Helium Evolution Inc. (HEVI CN): Initiating Coverage

Helium Evolution (HEVI) is a ~US$16 mm TSX‑listed company focused on Saskatchewan’s helium fairway, where the regulatory environment is prioritizing helium development. HEVI has already commissioned a helium processing plant and the focus is now on scaling-up. HEVI’s core assets are operated by North American Helium (NAH), Canada’s leading private helium producer with 10 helium plants in operation and over100 helium wells drilled to date. HEVI’s largest shareholder is ENEOS, one of the world’s largest energy and materials conglomerates, whose investment underscores the quality of HEVI’s assets and provides strategic and financial support. Our C$0.50/sh target price reflects our ReNAV, and is over 4x the current s/p.

From discovery to scale-up
HEVI holds the largest helium land position of any of the publicly listed North American operators, with 5.5 mm gross acres beside NAH’s producing assets. Near‑term activity is centred on the Mankota trend, adjacent to a six‑year‑old producing helium field. HEVI has already made six discoveries, with typical wells testing ~10 mmcf/d, 0.64–0.94% helium, with pressures over 2,900 psi. Initial production from three small downdip discoveries near the Soda Lake plant began in 4Q25 but were shut in due to increased water production. In 2026, NAH and HEVI have pooled lands (51/49) and commenced 3D seismic, potentially defining 10–20 appraisal locations. Using 0.08-0.1 bcf helium per gross well, this implies 0.4–1.0 bcf unrisked net resources. Drilling could start in September, with first production in 1Q27 from the remaining viable shut‑in wells, three updip discoveries not yet tied in, and new appraisal wells. Depending on well count, net helium output could reach 40–180 mcf/d.

Multiple areas with blue sky exploration upside
HEVI also holds 3 additional 100%-owned areas that form the core of its mid‑term focus. At Glenbain, interpretation of recent 2D seismic near NAH’s Cadillac helium field, which encountered ~40 m of pay, could support a first exploration well in 2026/27. The Abbey area is becoming increasingly prospective following offsetting producer’s neighbouring wells and reported helium content of up to 2%. At Fox/Hatton, a prior well intersected 58 m of reservoir, highlighting further potential.

Financials and Value build-up
HEVI ended 3Q25 with ~ US$6.3 mm in net cash. In our low‑case scenario—partial success on 2 of 4 new appraisal wells—net helium output reaches 40–50 mcf/d from 1Q27, generating ~US$3 mm/y of free cash flow (FCF) and supporting a valuation of C$0.17/sh. Each new successful well adds ~C$0.03/sh. Success at a full 20‑well programme would lift our valuation to C$0.71/sh. 12 wells onstream generate US$22-24 mm/y of FCF. Our base case assumes gaseous helium sales. Transporting helium to the US market for liquification adds C$0.18/sh. Glenbain has an unrisked NAV of C$0.31/sh.