Helium Evolution Incorporated (TSXV:HEVI)
(“
HEVI” or the “
Company”), a
Canadian-based helium exploration and production company focused on
developing assets in southern Saskatchewan, is pleased to announce
enhancements and amendments to the existing farmout agreement with
North American Helium (“
NAH”), through the
execution of an Amended and Restated Farmout Agreement dated
October 20th, 2022 (the “
Amended Farmout”). The
Amended Farmout offers HEVI near-term drilling catalysts that can
accelerate cash flow generation without incurring up-front capital
costs and allows the Company to retain 99% of its land base. At no
cost, HEVI will also receive NAH’s proprietary seismic that was
recently used to drill three successful and producing NAH wells in
the Mankota area, giving HEVI greater insight and valuable data
that can be used in identifying future targets.
Partnering with an industry leader such as NAH,
who is the most active driller of helium wells globally by a wide
margin, offers a significant advantage for HEVI. As a result of
being aligned with NAH and executing this Amended Farmout, HEVI is
ideally positioned to benefit from the continued exploration and
development of its asset base by NAH, and to leverage their
extensive data, learnings and expertise, without spending capital
in the near term. NAH’s farm-in allows HEVI to conserve its
approximately $10 million in cash and liquid assets while
maintaining financial flexibility and future optionality to pursue
other targets across the Company’s 5.5 million acres of helium
rights.
As part of the Amended Farmout, HEVI and NAH
also entered into a new seismic option agreement (the
“Seismic Option Agreement”) and seismic option
review agreement (the “Seismic Option Review
Agreement”) (and together with the Seismic Option
Agreement, the “Seismic Agreements”), which could
expand the number of wells to be drilled by NAH by 60%, from the
original five to up to eight. The Amended Farmout supersedes the
original farmout entered into with NAH on June 28, 2022 (the
“Original Farmout”) and maintains all earning
terms and after-earning operations from the Original Farmout.
“This Amended Farmout truly sets HEVI apart from
other helium-focused peers, as we are afforded multiple near-term
drilling catalysts, including two exploration wells by year-end
2022 and a third drill in the first half of 2023, without spending
our own capital and while retaining 99% of our land base,” said
Greg Robb, President & CEO of HEVI. “In addition, NAH could
increase the number of drills from five, contemplated under our
Original Farmout, up to potentially eight wells as a result of the
Seismic Agreements, an approximately 60% increase. The Amended
Farmout allows HEVI to maintain optionality to continue exploration
and development of internally-generated targets on our extensive
land base, while providing visibility to bring production on stream
without subjecting shareholders to dilutive equity financing.”
Strategic Benefits of the Amended
Farmout & Seismic Agreements
- Drilling
Timelines Accelerated: NAH will accelerate the timeline to
drill its first two test wells at Mankota, as defined herein, into
Q4/22 and commits to drill a third well in the first half of 2023.
If any of these three initial test wells is commercially
productive, NAH has committed to expeditiously drill development
wells on the related earned farmout blocks, which management
expects could be timed to coincide with a potential new NAH
processing facility.
- Receipt
of Proprietary Seismic: Under the Amended Farmout, NAH
will furnish to HEVI two proprietary seismic lines comprised of
35km of data in the Mankota area, previously used by NAH to target
drilling locations, of which three are currently producing helium.
Mankota is situated in the first of three predetermined blocks of
land in Saskatchewan as outlined in the Original Farmout. NAH will
select a fourth and fifth test well location on each of the other
two blocks by June 30, 2023, with both wells to be spud by
Q1/24.
- Seismic
Agreements Expands Drilling: NAH and HEVI have entered
into a new Seismic Option Agreement and Seismic Option Review
Agreement, covering two seismic option areas (the “Seismic
Option Areas”) and one seismic review area (the
“Seismic Review Option Area”) at Mankota. Details
of the Seismic Agreements are provided below.
- Seismic
Option Areas: Pursuant to the Seismic Option Agreement,
NAH will shoot new seismic, incurring 100% of the cost, in both
Seismic Option Areas, the data from which will be provided to HEVI,
and earn NAH the right to drill an option well (the “Option
Well”) in each of the two Seismic Option Areas prior to
August 31, 2023, thereby earning an 80% operated interest in the
section on which the Option Well was drilled plus nine contiguous
sections of land. Following the drilling of each Option Well, NAH
retains an 80% and HEVI a 20% working interest in the operations
and lands. If NAH does not spud an Option Well by August 31, 2023,
their ability to earn a working interest terminates.
