Renergen shares soar as new drillings show favourable helium concentration
DURBAN - RENERGEN’S share price rose by more than 21 percent on the JSE yesterday morning after the natural gas and helium producer reported high helium concentration from recently drilled wells at its Virginia Gas Project, which exceeded its expectations.
The share later closed at R29.56. The group said it had now obtained laboratory results on the helium concentrations from recently drilled wells P007 and MDR1 and MDR1 has returned a helium concentration of 3.15 percent and wildcard well P007 a concentration of 4.38 percent.
Its Virginia gas project comprises exploration and production rights of 187 000 hectares of gas fields across Welkom, Virginia and Theunissen in the Free State, and contains one of the richest helium concentrations recorded globally.
Chief executive Stefano Marani said MDR1 was just 300 metres away from MDR5 and 600 metres from HDR1, which were both blowers with helium concentrations of 2 percent, so getting a concentration of 3.15 percent was a very pleasant surprise.
“It will be interesting to see when and if the helium concentration reduces and stabilises in line with the nearby wells, but a key take-away from this excellent result is that despite the wells being so close, there does not appear to be any immediate interference between the wells, which is a great result for our reserve update,” Marani said.
The share price leapt to an all-time high of R31.25 after the release of the update, up from Friday’s closing price of R25.70.
The group also informed its investors that since March 11, the flow rate at MDR1 had increased by almost 90 percent to approximately 164 000 standard cubic feet per day, consistent with expectations as lost circulation drilling fluids introduced into the borehole dissipate and dry out.
Marani said on P007, the team was ecstatic, and this exceeded anything they were hoping for.
“This is a big leap forward in corroborating our geological modelling of the Virginia Gas Project, and the potential additional supply of more than 40kg of helium per day from a single well is quite an outstanding result,” Marani said.
The alternative exchange listed company opted for a secondary listing on the Australian Stock Exchange in June 2019 in a move meant to unlock value for its shareholders and present the group with more opportunities.
The group explained the listing in Australia as providing Renergen with an international exposure it required and act as a global showcase for foreign investors on the good prospects for natural gas in South Africa.