Helios Faces Regulatory and Financing Hurdles Despite Strong Presidio Resource Report

Independent Validation of Presidio’s Resource Scale

Helios Energy Ltd (ASX: HE8) has provided further details on its Contingent Resource Report for the Presidio Project in West Texas, reinforcing the project's significant hydrocarbon potential. The report, prepared independently by Foundation Energy LLC as of 30 September 2024, validates the scale and quality of the resource base, confirming recoverable volumes of oil, natural gas liquids (NGLs), and gas that position Presidio as a substantial new play in the region.

The Presidio Project targets the Cretaceous Lower Ojinaga Formation, which Helios has identified as geologically analogous to the prolific Austin Chalk Formation in East Texas’s Giddings Field, a formation that has historically produced approximately 600 million barrels of oil. This analogy underpins the company’s thesis that Presidio could evolve into a similarly significant hydrocarbon province.

Robust Resource Estimates and Production Insights

The contingent resource estimates, reported on a net 75% working interest basis, range from 5 to 8 million barrels of oil, 2 to 4 million barrels of NGLs, and 36 to 57 billion cubic feet (Bcf) of gas, translating to approximately 13.3 to 21.7 million barrels of oil equivalent (MMBOE). These figures reflect the low to high confidence intervals (1C to 3C) under the Society of Petroleum Engineers Petroleum Resources Management System (SPE-PRMS) guidelines.

Beyond contingent resources, the report outlines maximum recoverable resources with entitlements suspended, estimating up to 57 million barrels of oil, 34 million barrels of NGLs, and 495 Bcf of gas net to Helios. This theoretical ceiling highlights the upside potential as Helios expands its leasehold and enhances its working interest.

Helios has drilled and tested four wells, employing vertical and short-radius horizontal completions with multi-stage fracturing across the Ojinaga and Eagle Ford formations. Production data from these wells demonstrate the presence of producible hydrocarbons, with peak rates reaching over 150 barrels of oil per day and substantial gas flows. The wells also provide valuable data on reservoir characteristics, fluid properties, and recovery factors, supporting the resource estimates.

Strategic Development and Commercialisation Pathway

Helios is advancing the Presidio Project through a clear strategic pathway focused on enhanced technical evaluation, infrastructure development, and regulatory engagement. The company has engaged world-class technical experts to optimize reservoir modelling and recovery techniques, aiming to increase drilling density and reduce operational costs.

Commercialisation efforts will prioritize securing project financing, expanding appraisal drilling, and developing gas processing and transportation infrastructure. Regulatory collaboration remains a key focus to ensure timely permits and approvals, particularly given the evolving U.S. industry environment.

Outlook and Market Implications

Managing Director Philipp Kin highlighted the significance of the independent report as a milestone validating Presidio as a new substantial play. He emphasized the advantage of leveraging existing knowledge from established shale plays and the company’s commitment to unlocking value through joint ventures and resource monetisation strategies.

While the report does not include detailed economic forecasts, it assumes conservative commodity price scenarios and lateral well lengths consistent with industry standards. The company’s focus on de-risking the project and advancing technical understanding positions Helios well to capitalize on the growing demand for hydrocarbons in the U.S. market.

Overall, the Presidio Project represents a compelling growth opportunity for Helios Energy, with the potential to materially enhance its resource base and shareholder value as development progresses.