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.
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.
#HE1 One or two good things in that RNS thst should help them a lot with their next well, but overall a bit of a disappoint.
No doubt the price gets a bit (probably a lot) bumpy for a while then settles out and climbs for the next drill.
— The Masked Stock Trader (@ProAIMTrader) August 11, 2021
David Minchin, CEO of Helium One, commented:Â “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.Â
“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%.
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