The Greater Knappen is a 69,000 acre property stretching from Montana to Alberta, Canada...and it may represent one of the best North American prospects for new helium discovery.
Avanti Energy has a 100% operatorship of this property...and the company’s experienced technical team has identified 17 drilling targets in the region.
Avanti’s geological interpretation of the Greater Knappen property estimates an undiscovered resource potential of:
* Low case: 1.4 bcf of Helium
* Mid case: 4.4 bcf of Helium
* High case: 8.9 bcf of Helium.
Based on these estimates – and current helium prices – it’s possible that Avanti Energy Inc. (TSX:AVN.V; OTCMKTS:ARGYF) could be sitting on as much as $1 billion worth of helium.
And now the company’s initial drill testing is looking to validate the potential for Avanti’s Greater Knappen project.
Initial Drill Testing on Avanti’s First
Helium Well Shows Promise
On January 24, the company announced that it had completed initial open hole logging and drill stem testing on its first helium well, Rankin 01-17, on the Greater Knappen property.
The Rankin 01-17 well was successfully drilled to a depth of 5,860 feet and encountered all the targeted zones for helium potential. Open hole logging indicated five zones with reservoir characteristics (good porosity and low water saturation) suggesting further testing is warranted.
Drill stem tests were performed to high-grade zones for completions and two of the targeted zones showed economic helium potential.
This completion of the company’s first exploration well on the Greater Knappen property appears to bring strong potential for Avanti Energy Inc.
The company’s analysis has shown that there is potential for economic helium production in two of the three target zones.
And on January 27, the company announced that its second helium well, WNG 11-22, was spudded on the Greater Knappen property.
This second play concept in Greater Knappen is geologically distinct from the company’s first well, so success with WNG 11-22 would open the possibility for additional drill targets in the future for Avanti.
The next multi-well drilling program is expected to commence in Q1 2022.
Crunching the Numbers: What Success in the Greater Knappen Could Look Like for Avanti Energy
What makes the opportunity with Avanti Energy Inc. (TSX:AVN.V; OTCMKTS:ARGYF) so intriguing to us is the upside potential associated with success.
As mentioned earlier, with the 69,000-acre Greater Knappen property, it’s possible that the company could be sitting on as much as $1 billion worth of helium if the company’s estimates are proven to be accurate.
Just six miles from Avanti Energy’s Greater Knappen property, one of the company’s competitors is currently producing 55,000 cubic feet of helium per day...and it had a helium concentration rate of 1.4% in the raw gas stream.
It’s estimated that the company that owns this nearby well is seeing a payback on their well in roughly six months.
That’s impressive, to be sure – and it bodes well for Avanti Energy Inc.
In Avanti’s case – with a helium concentration potentially as high as 2% – it’s possible that the time to payoff for each well could be even shorter.
In fact, each well is projected to cost roughly $1.5 million...and the potential may exist for each of Avanti’s wells to be paid back in just 3 months.
And these are wells that could easily run for ten years or more...possibly even 20 years.
That would be an astonishing economic picture for any company – especially one in a bull market that continued to be red hot.
The Bull Market for Helium Shows No Signs of Slowing Down
As a noble gas, helium is not combustible and has properties that make it irreplaceable for a number of important industrial applications.
Helium is the second most abundant element in the universe but it is extremely rare on earth.
With a global helium shortage looming, it’s estimated that the supply will not keep up with demand for the next 20 years.
And that is happening as industry demand is projected to increase at a compound annual growth rate of 11% each year through 2037.
While helium is most commonly thought of as being used for the inflation of balloons, the truth is helium is used in a number of critical parts of daily life.
* Medical Industry – Helium is used to operate MRI machines and as part of respiratory treatments.
* Cryogenics – Helium is the only element that can come close to reaching absolute zero.
* Internet Connectivity – Fiber optic cables must be manufactured in a pure helium environment.
* Electronics – Many electronics and semiconductors – including mobile phones – require helium to be used at various stages of the production process.
* Computers – Helium-filled hard drives offer 50% higher storage capacity with 23% lower operating power.
* Car Air Bags – Helium is the gas of choice for effecting the near instantaneous deployment of air bags in cars.
