Noble Helium progressing to first drilling campaign at Tanzanian North Rukwa acreage

Mon 05 Sep 22, 1:44pm (AEST)
An array of differently coloured helium balloons are let loose into the sky
Source: iStock

Key Points

  • Noble Helium, which listed earlier this year, has launched the farmout process needed to fund its first 2-well campaign at North Rukwa
  • The company is targeting natural helium deposits at North Rukwa; neighbouring Helium One Global has confirmed helium present
  • Drilling will not commence until the next Tanzanian dry season, which starts in June 2023

Still a fairly fresh face to the ASX, Noble Helium (ASX:NHE) has today launched its farmout marketing process to find partners willing to potentially fund the company’s first 2-well maiden drill run at North Rukwa in Tanzania. 

The company is targeting natural gas deposits believed to be contained underground on-site, a thesis supported by previously acquired magnetic imaging. 

Last month, the company finalised airborne surveys over the acreage and confirmed signs of possible deposits that harmonise with known geology in the area. 

The rift basins of Tanzania over which North Rukwa lies extend into Uganda and Kenya, where helium has been found by other players. Worth noting is that Noble Helium CEO Justyn Wood (described as a managing director in today’s release) was, through another company, involved in helium gas discoveries in Uganda back in 2006. 

Shareholders will, however, need to be patient. The catch is drilling will not start until the Tanzanian 2023 dry season, which commences in June, so prospects for a fast-track to helium sales are a while off yet. 

Expressions of interest coming in fast 

The company states it has received interest from “several parties” towards its North Rukwa farmout agreement, and discussions remain ongoing. 

However, while airborne magnetic survey data has been completed, Noble is yet to finalise a seismic campaign on the acreage. Seismic campaigns generally provide a superior quality of data as compared to airborne surveys. 

Until such time those seismic campaigns are complete, the company does not anticipate farmout negotiations to conclude. Whether or not they will reach a successful decision at all with those entities currently engaged remains unclear, as does the identity of who those company representatives are. 

Possible game changer: management 

“The results of the exploration program this year have underpinned our confidence in the North Rukwa as a helium system that might just change the game,” Noble Helium MD Justyn Wood said. 

“We are encouraged with the interest shown after limited promotion of the opportunity.”

“The exploration [seismic and drilling] programs have been designed to focus on the two most prospective leads in the Rukwa Basin.” 

Crucial context: the 2022 US helium shortage 

Two unplanned plant shutdowns earlier this year at a facility in the US, and another in Russia respectively, kicked off a US helium shortage that is echoing into global markets. 

The Russian facility has been further impeded by sanctions placed upon the Kremlin following the invasion of Ukraine in late February.

Noble is not alone on the ASX, as far as helium plays go. Grand Gulf Energy (ASX:GGE), located in Utah, are also seeking to produce helium for sale into the US markets as companies scramble to extract more of the gas from the ground. Blue Star Helium (ASX:BNL) is also located in the US. 

While helium can be synthesised, it is most often mined—and that is why a number of Australian companies are searching for the gas. 

Helium Demand by Application
A breakdown of Helium demand, sector-by-sector

What is the shortage affecting, exactly?

Helium is a crucial and often overlooked material in the manufacturing of many high-impact products—fibre optics cables and microchips among them.

As the microchip (semiconductor) sector continues to recover, it is likely helium demand will only increase. 

Then there's kids balloons. US company Dollar Tree, which sells helium balloons for parties among other products, earlier this year published a statement on its website apologising for the shortage of helium balloons to American consumers. 

And if that wasn't bad enough, there are more concerning implications for a global helium shortage: in April, the US National Weather Service noted it wasn't able to release as many weather balloons.

That situation has only gotten worse since early 2022: in August, he US state of Denver stopped launching weather balloons altogether

A look at Noble Helium's three month charts
A look at Noble Helium's three month charts


Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication.

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