The following is a transcription of the above video, and The Market Online has edited it for clarity.
Our next company is Royal Helium Ltd. (TSXV:RHC) an exploration production and infrastructure company with a primary focus on the development and production of helium.
CEO Andrew Davidson joined us to provide an update about the company’s recent activity.
TMO: Just to start us off, can you provide a brief background about the company?
Davidson: We’re a primary helium producer, explorer, and infrastructure company that has developed helium assets. These assets have been developed in Western Saskatchewan and Southeastern Alberta for about five years. We drilled 10-plus wells and hit economic concentrations in all of them. We are now producing from our first facility just outside of Brooks, Alberta.
TMO: Can you tell us about the company’s Steveville helium purification facility and why it’s unique?
Davidson: It’s really a first-of-its-kind asset. It has a throughput rate of 15 million cubic feet a day of raw gas, and so that’s what we flow into the plant from the two wells that feed it. From there it goes through a series of different processes that has coming out the tailpipe 99.999 per cent pure helium. This allows us to capture the associated gases that come with that helium out of the wells.
Our plant has the ability to create pure CO2, pure nitrogen, methane, condensate, you name it. It’s got multiple different cash-flow sources and in fact, it powers itself. One of the things that makes it unique is that we use our produced gas to power the entire facility. In fact, this can create excess power that we can sell back to the grid.
In that end, it is the greenest helium purifier that we can see anywhere in the world.
TMO: The company has drilled 10 wells to date and has multiple project areas in Alberta and Saskatchewan. What can investors look forward to next for Royal Helium?
Davidson: With Steveville sort of in the rear-view mirror, now that it’s online and producing, we get to shift our focus back to the exploration side of things and as you mentioned, we have drilled 10 wells across four different fields that we have in Saskatchewan and Alberta.
So really it’s a competition amongst those fields to see where the next purifier is going to go. So, for us, we’re excited specifically about an asset that we call 40 mile in Alberta. It’s about 200 kilometres south of Steveville, but it’s a totally separate and unique project area. And so we plan to drill that this year and we’ll be twinning an existing well that’s there, that was flowed and assayed and shows high concentrations of helium and exceptionally high flow rates. It’s really moved the top of our list for next development areas but aside from that, we’ll ship back over to areas in Saskatchewan where we’ve already drilled that are right within what’s sort of becoming a helium fairway in southwestern Saskatchewan.
We’ve got material landholding throughout that fairway about 300,000 – 400,000 acres of them in that fairway. So there’s a lot to look forward to. A lot of high-value exploration targets across multiple areas.
TMO: Helium markets have experienced extended periods of short supplies since 2006 with supply deficits being a recurring issue for nearly 20 years. How does Royal Helium navigate some helium scarcity?
Davidson: It’s really a matter of the market itself has to look to relatively new regions for production. The U.S. has primarily filled the market for helium. This was through both conventional natural gas projects, and the strategic helium reserve in Texas.
That helium reserve no longer exists, so that’s a big chunk of production offline and offline forever, and the shift to more shale gas plays in the U.S. and in Canada and elsewhere has been a major problem for the helium industry because there’s no helium contained within shale gas.
It kicks people into jurisdictions like Canada where we produced helium since the 1960s, but never at scale. This is to look for regions to grow and we’re right in the heart of it. So the fact that we’re already producing now cements us as a leader in the public space anyway. It really sets us up nicely to be a part of the solution. This is because it relates to the undersupply of helium, regionally and globally,
TMO: Where do you see the company headed over the next year or so in terms of investment value?
Davidson: We look at our company as a series of projects and that’s the way to look at any helium company really, because every different land block within a helium company is a separate project because you can’t pipeline raw gas from one project to another.
For us, we look at the economic contribution that each plant can bring, and our model shows us around $100 million is what one of these plants is worth through its economic life. That’s obviously materially higher than our current market cap.
The ability to grow and bring on another facility, and then another one shortly on the tail of that over the next 18 months is really going to be material for our shareholders and we’ll be essentially tripling the value of the company.
You can find Royal Helium Ltd. on the TSXV under the symbol V.RHC or head to its website at royalheliumltd.com for more information.
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