Proactive Investors - Broker Liberum expects a new drill rig to be found ‘fairly swiftly’ by Helium One Global Ltd (LON:HE1H), which earlier Tuesday revealed it had unexpectedly lost access to the kit it hope to deploy.
“While today’s announcement is likely to result in a delay to the original 1Q23 [first-quarter] spud date, an updated timeline will be provided once a new rig has been found, Helium One remains committed to delivering a successful campaign as early as possible in 2023,” said Liberum in a note to clients.
Once sourced and on-site the new equipment will be deployed in Phase II drilling of its asset in Tanzania’s Rukwa basin.
“The company has identified its next targets and has the balance sheet strength to deliver this, however, given high oil and gas prices, it is proving challenging in securing the necessary equipment,” Liberum said.
“Helium One has completed extensive geological work which has identified an effective helium system within the Rukwa basin. Despite the de-risking completed to date, HE1’s [Helium One'] shares only trade at levels reported prior to Phase I.”
The broker reckons the shares, off 23% in the wake of the setback, offer compelling value at 5.43p each. It’s target price is 19p based on the company’s ‘risked’ post-discovery discounted cash flow, which incorporates a 35% chance of geological success.