Renergen rallies on wild-card results

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Renergen rallies on wild-card results

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Published Date: 2021-03-30 | Source: Stephen Gunnion | Author: Stephen Gunnion

Renergen rallies on wild-card results

The emerging helium and natural gas producer says tests from well samples show higher helium concentrations.

Renergen's shares rallied as much as 22% yesterday after it said results from recent drilling samples were exceptional, particularly its "wild card" P007 well.

The emerging helium and natural gas producer owns Tetra4, the holder of the only onshore petroleum production right in SA, with proven methane reserves and what Renergen believes is arguably one of the highest concentrations of helium globally at Virginia in the Free State.

It said laboratory results on the helium concentrations from the recently drilled P007 site showed a concentration of 4.38%, while its MDR1 well returned a concentration of 3.15%. Since an earlier announcement on 11 March, it said the flow rate at MDR1 had increased by almost 90% to approximately 164,000 standard cubic feet per day, consistent with expectations as lost circulation drilling fluids introduced into the borehole dissipated and dried out.

The company said MDR1 was just 300 meters away from its MDR5 well and 600 meters from HDR1, which are both blowers with helium concentrations of around 2% so the higher concentration from the well was a pleasant surprise. While it would wait to see whether the helium concentration reduced and stabilised in line with the nearby wells, it said a key take-away from the strong result was that despite the wells being so close, there didn't appear to be any immediate interference between the wells, which would be positive for its reserve update.

Apart from having a meaningful impact on its resource base, last month Renergen said the P007 strike highlighted the effectiveness of its inclined percussion drilling, which was used for the first time by the company. It said the success of P007 provided it with a clear path on which technology to deploy for all future drilling.

Anthony Clark of Smalltalk Daily Research, who tipped the company at R12 at the beginning year due to the potential for the company to move from the speculation development stage to the proven exploration stage, said its rating perception in the market had fundamentally shifted, resulting in its share price more than doubling since then.

The company's shares closed 15% up at R29.56.





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