Pulsar Helium Inc. (PLSR:TSX.V) engaged Capstar Drilling to drill one high-impact appraisal well at its Topaz helium project in Minnesota this year, reported Auctus Advisors analyst Stephane Foucaud in a Sept. 26 research note.
"The well will twin an existing well that encountered and flowed helium at high rate (10.5% helium concentration)," added Foucaud.
246% return potential
On this news, Auctus reiterated its CA$0.90 per share target price on Canada-based Pulsar, the current share price of which is about CA$0.25.
The total return implied by these prices is compelling, at 246%.
The drill plan
Capstar will collar the well, named Jetstream #1, about 20 meters from the original. While drilling is taking place, a gas chromatograph and gas spectrometer at the site will measure the helium concentration in real time. Once drilling reaches total depth, the new well will be logged.
Should Pulsar choose, it could have Capstar drill a second well at Topaz, per the existing agreement.
Drilling is slated to commence at Jetstream #1 around Dec. 10 of this year.
Possible value scenarios
Were the upcoming well test to show an initial production rate of 2,000,000 cubic feet per day (2 MMcf/d), or 0.2 MMcf of helium, Foucaud noted, this would "unlock CA$0.50 per share and eliminate the development and commercial risk." Also, it likely would result in some of the Proven, Probable and Possible contingent (3C) resources being upgraded to the Proven and Probable (2P) category.
Were the well test to show a higher initial production rate, of 5 MMcf/d or 0.5 MMcf of helium, "about CA$1.60 per share would be unlocked (assuming this triggers the entire conversion of the 3C resources into the 2P reserves category)," wrote Foucaud.
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