- Seismic
Review Option Area: Pursuant to the Seismic Option Review
Agreement, NAH is able to review HEVI’s proprietary seismic data
covering the identified Seismic Review Option Area, along with data
from HEVI’s 06-02-06-06W3M well for a 30-day period. Following this
review, NAH can elect to drill a well in the Seismic Review Option
Area (the “Seismic Review Option Well”) on or
before the end of Q2/23, release the option altogether, or shoot
new seismic data over the Seismic Review Option Area. If the latter
option is elected, NAH would provide the data to HEVI, and have the
option to spud a Seismic Review Option Well before October 31,
2023, on the same terms as Option Wells outlined above.
Executing this Amended Farmout provides numerous
strategic advantages for HEVI. With NAH committing to drill two
wells in Q4/22 and a third well in the first half of 2023, HEVI
offers shareholders exposure to near-term drilling catalysts that
can accelerate cash flow generation. In addition, HEVI will receive
proprietary seismic that NAH used to successfully bring three new
helium wells on production, giving HEVI greater insight and
valuable data that can be used in identifying future targets.
Finally, the execution of the Seismic Agreements will give HEVI
access to greater seismic coverage on its land without the
associated costs, and provides opportunity to participate in wells
drilled by NAH across the Seismic Option Areas and Seismic Review
Option Area. All of these enhancements are expected to drive
meaningful value creation and strengthen HEVI’s longer-term
outlook.
About Helium Evolution Incorporated
Helium Evolution is a Canadian-based helium
exploration and production company holding the largest helium land
rights position in North America among publicly-traded companies,
focused on developing assets in southern Saskatchewan. The Company
has over five million acres of land under permit near proven
discoveries of economic helium concentrations which will support
scaling the exploration and development efforts across its land
base. HEVI’s management and board are executing a differentiated
strategy to become a leading supplier of sustainably-produced
helium for the growing global helium market, offering a compelling
opportunity for investors.
For further information, please
contact:
Greg Robb, President & CEO |
Phone: 587-330-2459 Email: info@heliumevolution.caWeb:
https://www.heliumevolution.ca/ |
Cindy Gray, Investor
Relations |
HEVIinfo@5qir.com |
403-705-5076 |
Statement Regarding Forward-Looking
Information
This news release contains statements that
constitute "forward-looking statements." Such forward looking
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results, performance or achievements,
or developments in the industry to differ materially from the
anticipated results, performance or achievements expressed or
implied by such forward-looking statements. Forward looking
statements are statements that are not historical facts and are
generally, but not always, identified by the words "expects,"
"plans," "anticipates," "believes," "intends," "estimates,"
"projects," "potential" and similar expressions, or that events or
conditions "will," "would," "may," "could" or "should" occur.
Forward-looking statements in this document
include statements regarding the Company's expectations regarding
the Company's and NAH's exploration and drilling plans,
management's expectations regarding startup of a new NAH processing
facility, the Company's ability to identify future exploration and
drilling targets, the Company's ability to preserve capital, the
ability of the Company to bring production of helium on stream, the
ability of the Company to delay or avoid dilutive financings, the
ability of the Company to generate cash flow, NAH's drilling of
development wells, and other statements that are not historical
facts. By their nature, forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause
our actual results, performance or achievements, or other future
events, to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. Such factors and risks include, among
others: NAH may be unsuccessful in drilling commercially productive
wells, NAH may determine not to startup new processing facilities;
the Company may choose to defer, accelerate or abandon its
exploration plans; the Company may require additional financing
which may be dilutive to shareholders; new laws or regulations
and/or unforeseen events could adversely affect the Company’s
business and results of operations; stock markets have experienced
volatility that often has been unrelated to the performance of
companies and such volatility may adversely affect the price of the
Company's securities regardless of its operating performance; risks
generally associated with the exploration for and production of
resources; the uncertainty of estimates and projections relating to
expenses; constraint in the availability of services; commodity
price and exchange rate fluctuations; the current COVID-19
pandemic; adverse weather or break-up conditions; and uncertainties
resulting from potential delays or changes in plans with respect to
exploration or development projects or capital expenditures.
When relying on forward-looking statements and
information to make decisions, investors and others should
carefully consider the foregoing factors and risks and other
uncertainties and potential events. The Company has assumed that
the material factors referred to in the previous paragraphs will
not cause such forward-looking statements and information to differ
materially from actual results or events. However, the list of
these factors is not exhaustive and is subject to change and there
can be no assurance that such assumptions will reflect the actual
outcome of such items or factors. The reader is cautioned not to
place undue reliance on any forward-looking information. Such
information, although considered reasonable by management at the
time of preparation, may prove to be incorrect and actual results
may differ materially from those anticipated. Forward-looking
statements contained in this news release are expressly qualified
by this cautionary statement. The forward-looking statements
contained in this news release are made as of the date of this news
release. The Company does not intend, and expressly disclaims any
intention or obligation to, update or revise any forward-looking
statements whether as a result of new information, future events or
otherwise, except as required by law.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
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