gas discovery valuation, page-7

Today’s report was very good and I am surprised the sp didn’t kick up more than it did.

A flow of 10mmcfd is good, even with nitrogen being 57% it may still be a very commercial proposition.

The other thing I liked about the announcement was the testing for noble gases. This could really make a difference to the economics of this field.

I found this site while searching for helium prices.

http://www.iacx.com/heliumsponge/?gclid=COLepaLFwJ0CFZMwpAod-RsUsw

“if have high levels of associated nitrogen in your gas, there’s a chance that you have marketable quantities of helium in your stream. And if the lab analysis comes back showing 0.00% helium, it’s probably because it wasn’t tested (standard gas chromatographs use helium as a carrier gas – and you can’t measure for the carrier gas). When sampling your gas, you must ask the tester to specifically read for helium.”

“Helium is in very short supply and prices have been recently climbing to extraordinary levels with no signs of weakening ($60 to $100/Mcf – depending on who you ask). All natural gas has some component of associated helium, though some more than others. If you’re not monetizing the helium in your gas, you could be missing out on considerable cash flow – as well as a veritable hedge against fluctuating natural gas prices.”

That looks like helium is about 20 or 30 times the current price of natural gas which is certainly something to think about.

Listless, here is my rough calculation of value:

10mmcfd @ 42% methane = 4.2mmcfd saleable natural gas @ Rocky Mountain spot price $3.80/mcf = $16,000 revenue per day

If we have helium present say @ 1% then we will have 100mcfd @ $60/mcf = $6,000 revenue per day for helium; if $100/mcf that = $10,000 per day

These are just rough calculations but it shows how big a difference even 1% helium will make. I am placing no value to the nitrogen component.