In a recent interview on "Inside The Boardroom," Andrew Davidson, CEO and Director of Royal Helium (Ticker: RHC.v or RHCCF for US investors), discussed the company's helium operation, future plans and the helium sector overall.
Helium Market Evolution & Demand
Davidson provided an overview of the helium market, noting that Royal Helium is Canada's first publicly traded helium company. The helium industry has traditionally been dominated by industrial gas companies and the now-defunct U.S. Strategic Helium Reserve in Texas. With the dissolution of this reserve, the helium market has gained visibility, highlighting the supply-demand gap and driving prices up.
The primary demand for helium historically comes from the healthcare sector, particularly for MRI machines. However, recent years have seen a surge in demand from high-tech manufacturing, aerospace, defense, and nuclear reactors. This shift has intensified the need for helium, positioning companies like Royal Helium to fill the supply gap. Davidson highlighted that Royal Helium explores, produces, and sells helium to meet these growing demands.
On the supply side, the U.S. has been the largest helium producer, with significant contributions from Qatar, Russia, and Algeria. Canada, an emerging player, has been producing helium since the 1960s. In Western Canada, helium exploration and production mirror the oil and gas industry, utilizing similar drilling and completion techniques. However, helium requires specialized purification systems to extract and sell the high-purity product.
RHC's Flagship Project
Royal Helium's flagship project, the Steveville facility in Alberta, began production in late 2023. The company is currently ramping up to full capacity. Davidson highlighted the company's innovative approach to monetizing byproducts like CO2 and methane, which are typically considered waste. By capturing and selling these gases, Royal Helium aims to become a junior industrial gas player with multiple revenue streams.
Future Exploration & Production Plans
Looking ahead, Davidson outlined Royal Helium's plans to replicate the success of the Steveville project across other areas. The company holds over 600,000 acres of helium rights in Saskatchewan and Alberta and has drilled 10 wells across four projects, all showing economic concentrations of helium. The goal is to scale production and become a significant industrial gas provider in North America.
Royal Helium's short-term objectives include increasing production at Steveville and expanding into new project areas. With an average helium selling price of $538 USD per thousand cubic feet (mcf), the company is well-positioned economically. In the long term, Royal Helium aims to establish itself as a leading independent helium and industrial gas provider, focusing on direct sales to end-use customers.
Full interview here:
Posted on behalf of Royal Helium Ltd.