Jul 27, 2021 (Financial News Media via COMTEX) -- FN Media Group Presents Oilprice.com Market Commentary
London - July 27, 2021 – Discovered over a century ago, helium was never intended for balloons. It wasn't supposed to be a party gas. At the height of the Cold War, the United States recognized its strategic nature and started stockpiling it and controlling supply and pricing at a Federal Helium Reserve in Amarillo, Texas. Three decades later, in the 1990s, the federal government decided that helium could be sold to private entities. Mentioned in today's commentary includes: CNOOC Limited /zigman2/quotes/204523316/delayed CA:CNU 0.00% , Lithium Americas Corp. /zigman2/quotes/206933779/composite LAC +6.43% , Turquoise Hill Resources Ltd. (NYSE: TRQ), Teck Resources Limited /zigman2/quotes/208435438/composite TECK +2.52% , Celestica Inc. /zigman2/quotes/208427519/composite CLS +1.18% .
Now, reports say those reserves have been depleted, and the reserve is slated for shutdown in September, while the United States is taking over 2 billion cubic feet of helium off the market. For national security, Big Tech, biomedicine and even the space race, the situation may now be nearing critical. And one junior Canadian explorer who recently scooped up highly prospective helium property in both the U.S. state of Montana and the Canadian province of Alberta is hoping to be part of the change for the course our helium trajectory.
Avanti Energy Inc. ( AVN.V ; ARGYF ) is aiming for the next big commercial helium discovery, and it's a small-cap stock that could end up rewarding early-in investors significantly, if successful. And it looks well positioned to take advantage of a critical supply squeeze looming for helium.
Our Tech Future May Depend on Helium
Everything from Big Data, fiber optics and MRIs to astrophysics, space travel and cryogenics relies on helium. There's no winning the race against China for global tech dominance without helium.
There might be no winning the space race, either. Advancements in healthcare could be severely hindered. You probably wouldn't be able to get an MRI. And perhaps most significantly, at least to the masses in the immediate term ...No one would be able to stream TV and movies ... or even use a cell phone. Helium is usually found in natural gas reservoirs and mined as a by-product of natural gas.
This noble gas is so valuable because it's non-combustible, very unreactive, highly stable and so light that Earth's gravity cannot hold it. Helium is non-toxic and boils at -268 degrees Celsius–near absolute zero, which is the lowest temperature in the universe. No other element can perform the invaluable act of remaining a liquid at such temperatures. That's what makes helium a noble gas that cannot be replaced. And investors will like the fact that it's already a hundred times more expensive than natural gas, which sells for around $3 per Mcf.
Helium can sell for as much as $400 Mcf, and isn't traded like a commodity--yet. Now, get ready for what looks to us like the supply squeeze of the century. One that could last decades.
First, it acquired the license for over 6,000 acres from the Government of Alberta in highly prospective helium territory. Next, it scooped up another ~2,500 acres in Alberta. Those projects–Knappen and Aden–show helium up to 2% and helium-trapping structures. Shortly afterwards, Avanti moved on over 60,000 acres in northern Montana, on territory that is said to be on-trend with both Saskatchewan's helium prospects and Alberta's.
In mid-April, Avanti moved to acquire the helium license rights to a 12,000-acre land package in Montana. According to reports, that deal should close soon. In June, Avanti announced intentions to purchase the helium license rights for ~50,000 more acres in Montana. The deal is still being finalized, but initial data shows multiple formations (similar to the Aden project) and data from surrounding wells makes this one even more promising in our perspective: That data showed 1.5%-2.2% helium in the Cambrian and 0.7%-1.7% helium in the Devonian. Again, with high nitrogen levels (up to 96%).
Back in Alberta, at Avanti's Knappen project, data shows helium concentrations up to 2.18%, with nitrogen up to 98%. Additionally, data shows deep structural features for trapping helium. (Keep in mind that in Alberta, reports say 1% helium is considered a very good concentration.)
At the Aden project, also in Alberta, similar results and helium concentrations have been shown in multiple zones. For Alberta, it's great news because the province is reinventing itself: It's not only going to be about dirty oilsands in the future. The future is critical gas supplies, and Alberta could become a major global hub for helium.
Experienced Explorers Who've Been Part Of This Before
The key figures behind Avanti Energy Inc. ( AVN.V ; ARGYF ) are experienced in exploration. And they know discovery, too. Several team members were involved in giant Encana's natural gas discovery in Canada's Montney shale--a play that ended up producing around 300,000 boe/d over 15 years.
One of those key figures is Chris Bakker, Avanti's CEO who has over 20 years of O&G experience, including with Encana. His expertise in acquisitions, exploration and production has already been tested in the past.
Are Insiders Going All-In on Avanti?
Reports show that insiders have been buying up this stock, and that's always a good sign...It's now on analyst radar, too.
Recently, Beacon Securities Limited initiated coverage on Avanti, stating that with the new ~50,000 acres in Montana, Avanti could have "a contiguous land block that may support several years of drilling". Beacon also noted that "if successful, numerous development wells would follow with production in H2/22 once facilities are configured and installed".
On July 12 [th] , following a detailed geophysical review of seismic data, Avanti Energy Inc. ( AVN.V ; ARGYF ) identified three potential drilling locations on its Aden property and says it will now be moving forward with its planned Q3/Q4 drilling program.
Not only did the team's geophysical review of seismic data confirm a four-way structural close with over 75 meters of relief, ideal for trapping helium, Avanti said it would target multiple horizons showing up to ~95% nitrogen and ~2% helium from multiple adjacent wells and previously abandoned wells on the property. 8Not only is Avanti moving fast, but we think the land rush in Alberta is taking on proportions appropriate for a looming helium shortage that could make or break our tech dominance, and much, much more.
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