GGE (ASX) News: GGE Grand Gulf Energy Says Aztec Well Servicing, Co. Has Been Contracted To Drill Jesse#1...

Originally posted by bevter: ↑
This might explain all the funny trading lately...
"N*xt Invest*r..
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1 GGE Drilling 15 Miles Away from the Second Largest Helium Discovery in 70 years
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Disclosure: The authors of this article and owners of Catalyst Hunter, S3 Consortium Pty Ltd, and associated entities, own 43,300,000 GGE shares at the time of publication. S3 Consortium Pty Ltd has been engaged by GGE to share our commentary and opinion on the progress of our investment in GGE over time.

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Our US helium investment and Catalyst Hunter 2021 Pick of the Year, Grand Gulf Energy (ASX:GGE) is set to drill an exploration well in the coming weeks in a region of Utah that is dubbed the “Saudi Arabia” of helium.
We think they have timed it well.
Helium is a critical gas that is needed to manufacture high-end computer chips and other semiconductors - an industry which is experiencing a global supply crunch.
Russia is aiming to bring on new helium production sources and ultimately supply around one third of the world’s helium by 2029.
Given the punitive sanctions placed on Russia following the invasion of Ukraine, we think the US will now place new emphasis on securing a local helium supply.
Lucky for GGE, their project sits just 15 miles away from the second largest helium discovery in North America in the last 70 years - the Doe Canyon Helium Field in Utah, and also 20 miles from a helium processing facility.
In mid-April, GGE will be drilling into a structural closure that is interpreted to be high to, and 4-5 times bigger than the geologically analogous Doe Canyon Helium field.
Doe Canyon is pumping out 10.7 million cubic feet (mmcf) of helium per month, and has an anticipated total production of 3-5 bcf of helium.
Given GGE is drilling in the “Saudi Arabia of helium”, there is plenty of infrastructure to bring any discovered helium to market.
GGE’s project is located 20 miles from a helium processing facility - the Lisbon gas processing plant. This gas processing facility is comprised of a 60 mmcfd treating plant with a 45 mmcfd cryogenic plant capable of 0.5 mmcfd of 99.9995% helium.
99.9995% is Grade 5.5 “research grade” helium suitable for, among other uses, semiconductor manufacturing.
Around the “Saudi Arabia” of helium there’s a total of US$50BN in semiconductor chip facilities getting built in neighbouring states (more on that below).
What all this means is that given GGE’s project location, we think that any helium GGE can discover in the coming weeks could be commercialised relatively easily (versus drilling in the middle of nowhere).
Today GGE announced that it has secured a drilling contractor and it plans to drill the first pure helium well on the project in mid-April.
So in summary, GGE will soon be drilling:
15 miles away from the second largest helium discovery in 70 years
In a geologically analogous spot
That looks like a structural enclosure (allowing the gas to be trapped in one place)
20 miles from a helium processing facility
In a region dotted with helium transport pipelines
With almost US$50BN in big chip factories being built in neighbouring US states
With geopolitical tensions reaching fever pitch and countries rushing to secure their own supply of critical materials like helium, we think the timing couldn’t be better for GGE’s drilling.
Grand Gulf Energy
ASX:GGE
We think the world is on the cusp of a major helium bull market - driven by the major powers’ need to secure friendly supply for their chip manufacturing industries.
We’re talking about Russia, China and the US.
Although helium prices are hard to gauge, today GGE mentioned current helium prices are in the range of US$300-500/mcf.
We think prices could continue to move higher in light of geopolitical tensions and supply issues.
GGE’s project contains a gross P50 unrisked prospective helium resource of 10.9 billion cubic feet (bcf).
Drilling will aim to test flow rates and grades - informing the positioning of other wells at the project.
This first well is expected to cost US$1.6M ($2.2M).
As of December 31st 2021, GGE had ~$3M in the bank. So we could reasonably anticipate that at some stage in the coming weeks it would be prudent for GGE to look to raise capital to fund the drilling, especially if we see late to the party speculators pile into the stock ahead of the spud date and anticipation of a positive result.
As long term holders of GGE, we would hope that this capital raise is completed at as high a price as possible.
As GGE moves from a planning phase to an operational drilling phase, it's pleasing to see that GGE recently appointed a highly experienced Managing Director - Dane Lance.
Mr Lance is a seasoned oil and gas / reservoir engineer, with previous experience at companies like Woodside, Ophir and Oil Search.
We think he will bring the necessary operational and commercial acumen to the job - in particular the ability to not only deliver operational goals but also seal offtake deals for GGE.
Here’s how we’ll approach the rest of today’s note:
Details of today’s drilling announcement
Helium market dynamics
New MD Dane Lance: Can GGE get an offtake?
Expand
the new boy on the management team certainly seem to be having an effect on sentiment ??

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Last updated 15.25pm 02/05/2024 ?

the new boy on the management team certainly seem to be having...

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