.

As a result, we think this should add some urgency and competitive tension around the “multiple interested parties” that are currently engaged in NHE’s farmout process.

We did some quick scans on Twitter to see if we could track down a picture of NHE’s drill rig and we managed to find this:

Could this be the drill rig that delivers a globally significant helium discovery?

Time will tell…here’s what we’re looking for from NHE in the lead up to the drill program.

What’s next?

• Resource update 🔄
• Farmout partner secured 🔄
• Rig contract executed 🔄
• ⚠️The Big One: Drilling ⚠️ 🔄

To read more about this upcoming newsflow, and see our rough calculations on what NHE’s project could be worth, read our latest NHE note: Multiple Interested Parties in NHE’s Project.