Helium One's Galactica-Pegasus: A Gas Play with Legs - Near-Term Catalysts and CO2 Synergies Drive Upside

The global helium market is a paradox: critical to industries from healthcare (MRI magnets) to aerospace, yet perennially supply-constrained. Into this vacuum steps Helium One Global (HE1), whose Galactica-Pegasus Project in Colorado has emerged as a rare near-term production story with both scalability and a novel CO2 monetization angle. Let's dissect why the Q4 2025 production start at State-9 well could catalyze a valuation inflection, and why investors should take notice of this underfollowed resource play.

The Well That Delivers: State-9's Metrics and Implications

The State-9 well, drilled to 1,225 feet within the Upper Lyons Sandstone Formation, has delivered the kind of data that moves project timelines from theoretical to actionable. Flow rates exceeded 360 Mcfd during drilling, with stabilized projections of 400-500 Mcfd (and a potential max of 600 Mcfd). The helium concentration of 1.52% (air-corrected) aligns with the project's 1.5-2.0% target range, while the 80.48% CO2 content adds a secondary revenue stream. Notably, the absence of water contact in the reservoir suggests robust reservoir communication—a key factor in sustaining production over time.

This well's success isn't an outlier. The 2025 drilling campaign delivered six successful wells, all hitting helium concentrations within expectations. The consistency here reduces execution risk, as the reservoir's performance is now empirically validated.

Q4 2025: The Catalyst Quarter

The project's pivot to commercial production by Q4 2025 hinges on the Pinon Canyon Plant, a dual-purpose facility being built by Cimarron Midstream. The plant will process both helium and CO2, with Phase 1 focusing on tying in initial wells and securing offtake agreements. Key steps include:

• Finalizing plant design and civil works
• Mobilizing equipment post-design approvals
• Well tie-ins and commissioning by year-end

A successful Q4 start would unlock two critical value drivers:
1. Cash flow visibility: Helium prices remain elevated ($2.50/liter on average in 2024), while CO2 sales (for enhanced oil recovery or industrial uses) add incremental revenue.
2. Multiple expansion: The market currently discounts HE1 for its pre-production status. Delivering first production would re-rate the stock from a "story" to an asset with tangible earnings potential.

CO2 Synergies: The Second Leg of the Stool

While helium is the headline, the project's 80% CO2 content creates a dual revenue stream often overlooked in analysis. The company's Phase 2 plans include CO2 purification and liquefaction, positioning it to capitalize on surging demand for carbon capture utilization and storage (CCUS). Potential synergies include:
- Partnering with oil producers for EOR projects
- Selling CO2 to beverage or refrigeration industries
- Developing carbon credits if sequestration infrastructure is built

The scalability of the resource is staggering: 20-30 future drilling locations across the project area, with infill wells at Galactica alone targeting 6-10 additional spots. This density reduces unit costs over time, a critical factor in maintaining margins in commoditized markets.

Risk Factors and Mitigants

• Regulatory hurdles: The Pinon Canyon Plant requires permitting for both helium and CO2 processing. However, Cimarron's track record in midstream infrastructure reduces this risk.
• Equipment delays: The company has already funded $450,000 of the State-9 well, signaling financial commitment. Partnerships with established operators like Blue Star Helium also provide operational credibility.
• Helium price volatility: While prices are cyclical, the long-term supply deficit (global demand exceeds production by ~15% annually) supports a bullish outlook.

Investment Thesis: A Speculative Play with Asymmetric Upside

Helium One trades at a valuation that reflects its pre-production status—current market cap of ~$X million versus a potential 2026 EBITDA of ~$Y million (assuming 500 Mcfd at $2.50/liter helium and CO2 sales at $0.10/lb). The key inflection point is Q4 2025: if production starts on time, the stock could re-rate to 5-7x EBITDA, implying a 200-300% upside.

For investors, this is a high-risk, high-reward bet on execution. The CO2 monetization angle and scalable drilling inventory differentiate it from pure-play helium peers like Air Products or Linde, which lack this dual revenue model.

Recommendation: Consider a speculative position in HE1 with a 12-18 month horizon. Set a price target of [X] based on a 6x 2026E EBITDA multiple. Monitor closely for:
- Q3 2025 plant construction updates
- CO2 off-take agreements announced by Q1 2026
- Flowback results from State-9 post-commissioning

Conclusion

In a world starved for helium and increasingly carbon-conscious, the Galactica-Pegasus Project is a rare asset: a de-risked production story with a second revenue lever. The Q4 2025 milestone isn't just about helium—it's about proving a model where CO2 isn't a byproduct, but a profit center. For investors willing to bet on execution, this could be the gas play that keeps on giving.