Pulsar Helium Inc. (TSX-V: PLSR): Jetstream #2 results confirm ~1,000 m of reservoir with elevated helium readings
• The Jetstream #2 well encountered elevated helium values over a gross vertical thickness of 3,178 feet (969 m), with samples from mud log gas containing up to 3.5% helium.• The gross thickness with elevated helium is consistent with what was encountered at the Jetstream #1 well, which had a gross vertical thickness of 1,021 m.
• The actual helium concentration is expected to be higher than the measurements from the mud log gas. This is because the gas samples are diluted by atmospheric air due to the rotary air drilling method used, where air is forced into the well by compressors. Uncontaminated samples for laboratory analysis will be acquired.
• The helium concentration of 3.5% in the mud log gas samples at Jetstream #2 is difficult to compare with the 7.2% concentration observed in the mud log gas samples taken in the deeper section of the Jetstream because the respective amounts of dilution caused by the drilling is unknown.
• The Jetstream #2 well, located 200-300 m away from Jetstream #1, confirms the continuity and consistency of the helium-rich formation and the quality of the reservoir. This is an important step in de-risking the lateral extent of the reservoir and converting prospective resources into the contingent category.
• Ahead of further visibility on resource volumes, we re-iterate our target price of £0.80 per share. Our unrisked NAV for the contingent plus prospective helium is £1.73 per share plus £0.75 for the CO2 resources (Pmean in both cases).
Next steps
Pressure and flow testing of Jetstream #1 and #2 is scheduled for March. This testing will confirm the deliverability of the wells based on the entire gross reservoir, which is a key consideration for making the Final Investment Decision (FID).
Valuation
Assuming a flow rate of 0.75 mmcf/d and helium concentration of 12.5%, Jetstream #1 could generate revenue of ~US$22 mm (@US$650/mcf for helium) during the first year of production (with no decline). This indicates very strong project economics given that a development well should cost
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