new-recommended-broker-banner new-recommended-broker-banner
Practice Stock Trading Your Capital Is At Risk

Helium One (HE1) Shares Plunge As Announcement Underwhelms Investors

Updated: 11 Aug 2021

Helium One (LON: HE1) shares have plunged on Wednesday following the completion of drilling of the Tai-1A exploration well at its 100% owned Rukwa Project in Tanzania.

new-recommended-broker-banner

Tai-1A drilling was completed to a depth of 1121m, with Helium shows identified in all three target formations. In addition, helium shows were encountered over five intervals in the Karoo Formation.

Wireline logging of the uppermost Karoo indicates good reservoir potential with 15-20% porosities. However, the petrophysical analysis revealed no free gas in the uppermost thinly bedded Karoo sands associated with helium shows.

The company also added that helium shows within the deeper and thicker sandstone units of the primary Karoo reservoir were not logged due to poor and deteriorating hole conditions.

While the results were not terrible, they were not what investors were hoping for after much hype. Helium was identified in multiple zones,  but the main reservoirs were not able to be logged due to the hole conditions. However, Helium One said they may redrill Tai to test identified targets.

David Minchin, CEO of Helium One, commented: “We are encouraged to see multiple zones with helium shows whilst drilling through the Karoo Formation. Tai-1 has successfully identified helium shows within all three target formations which confirms the presence of a working helium system in the Rukwa Basin. 

“Frustratingly, due to poor and deteriorating hole conditions, including large washouts across much of the Karoo, we were not able to run wireline tools downhole beyond 882m and have subsequently not been able to log the main Karoo Formation.

“Thinly-bedded sands in the uppermost Karoo that we were able to log have no indications of free gas.”

Helium One's share price plummeted to 9p following the announcement. It is currently trading at 16.25p, down 37.6%.

Should you invest in Helium One shares?

Helium One shares are traded on the London stock exchange's AIM market (the alternative investment market), which is the submarket specifically for smaller companies. AIM stocks are attractive to investors as they have tax advantages and smaller companies have the potential to benefit from rapid growth. But are HE1 shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage . 75 % of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money .