Founded in 2016 and headquartered in Vancouver, First Helium (TSXV:HELI,Forum) is a company involved in helium production to meet the growing demand in the high-tech global market. Notably, First Helium is in a strong position to become a leading North American producer of helium as it continues the development of its Worsley Helium Project.
The company has already had a strong start to this still very young year as it continues making progress at its Worsley Helium Project.
Stockhouse Editorial’s Jocelyn Aspa recently had the chance to speak First Helium CEO Ed Bereznicki to catch up on all of the new company developments that investors will be eager to hear about.
TRANSCRIPT BELOW:
SH: Can we first start off with you providing a little bit of an overview of yourself and the company?
EB: Absolutely. So thanks to everyone for joining us today. As Jocelyn mentioned, my name is Ed Bereznicki. I'm the CEO and president of First Helium. So I got involved with First Helium over two years ago. I was introduced to the company through a mutual friend. The founder of the company, as Jocelyn mentioned, had put the company together in 2016, assembled the properties that we currently have and begun raising capital to get First Helium off the ground, so to speak. So myself, my background is engineering. I started off in oil and gas, oil and gas pipelines and midstream and coupled that together with an MBA in finance and accounting. I spent roughly 15 years in investment banking where I raised capital for junior oil and gas and energy growth stories as well as service companies. I also advised on numerous M&A transactions in the space as well. First Helium started out as a private company. We recently went public in July of last year on the back of capital raise of about 12 million in the first half of 2021.
SH: The company’s having a strong start to the year — and the last few months in general — what’s been happening with the company that our audience might want to know about?
EB: Yeah, I think Jocelyn the key thing with First Helium is that it was a private company that had been operating for quite some time and so prospective helium opportunities had been evaluated already, land had been bought. There was a certain amount of seismic purchased, the company acquired a well with helium in it is our 15 of 25 discovery well, so there were a lot of good things that had happened well prior to the company becoming public in July. So what you're seeing I guess in the first six months of First Helium being public is we're getting to work on our properties, beginning to drill, and starting to share new news. So new developments, if you will that we've been working on for quite some time and so some of this news is just starting to hit the market - and in the helium exploration and development game, there's a tremendous amount of geologic evaluation that goes on reviewing seismic data and all these sorts of things and so with much of that work already done, we're now able to hit the ground running, so to speak drilling these opportunities and beginning to deliver of value to shareholders.
SH: It was recently announced that the company delivered sales from over 1,100 barrels of light crude oil, which amounts to over $90,00 in sales revenue for the company. Can you walk us through this news and what makes it so significant for First Helium?
EB: Sure. So Jocelyn this oil well discovery that we found is our first expiration well or second, I guess, to the 15 of 25, it's called the 1 of 30 well, it was our first exploration drill based on the geologic evaluation we undertook. It's a proof of concept on our geologic model. We found a tremendous oil well and we expect that we'll be producing roughly 400 barrels a day from that well, which amounts to annualized cash flow for us in the order of about $6 million per year. So it really sets the company up nicely for further helium exploration and development work in the area.
SH: How will this set the stage for the company for the rest of the year?
EB: Yeah, I think it's important for us, (for) investors to understand that we are going to continue you to drill for helium in the Worsley property, as well as some of our other areas but there is a bit of cash flow now and we will be able to capture that value for shareholders and it will give us some financial flexibility moving forward as we plan out the balance of the year in terms of our drilling plans and other capital expenditures.
SH: This announcement led to a nice bump in the company’s share price and was actually the company’s best trading day in some time - why do you think that is?
EB: I think for many investors, it was recognition that there was not only a drilling success but there was immediate value to be captured from the oil well in that cash flow would be generated immediately and that the company could put that to work going forward here. The company's currently in the process of constructing what we call an oil battery to help us produce the one of 30 well, which should be complete by early February and we should be cash flowing producing and cash flowing from that well in February this year. I think for investors, it was recognition that, that value wasn't fully reflected in today's stock price.
SH: What makes First Helium a good investment right now?
EB: Just building on my last point, when we take a look at our 15 of 25 helium discovery well, independent third-party evaluators have taken a look at that well and given the company a contingent resource estimate on that well, and provided a value on that well alone of approximately $15 million net present value discounted at 10%. That approximates to roughly 23 cents a share in value, with the addition now of the one of 30 oil wells at 400 barrels per day using industry-standard metrics of cash flow at the field level So pre corporate level of roughly three times and 6 million of annualized cash flow, that adds another 18 million of potential market value. So put those two together, you’re over $30 million in market value on 65 million shares outstanding, that's over 50 cents in asset value per share and I haven't even started to talk about our exploration opportunities, which I feel are coming along in the stock price for free today with where we're trading. So the bottom line is we're a really good investment with substantial underlying asset value and a tremendous amount of future helium exploration upside potential.
SH: Can you talk about the company’s business model and how it’s able to generate money?
EB: So Jocelyn as I mentioned, and you pointed out earlier, we are a helium exploration development and production company. Currently, we are producing oil, as I pointed out - our helium production,w expect to put online early next year when we build a helium processing facility. So the model really is to take our cash flow from our oil well, plus our cash reserves to continue to drill for helium, bring that into production to generate cash flow, and in the meantime we're able to augment that cash flow with our oil well discovery.
SH: Moving forward, how does First Helium fit into the helium market and what makes it stand out from its competitors?
EB: Yeah, I think the difference for us Jocelyn is where we are located geographically, and exploring - our core Worsely property not only provides great helium exploration opportunity but it does have some hydrocarbon by-products that we're able to produce alongside any of our helium finds. So it provides an added level of cash flow for the company, and we're not exploring for just for helium, or relying just on helium explorations to clarify, we've got an added stream of revenue that de-risks the company's exploration program a little bit. In addition, though, we do have a Southern land block in Southern Alberta that I haven't spoken a lot about. It's a larger exploration play close to many of our public company peers who are exploring in Southern Alberta and Southern Saskatchewan. We've got a tremendous amount of seismic that we acquired as a result of a transaction we did there to get that land. We have evaluated, and we've got a couple of drill locations ready to go for this year. So that's an exciting component of exploration to more de-risked kind of bread and butter development play in our Worsley area.
SH: It’s still early in the year, but are there catalysts over the course of the next 12 months investors should be watching for?
EB: Yes, Jocelyn. So in the first quarter of this year, we'll be drilling up a follow-up well to our one of 30 testing helium horizons as well as potential oil accumulations, again as a follow-up to our one of 30 well. During the balance of the year, we'll be looking at another two to three Wells in the Worsley region and potentially in Southern Alberta as well. The other thing investors should look for is we are finalizing arrangements on a helium processing facility up at our Worsley property and that ties back to my earlier point where I said we'd like to be or we're planning to be producing helium into first quarter of next year from the Worsley area.
SH: Is there anything else you'd like to add before we end our conversation today?
EB: I think all I would say Jocelyn is the helium sector, in the junior helium growth sector in Canada and the US, North America, if you will, is an exciting growth sector right now - there's a tremendous amount of opportunity for junior explorers in North America to continue to supply North American helium demand as we move forward here, and we at First Helium (are) very proud to be a part of that sector, and we think we offer a great value proposition for investors today. So on that note, I'd like to thank you Jocelyn for your questions and time here today and for allowing us to share some information in respect of First Helium.
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.