First Helium finalised a long-term "take-or-pay" helium supply agreement with an unnamed major global industrial gas supplier. The agreement is for 80% (potentially up to 100%) of First's helium production from Worsley, with a maximum monthly and annual volume limit, and specified pricing. The agreement, valued at up to US$100mm over the first five years of production, provides a firm pricing structure for the initial 10-year term. First plans to begin helium production in late Q1’24, utilising the 15-25 well initially and expanding production with further well development. No unit pricing data was provided but if we assume gross gas production of 10mmcf/d, which at 1% helium concentration would be 0.1mmcf/d or 36.5mmcf/y, this would equate to a price of ~$550/mcf (there is considerable variability around this based on the assumptions). The value of the deal is significant in the context of First’s market capitalisation of just over $15mm.
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