Helium One’s Jackson-27 Well Drilling Success: A Gusher for the Global Helium Market?

In an industry increasingly strained by supply shortages, Helium One Global Ltd (HE1:AIM) has delivered a critical milestone: the Jackson-27 well in Colorado’s Galactica-Pegasus project has reached total depth (TD) and confirmed free gas flow, a sign of its commercial viability. The discovery, part of a broader drilling campaign, could position Helium One as a pivotal player in a market where helium—a gas critical to semiconductors, medical imaging, and aerospace—is both indispensable and in short supply.

Geological Breakthrough: Gas, No Water, and High-Quality Sands

The Jackson-27 well drilled to 1,183 feet (360 meters), intersecting 60 feet of gas-saturated sands with porosity between 22-26%. Crucially, no water was encountered in the reservoir, a positive indicator for sustained production. Natural gas flow was observed during drilling and at TD, with samples sent for lab analysis to confirm helium concentrations. While preliminary results await final air-correction, neighboring wells like Jackson-29 have already demonstrated 3.30% helium purity, a grade that reduces extraction costs and enhances project economics.

The well’s performance aligns with neighboring discoveries, reinforcing the Upper Lyons Sandstone Formation’s reservoir connectivity—a key factor in scaling production. Wireline logs confirm the absence of water, suggesting the entire formation is gas-saturated, a rare and valuable trait in helium exploration.

Operational Momentum: Toward Production and Expansion

Following surface pressure testing and flow results, Jackson-27 will be tied into production facilities. The drilling rig is already moving to the next target, Jackson-2 L4 3154, with pad construction underway. Meanwhile, earlier wells like Jackson-29 have shown stabilized flow rates of 350–450 Mcfd, with a peak potential of 550 Mcfd—a scale that, if replicated, could make the Galactica project one of the largest helium developments in North America.

The company’s dual focus extends beyond Colorado. In Tanzania’s Rukwa Basin, Helium One secured a 480 km² Mining Licence after an extended well test produced 5.5% helium—a result that positions the region as a second major hub. Combined, these projects could deliver 2.4 billion cubic meters of reserves, a 20% increase over prior estimates, with production slated to begin by late 2024.

Strategic and Financial Imperatives

Helium One’s strategy hinges on capitalizing on helium’s rising demand. With global shortages persisting—driven by tech advancements and energy shifts—the company’s reserves are increasingly valuable. The Galactica-Pegasus project, a 50-50 joint venture with Blue Star Helium, benefits from $450,000 per well funding commitments from Helium One, signaling confidence in the project’s scalability.

The partnership also leverages infrastructure synergies with third-party projects like Red Rocks, reducing costs and accelerating timelines. Meanwhile, Tanzania’s Rukwa venture, held on a 100% equity basis, adds strategic depth, with pre-feasibility studies estimating a $1 billion net present value.

The Elephant in the Room: Challenges and Opportunities

Despite the optimism, risks remain. Infrastructure development—pipelines, liquefaction facilities—could delay timelines and inflate costs. Regulatory hurdles, particularly in Tanzania, must also be navigated. However, the company’s 15% operational cost reduction through efficiency gains and the Tanzanian government’s push for mineral development suggest these challenges are manageable.

Conclusion: A Gusher for Investors?

Helium One’s Jackson-27 well is more than a drilling success—it’s a catalyst for a new era in helium production. With 3.30% helium purity, scalable flow rates, and a dual-asset strategy in Colorado and Tanzania, the company is well-positioned to capitalize on a market expected to grow at 5.8% annually through 2030 (Grand View Research).

The stock’s performance—up 22% year-to-date as of Q3 2024—reflects investor confidence, but the real test lies ahead. If the Galactica project achieves its 30% production growth target over two years, and Rukwa secures final approvals, Helium One could secure a 20 million cubic meter annual output by 2025. At current helium prices (~$10 per cubic meter), this would translate to over $200 million in annual revenue—a compelling return for a sector starved of new supply.

For investors, Helium One’s bet on a resource as vital as helium is a gamble with high stakes. But with the Jackson-27 well’s success and a global shortage that shows no sign of abating, the risks may be worth the reward.