Helium is used by companies like Amazon, Google and Netflix to help cool their data centers. And both the U.S. and Canadian governments have recently added helium to their critical minerals lists.
Not to mention...approximately $12 million worth of helium is needed for a single space rocket launch.
In fact, the single largest buyer of helium is NASA, consuming almost 75 million cubic feet annually to cool liquid hydrogen and oxygen for rocket fuel.
And with the highly publicized rocket launches from Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin...that consumption of helium for space launches is only likely to increase in the months ahead.
That’s why for us Avanti Energy Inc. (TSX: AVN.V; US OTC: ARGYF) right now appears to be such an attractive potential investment.
Avanti Energy is Led By a Collection of Resource Industry Recognized Veterans
The Avanti Energy team is comprised of industry recognized veterans, some of whom were (while formerly at Encana) involved in the early stages of the discovery of the Montney Formation, one of the premier natural gas formations in North America.
Without question, the Avanti Energy team is among the most experienced – and most decorated – in the helium space, with direct experience in developing multi-billion dollar projects from their time at Encana.
Avanti CEO Chris Bakker has over two decades of experience in oil and gas, most recently working as a commercial negotiator with Encana (now Ovintiv) for major facilities and pipelines in the Montney gas play.
His expertise includes all facets of Natural Gas Exploration like land acquisition, exploration, drilling, well production and facility integration and construction.
VP – Subsurface Genga Nadaraju has over two decades of experience in the oil & gas industry…Director - Geoscience Dr. Jim Wood has over 30 years of experience as a geologist specializing in reservoir characterization…VP - Engineering Ali Esmail has spent the past 13 years specializing in reservoir engineering …and Senior Geophysicist Richard Balon has over 30 years of experience in the Western Canadian Sedimentary Basin.
This is an experienced team with an impressive track record of work in the oil and gas industry.
And now they appear poised to leverage their expertise again.
Why The Window of Opportunity for High Upside Helium Potential Could Close Quickly
The results of the company’s initial drill testing appear to support the significant potential for Avanti’s Greater Knappen project.
And Avanti Energy is moving quickly – with the second helium well already spudded...and the next multi-well drilling program anticipated to start in Q1 2022.
Assuming a continued red-hot bull market in helium, any company that shows the potential for exploration success could attract significant investor attention.
With a current market cap of approximately $80 million there is tremendous potential if Avanti makes a bona fide discovery.
Additional developments related to the company’s three-well drilling program in the Greater Knappen region could result in increased visibility and rapid moves for Avanti Energy Inc. (TSX:AVN.V; OTCMKTS:ARGYF).
Other companies that could benefit from a different kind of shortage…
While the tech industry runs on helium…it is also dependent on another kind of resource. One that both a shortage of materials, and production shutdowns during COVID-19 has made increasingly scarce. Semiconductors.
One of the world's leading semiconductor manufacturers, Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) has a storied history and helped shape many technologies we rely on today. Founded by Morris Chang in 1987 as part-time contract chipmaker for IBM and Motorola--the company that would eventually become known simply as "TSM '' or Taiwan Semiconductor Manufacturing Company was only 200 strong when it started out back then! It wasn't until quality control became its top priority day 1 though; this focus makes all difference because even with more employees than any other foundry group at over 14k people now (with plenty still coming soon) they're able to maintain those high standards which led them into becoming one of Apple Inc.'s primary suppliers alongside Nvidia Corp., Qualcomm, and more.
The global semiconductor industry is a highly competitive one and only five companies in the world own chip-making facilities, making Taiwan Semiconductor a standout in the industry.. Indeed, many leading top semiconductor companies are "fabless," meaning they only design the chips but rely on other companies, known as foundries, to actually make the chips. The shift to outsourcing has been having a big effect on structural changes and related capacity because companies that cut orders in the early days of the pandemic have been forced to go to the back of the line.
Taiwan Semiconductor is a key player to watch in both the helium shortage and the semiconductor shortage. As the world’s largest chipmaker, it needs helium to survive. And with a semiconductor supply squeeze looming, it could stand to benefit big when Big Tech comes knocking.