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How To Profit From The Coming Helium Wars

Published: February 16, 2022
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Source: Oil Price

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Today, all the biggest names in tech are likely to find themselves scrambling to get their hands on more of this ultra-rare commodity.

Without it, Netflix couldn’t stream movies and shows to TVs around the world.

Google couldn’t support the 5.6 billion searches made per day.

And Apple couldn’t produce the millions of iPhones and Apple Watches that so many fanatics die for.

However, Big Tech’s house of cards may be closer than ever to falling apart because of a massive supply squeeze that’s only getting worse.

That’s because after 70+ years of production, the world’s single largest source of this commodity, the US National Helium Reserve in Amarillo, TX has finally dried up.

Most wouldn’t believe that a helium shortage could create a looming crisis for the entire tech sector.

But what they don’t know is helium plays a critical role in far more than just filling birthday balloons.

Because of its unique properties, helium is one of the best options in the world for cooling the equipment needed to keep the world as we know it running.

That includes everything from diagnosing health problems (MRI machines) and connecting us with friends and family (fiber optic cables for the internet)...

To building the world’s most popular electronics (semiconductors) and keeping trillion-dollar businesses in operation (supercomputing and data centers).

Now experts are predicting that we won’t have enough of the rare gas with current production rates to last us for even the next 20 years.

Technology plays a bigger and more important role than ever in our world today, which is driving demand for helium sky-high at a time when supply is lower than ever.

That has sent the price of helium soaring, making it over 100x more valuable than natural gas today ($2-5/Mcf versus $200-600/Mcf).

And that’s giving helium exploration companies like Avanti Energy Inc. (TSX:AVN.V;OTCMKTS:ARGYF)​​ incredible upside potential for early investors.

Avanti acquired the mineral rights to nearly 70,000 acres of prospective real estate on the United States-Canada border last year.

Now, they’ve made an exciting announcement in their current drill program that could soon capture the attention of oil and gas majors everywhere.

The Greater Knappen - Home to a Potential
Billion Dollar Helium Discovery?

Avanti’s veteran exploration team reviewed over 30 different opportunities before narrowing it down to 10 and finally acquiring the Greater Knappen project.

With 69,000 acres of prospective helium properties, that equals out to ~10,000 acres in Alberta and ~60,000 acres in Montana.

Over the last 8 months, they’ve plowed ahead after acquiring the property, identifying 10 structural targets that could house the helium needed to help power this tech-hungry world.

Since then, they’ve put together the drill program, built out the infrastructure, and they’ve already successfully completed drilling of the first well and the second well has been spudded.

Why are they rushing ahead so quickly?

It could have something to do with the success of their neighbor just 6 miles down the road.

Another helium exploration company has a well at their location nearby which is currently producing 55,000 cubic feet of helium per day.

It’s been steadily producing since it was brought onto production over a year ago, so it’s clear that there’s potential for a healthy supply of helium in the region.

But what’s more exciting to us is the economics of that deal.

Payback on that nearby well could be just 6 months.

After that, anything produced in the coming years could equal huge potential profits as helium prices continue to climb higher.

But results look to be even more promising at Avanti’s property based on what their team announced in recent drilling results.

More Than Just Potential -
Avanti Confirms Helium at Greater Knappen

At their first well, Avanti’s (TSX:AVN.V;OTCMKTS:ARGYF)​​ team drilled more than a mile below the surface to hit 5,860 feet, encountering all targeted zones for helium potential along the way.

What they encountered may help put them squarely in the spotlight of this fast-growing helium market.

The results of open-hole logging showed 5 zones with reservoir characteristics (good porosity and low water saturation). That suggests it warrants further testing from the team in each of these zones.

Even more importantly, drill stem testing results showed economic helium potential, which gives the team the green light to complete each of these zones they’ve identified moving forward.

Genga Nadaraju, Avanti’s Vice President - Subsurface, commented on the results, "Avanti's technical team is thrilled that our first exploratory well encountered all targeted zones for potential helium.“

“We are also excited to have seen shows in an additional formation not previously identified and the team is looking forward to the further evaluation of the well."

All that to say, the results are even more promising than the company expected. And the economics could be off the charts, based on the early estimates.

After accounting for drill costs of around $1.5 million, it could take only 3 to 4 months to pay this back.

Those kinds of figures are almost unheard of, and Avanti’s just getting started.

Even by conservative estimates, it may only take roughly 7 months to pay back.

From there, the Greater Knappen properties could produce cash-rich helium for another 10 to 15 years.

Plus, this could be high-grade helium as surrounding wells in the area have had shows in several targets, with helium percentages up to 2% and nitrogen percentages of up to 96%.

These numbers add up to build a case that’s sure to grab the attention of the majors and could set Avanti up to become a possible acquisition target.

The discovery becomes even more critical though given their location in the helium markets.

In the Right Place at the Perfect Time?

