BNL (ASX) Ann: Significant Helium Discovery at State 16 Well

Originally posted by SpiderMonkeyZ: ↑

With 7 wells total of about US7m/yr from helium at US500/mcf plus total US2m from the CO2 at US$4/mcf.

Operating costs using a leased plant I guess make sense with high helium percentages as it avoids the cost of buying a plant upfront for maybe US15m or so?

If margins are tighter at 2% with a leased plant maybe margins are better if the about US15m-US20m plant was owned by BNL versus leased but money would be needed upfront to buy such a plant.

If accurate bnl showed helium operating costs about US4.5m/yr of which a big chunk will be leasing the plant from IACX.

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Originally posted by DGcruzing: ↑

SM,
This is what I get with a bit of magic at my fingertips... using yours as a base..
Let's break down the financial analysis using the provided information and assumptions.
Revenue and Costs Calculation
Assumptions:
Helium Production:
Average production per well: 285 Mcf/day.
Price of gaseous helium: $500/Mcf.
Price of CO2: $4/Mcf.
Operating costs: $120/Mcf at 8% concentration.
Increased costs at lower concentration (2%): $480/Mcf.
Total wells required to reach 2 MMcf/day: 7 wells.
CO2 Production:
Contribution to revenue from CO2: $300k/year.
Assume extraction and processing costs are not provided, so not included in initial calculations.

Calculations:
Daily and Annual Production:
Total daily raw gas input for 7 wells: 2000 Mcf/day.
Average daily production per well: 285 Mcf/day.
Annual production of helium (assuming 365 days/year): $Mcf/year\text{Annual Helium Production} = 285 \text{ Mcf/day} \times 365 \text{ days} \times 7 \text{ wells} = 728,175 \text{ Mcf/year}$
Revenue from Helium:
Annual revenue from helium: $Mcf/year×$500/Mcf=$364,087,500/year\text{Revenue} = 728,175 \text{ Mcf/year} \times \$500/\text{Mcf} = \$364,087,500/year$
Revenue from CO2:
Annual revenue from CO2: $300,000/year.
Operating Costs:
If helium concentration is 8%, operating costs are $120/Mcf. $\text{Annual Operating Costs (8%)} = 728,175 \text{ Mcf/year} \times \$120/\text{Mcf} = \$87,381,000/year$
If helium concentration is 2%, operating costs increase to $480/Mcf. $\text{Annual Operating Costs (2%)} = 728,175 \text{ Mcf/year} \times \$480/\text{Mcf} = \$349,524,000/year$
Net Revenue Calculation:
At 8% concentration: $\text{Net Revenue (8%)} = \$364,087,500 - \$87,381,000 + \$300,000 = \$276,006,500/year$
At 2% concentration: $\text{Net Revenue (2%)} = \$364,087,500 - \$349,524,000 + \$300,000 = \$14,863,500/year$
Analysis and Prospects
Economic Viability:
At 8% concentration, the operation is highly profitable with a significant margin.
At 2% concentration, the margin is very slim, making it crucial to explore ways to reduce costs or increase the selling price.
Price Optimization:

Selling helium at higher prices (e.g., $600/Mcf) or liquefying helium can significantly improve profitability.

For instance, at $600/Mcf: $Mcf/year×$600/Mcf=$436,905,000/year\text{Revenue} = 728,175 \text{ Mcf/year} \times \$600/\text{Mcf} = \$436,905,000/year$

Net Revenue at 2% concentration: $\text{Net Revenue (2% at \$600/Mcf)} = \$436,905,000 - \$349,524,000 + \$300,000 = \$87,681,000/year$
Operational Efficiency:
Reducing operating costs through improved efficiency or technological advancements can also help maintain profitability at lower helium concentrations.
CO2 Revenue Contribution:
Additional revenue from CO2 can further support the financial health of the project, especially if the extraction and processing costs are minimized.
Conclusion
The financial viability of Blue Star Helium's operations depends significantly on the concentration of helium and the ability to optimize selling prices and operating costs. At higher concentrations (8%), the project is highly profitable. However, at lower concentrations (2%), strategies such as increasing the selling price, improving operational efficiency, or monetizing CO2 more effectively become critical to maintaining profitability. Further analysis and detailed economic modelling are necessary to solidify these projections and ensure sustainable operations.

Exuss the formatting HC HTML input suck..

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Hey ...Fellas....your figures are based on about 2%
which is a very poor outcome...but your figures don't reflect Trent's announcements of a :

* SIGNIFICANT HELIUM DISCOVERY AT STATE 16 WELL,
GALACTICA PROJECT

Can you Fellas tell me why Trent is boasting of a Significant Helium Discovery at only say 2% ..???

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Ann: Significant Helium Discovery at State 16 Well, page-39

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