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Helium One shares lose steam after negative drilling update

The helium producer’s stock suffered a second crash in less than a month, after it shared that its second well failed to find any helium gas.

  • Helium One (LON: HE1) shares fell by over 50% on Thursday (26 August)
  • The company said its Tai-2 well concluded ‘without identifying helium gas’
  • Chief executive remains optimistic about the company’s progress
  • Keen to take a chance on Helium One? Open an account with us to start trading the stock.

Helium One stock price plummets again

Helium One shares had another spectacular crash on Thursday morning – its second in less than a month, after the company ended its 2021 drilling campaign.

The helium producer’s stock plummeted by over 50% to 6pence a share, after it revealed that its latest drilling campaign through the Tai-2 well concluded ‘without identifying helium gas’.

Tai-2’s failure follows that of Tai-1, which had confirmed ‘the presence of a working helium system’, but was also unable to locate any free gas ultimately.

Chief executive David Minchin, however, remained optimistic about the progress, saying that the two campaigns have yielded ‘significant information’. He added that there is also enough data to move to ‘a two-track exploration route to develop’ the Rukwa Project in Tanzania.

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Is Helium One’s lack of revenue a problem?

Despite the disappointing developments and its latest price crash, investors should still be happy to know that the stock is still up by over 110% from one year ago.

Just for this year alone, Helium One’s share price is also up by a respectable 10%.

This is impressive, especially for a company that has yet to turn in any sales. The stock’s outperformance has really come on the back of guidance and forecasts.

Looking to the near future, some investors would also remain invested in the company for its potential to replace outdated Helium supplies, if its guidance on the Rukwa Basin turns out to be true.

Minchin also stated in the update that the company’s cash position remained healthy.

‘We're well financed, we have got £10mln left in the bank. And that gives us a great deal of optionality, and the ability to advance the project very rapidly,’ he said.

‘I'm looking to mobilise seismic imaging physical this season, so that we're able to get information from before the rain starts in mid-November, it's ambitious, but we try our best because I hate wasting time.’

Still, it should be noted that Helium One does not have any revenue or steady gas reserves. Until this changes, the nature of the stock thus appears to be largely speculative for now.

As of Friday (27 August), the stock has recovered slightly to around 9p per share, but remains roughly 28% below pre-announcement prices.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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