Helios Energy (ASX:HE8) has completed a $10.1 million share placement — giving it the capital to conduct further drilling at its exciting Presidio oil project in south-west Texas.
The company told the market in a release this week that it had raised an additional $1.4 million as part of a previous placement of $8.7 million — bringing the total to $10.1 million.
The cash will be used to drill a third well at Presidio, which was confirmed as a new oil discovery in August last year. The money will also allow Helios to complete a 2D seismic program and snap up additional acreage in the Presidio area.
The placement was completed at 13.1 cents per share — which is a premium to today’s price of 13c.
While the leasing of more acreage and the 2D seismic would be welcome news for shareholders, the main news is that it’s using the cash to drill a third well at Presidio — which Helios is required to drill to earn a 70 percent working interest in the project.
About the Presidio project
One of the co-founders of Helios is veteran mining and oil and gas entrepreneur Peter Allchurch.
His technical work along with that of fellow veteran oil and gas geologist and oil finder Neville Henry led the company to drill two vertical ‘wildcat’ wells on the project.
One of the wells, Quinn Creek 141, flowed oil at 260 barrels of oil and 1345 barrels of completion fluid in 168 hours.
The oil produced came out with similar characteristics as oil flowing from the prolific Eagle Ford Shale Formation — which over the past decade has triggered a renaissance in Texan oil drilling.
What’s more, the company has claimed porosity and permeability of the target formation which exceeds that present in the Karnes trough — which is the sweet spot of the Eagle Ford Shale.
With the well flowing oil from what was a vertical well with a single-stage fracture stimulation, Helios has labelled it compelling evidence of a new oil discovery and the company’s share price has responded in kind.
From less than 5c at the end of June last year, the stock rocketed as high as 17c in August and has maintained most of those gains in the time since.
A hydraulic fracturing spread at Quinn Creek 141
Helios had previously told shareholders that it expects the third well in the Presidio oil project to spud in during April this year.
Not the only project on Helios’ plate
While the main aim of the placement was to raise funds for work at Presidio, Helios is also sitting pretty with its other asset in Texas, the Trinity oil project.
It has a 100 percent working interest in the project, and is currently mulling over development options for the project.
Nearby wells targeting largely the same formations as Trinity have daily production of 500 barrels of oil per day, with the average well producing a total of 250,000 barrels of oil.
This content is produced by Star Investing in commercial partnership with Helios Energy. This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
Don’t miss a thing, subscribe now