Renergen rockets as it reports sevenfold jump in proved helium reserves
The natural gas and helium group has released an independent assessment of its reserves, sending its shares up almost a fifth in early trade.
Domestic natural gas and helium producer Renergen says an independent assessment of its Virginia Gas Project has resulted in its proven reserves of helium rising sevenfold — news that sent its share above R40 for the first time, on Wednesday.
Renergen, now valued at R5.1bn on the JSE, has been conducting a drilling campaign in its production right in the Free State, hiring Canadian subsurface consultant Sproule to estimate its reserves.
The gas group said on Wednesday the report showed proved reserves of helium had risen 620% to 7.2-billion cubic feet and methane 420% to 215.1-billion cubic feet.
Renergen’s shares leapt as much as 18% to R41.92 in response, adding to a 14.27% rise on Tuesday, when the group had reported gas flow at one of its drilling wells had come in 50% higher than initially expected. The group’s shares have now more than tripled so far in 2021, and were on track for their best day in six months on Wednesday morning.
Proved reserve is defined as 90% or greater confidence that the volumes will be produced, with Renergen saying its upgraded reserves confirmed its potential as globally significant supplier of helium.
“We have and continue to work towards ensuring Virginia is well-placed to supply helium into a growing and constrained market,” said CEO Stefano Marani in a statement.
“Increasing our [proved] helium reserves by over 600% since March 2019 is a great step forward in achieving this goal and importantly, highlights the enormous potential of Virginia to become a significant helium supplier to not only SA but globally as well,” he said.
The JSE and ASX listed group holds SA’s only onshore petroleum development right, Virginia Gas Project in the Free State, which has some of the highest concentrations of helium recorded globally.
Phase 1 is on track to begin production early in 2022, with expected output of 350kg of helium a day, while Renergen is also gearing up for phase 2 of its development, a more substantial project that is expected to produce at least five tonnes per day towards the end of 2023.
Helium is important for the medical industry and is used for cooling in magnetic resonance imaging (MRI) machines. It is also needed for the manufacture of fibreoptic cables, cooling during the production of nuclear power and the propulsion of rockets into space. It is a key input for the defence industry, as well as for balloons.