Auctus Advisors analyst Stephen Foucaud reiterated his Buy rating on Pulsar Helium Inc. (PLSR:TSX.V) in a March 1 research note after the company encountered promising initial helium shows at its Topaz #1 appraisal well in Minnesota.
The spectrometer logged helium concentration levels up to 12.4% at depths between 1,750 and 2,200 feet. However, air pumped into the hole during drilling diluted measurements. Pending lab analysis will provide clarity on true concentrations. Logging will detail fracture networks ahead of eventual well testing.
"Ahead of the well testing results, we have increased our chance of commercial success from 40% to 50%," Foucaud wrote. "We increase our target price
from CA$0.80 per share to CA$1.20 per share."
Catalysts
Foucaud noted that some fluid samples have already been sent over for analysis. The company is anticipating results within the next couple of weeks, which Foucaud wrote should give the company a better idea of a helium concentration.
"Pulsar expects to be able to bring well testing equipment to the well site to start the well test programme during 2Q24," Foucaud noted.
Cashflow
Foucaud forecasted US$15 million of development capex, with the first gas production commencing in 2025 under a 5 mmcf/d scenario.
The company models net cash generation approaching US$35 million by year-end 2025, equal to 45% of Pulsar's current market capitalization.
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Disclosures for Auctus Advisors, Pulsar Helium Inc., March 1, 2024
Pulsar Helium Inc (“Pulsar” or the “Company”) is a corporate client of Auctus Advisors LLP (“Auctus”). Auctus receives, and has received in the past 12 months, compensation for providing corporate broking and/or investment banking services to the Company, including the publication and dissemination of marketing material from time to time.
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Author The research analyst who prepared this research report was Stephane Foucaud, a partner of Auctus.
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