Helium Evolution Inc. (HEVI CN): Hormuz, Qatar LNG and helium
• The Strait of Hormuz is currently closed and the North Field/South Pars complex has been bombed. Doha has indicated that restoring full production capacity could take up to five years. North Field/South Pars is the world’s largest gas field, supplying ~20% of global LNG exports and 70–75% of Iran’s domestic gas output.• In Qatar, helium is produced as a by‑product of natural gas, and the country accounts for roughly one‑third of global helium supply. The shutdown of North Field/South Pars is therefore expected to have a major impact on helium availability and pricing.
• We currently assume helium prices of US$400/mcf in 2026 and US$475/mcf in 2027–2028, though these may prove conservative. After applying a US$100/mcf transport and marketing discount, this implies US$300–375/mcf netbacks for HEVI.
• Media reports suggest helium prices have already risen by ~50%, with some commentary pointing to a potential spike to US$2,000/mcf. Higher helium prices would have a significant impact on HEVI’s valuation.
• Depending on whether helium is sold in liquid (in the USA) or gaseous form, at US$600/mcf a three‑well development generates US$8–9 mm in annual operating cash flow and has an NPV of US$22–25 mm net to HEVI’s 49% WI. At US$800/mcf, this increases to US$11–13 mm per year and an NPV of US$36–38 mm. This is more than the current market cap and Mankota alone could support ~20 new wells.
• At US$600/mcf, our ReNAV for HEVI is C$0.67/sh; at US$800/mcf, this rises to C$1.00/sh.
HEVI is expected to start a drilling programme at Mankota in early 4Q26. Our low case scenario (partial success on 2 of 4 new appraisal wells) supports a valuation 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 ReNAV is C$0.50/sh.
Auctus Advisors is a specialist Equity Capital Markets and Advisory business with a focus in the Energy Sector.
The partners have complementary skill sets, with decades of experience across Equity Capital Markets, Investment Banking and the Energy industry. We have worked at Société Générale, Canaccord Capital, BMO Capital Markets and Schlumberger. Most recently we have worked together for many years at GMP FirstEnergy.
Auctus has been set up at the beginning of a new decade in which we see significant opportunities in the Energy space. Globally, demand for energy is at record levels and continues to grow. Conversely, investment in traditional energy sources has been severely constrained. We believe this imbalance creates opportunities for both companies and investors.
Auctus provides Corporate Broking, Equity Research and Investment Banking services.
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