Avanti’s (TSX:AVN.V;OTCMKTS:ARGYF)​​ announcement may even be more important given the growing supply chain issues ravaging markets around the world right now.

Supply chain problems have struck everything from semiconductors to medical equipment to lumber, to name only a few.

Helium hasn’t been spared in that conversation either.

That means the rare commodity we need to produce nearly ALL of our electronics could be held up overseas because of where the largest helium producers are based.

Most of the world’s non-US supply today is primarily coming out of Russia, Qatar, and Algeria.

Even putting global politics aside (and the fact that Russia could hold this as leverage in any upcoming clash), having helium that far away from North America poses a huge risk.

That’s why it’s critical to add to the helium supply in North America to ensure we’re able to produce the electronics we need and help keep tech companies powering forward

Thankfully, Avanti is announcing their latest results at a time when helium is really growing in demand.
High Expectations for the Greater Knappen
The report coming out of this proven helium region in Montana has been enough to build a serious bull case in some analysts’ views.
Beacon Securities recently wrote, “The technical acumen is a main advantage that Avanti has in its exploration for helium, and we continue to have high expectations for the Greater Knappen area.”

Of course, the technical acumen they’re referring to comes from certain team members who are already known for their involvement in a world-class discovery in Canada’s Montney Formation.

After producing nearly 300,000 barrels of oil equivalent/day, the Montney has been recognized as one of the largest discoveries in all of North America.

And now several key members have left the $10 billion commodity giant, Ovintiv, to join this small but mighty team at Avanti.

With Beacon Securities’ high expectations, it’s clear that some experts see a significant potential upside for the little-known helium producer.

And it’s no wonder, given the company’s preliminary estimates of between 1.4 billion and 8.9 billion cubic feet of helium.

That means they could possibly be sitting on over $1 billion of helium if all goes to plan.

The initial drilling program in Montana and Alberta is aimed to be the start of a multi-year exploration and development program for Avanti.

But the fast-moving junior is continuing to move full-steam ahead, with up to 6 wells being planned through Q2 2022.

With results just coming in from the first well, we’re looking at a steady potential stream of news and upcoming catalysts coming out of Avanti’s camp.

That may put Avanti (TSX:AVN.V;OTCMKTS:ARGYF)​​ square in the middle of the action as Big Tech continues to push the need for helium in North America sky-high.

By. Josh Owens

**IMPORTANT! BY READING OUR CONTENT YOU EXPLICITLY AGREE TO THE FOLLOWING. PLEASE READ CAREFULLY**

Forward-Looking Statements

This publication contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this publication include that prices for helium will significantly increase due to global demand and use in a wide array of industries and that helium will retain its value in future due to the demand increases and overall shortage of supply; that Avanti will able to successfully pursue exploration of its licenses and properties; that Avanti’s licenses and properties can achieve drilling and mining success for commercial amounts of helium; that indications of potential for economic helium in Avanti’s initial wells will predict future results; that Avanti will be able fulfill its obligations under its licenses and in respect of its properties; that Avanti will be able acquire the rights to the helium on its prospective helium properties; that the Avanti team will be able to develop and implement its helium exploration models, including their own proprietary models, that may result in successful exploration and development efforts; that historical geological information and estimations will prove to be accurate or at least very indicative of helium; that high helium content targets exist on Avanti’s projects; and that Avanti will be able to carry out its business plans, including timing for drilling and exploration. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information.  Risks that could change or prevent these statements from coming to fruition include that demand for helium is not as great as expected; that alternative commodities or compounds are used in applications which currently use helium, thus reducing the need for helium in the future; that the Company may not fulfill the requirements under its licenses for various reasons or otherwise cannot pursue exploration on the project as planned or at all; that the Company may not be able to acquire the helium rights on its properties as contemplated or at all; that the Avanti team may be unable to develop any helium exploration models, including proprietary models, which allow successful exploration efforts on any of the Company’s current or future projects; that Avanti may not be able to finance its intended drilling programs to explore for helium or may otherwise not raise sufficient funds to carry out its business plans; that geological interpretations and technological results based on current data may change with more detailed information, analysis or testing; and that despite promise, results of the recent drilling and exploration may be inaccurate or otherwise fail to result in locating or developing any commercial helium reserves on the Avanti properties, and that there may be no commercially viable helium or other resources on any of Avanti’s properties. The forward-looking information contained herein is given as of the date hereof and we assume no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.

DISCLAIMERS

PAID ADVERTISEMENT.  This communication is a paid advertisement and is not a recommendation to buy or sell securities. Oilprice.com, Advanced Media Solutions Ltd, and their owners, managers, employees, and assigns (collectively “Oilprice.com”) has been paid by Avanti fifty thousand US dollars for this article to provide investor awareness advertising and marketing for TSXV:AVN. The information in this report and on our website has not been independently verified and is not guaranteed to be correct. This compensation is a major conflict with our ability to be unbiased. This communication is for entertainment purposes only. Never invest purely based on our communication.

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