Helix Exploration

The Hydrogen Play Just Got Real

Good Morning Team.

When I wrote about Helix last month, I positioned the natural hydrogen discovery as scientific upside — interesting, potentially valuable, but not something to bank the investment case on.

That just changed.

This morning’s RNS announces Helix has secured a drilling rig to re-enter Inez #1, starting as soon as next week, specifically to core 30-40 feet of ultramafic rock — the exact geological formation that generates natural hydrogen.

This is now a company moving decisively to prove up what could be one of North America’s first commercial natural hydrogen discoveries.

CEO Bo Sears just said something remarkable:

‘To my knowledge, no better rock has been encountered in the United States for geological hydrogen exploration.’

That’s the man who literally wrote the textbook on helium geology telling you he’s found something exceptional.

What’s Actually Happening

Helix is re-entering the Inez #1 well next week to:

1. Remove existing production tubing and drill to total depth

2. Core 30-40 feet of ultramafic rock — the hydrogen source formation

3. Perforate the entire Souris River zone to complete the well for helium production

The dual objective is simple: prove the hydrogen potential while simultaneously bringing Inez #1 online as a helium producer to feed the processing plant.

This is capital-efficient exploration.

One operation, two value drivers.

Why This Matters: The Geology

Natural hydrogen forms when water reacts with ultramafic rocks (rich in iron and magnesium) deep underground. The process is called serpentinisation, and it’s been known to science for decades— but commercial-scale discoveries remain vanishingly rare.

Helix’s October announcement confirmed the presence of serpentine, olivine and magnetite in Rudyard rock cuttings. These are the exact minerals that drive hydrogen generation.

The mantle helium signature (³He/⁴He ratio of 0.74 Rₐ, ~9% mantle contribution) proves there are deep crustal fractures channeling fluids upward from the Earth’s interior, exactly the plumbing required for active hydrogen generation systems.

Laboratory analysis through XRD, XRF and Mössbauer spectroscopy confirmed these rocks are ‘actively undergoing, or have undergone, alteration processes capable of generating hydrogen.’

The geochemical conditions are right.

The rock composition is right.

The structural framework is right.

What’s missing is direct core samples from the ultramafic interval itself.

That’s what happens next week.

The Economics: $3 Per Kilogram

If Rudyard’s hydrogen qualifies as “clean hydrogen” under Section 45V of the Inflation Reduction Act (and given zero-carbon geological production, it absolutely should) Helix can claim up to $3 per kilogram in tax credits.

For context:

• The US Department of Energy’s ‘Hydrogen Shot’ targets $1/kg production cost

• Current grey hydrogen (from natural gas) costs $1-2/kg to produce but emits CO2

• Clean hydrogen commands premium pricing in industrial, transport and energy storage markets

Geological hydrogen has near-zero production cost once wells are drilled. If you’re extracting it alongside helium from the same wells, your marginal cost to produce hydrogen is essentially the cost of separation and compression.

Let’s do some hypothetical maths:

Assume Rudyard produces hydrogen at concentrations sufficient for commercial extraction. If a single well produces even modest volumes — say 100 kg/day of hydrogen — that’s:

• 36,500 kg/year per well

• At $3/kg tax credit alone: $109,500 per well annually in credits

• Add actual hydrogen sales at market rates (let’s say $4-6/kg): $146,000-$219,000 per well

Scale that across twenty wells and you’re looking at perhaps $4 million in annual hydrogen revenue, entirely incremental to the helium business case.

That’s before considering that hydrogen concentrations might be far higher, or that market pricing for zero-carbon geological hydrogen could command significant premiums.

Strategic Implications

This changes the Helix story in three ways:

First: De-Risking the Hydrogen Optionality

Until now, hydrogen was interesting but unproven. Core samples from the ultramafic interval will either confirm or refute whether commercial hydrogen generation is occurring.

If cores show active serpentinisation and hydrogen generation, Rudyard becomes one of the only verified commercial-scale hydrogen prospects in the United States.

Second: US Government Interest Becomes Inevitable

The Biden administration’s Hydrogen Shot initiative, combined with the IRA’s massive clean energy subsidies, makes domestic clean hydrogen a strategic priority.

JP Morgan’s $1.5 trillion Security and Resiliency Initiative explicitly targets critical industries — and helium and hydrogen both qualify.

If Helix proves commercial hydrogen production, Washington will take notice. Whether that manifests as direct investment, loan guarantees, offtake agreements or regulatory support remains to be seen — but government engagement becomes inevitable.

This would likely be far more valuable than the revenue generation itself.

Third: The Takeover Premium Just Increased

I wrote last week that major producers (Linde, Air Products, ExxonMobil) would likely acquire Helix once the helium business was sufficiently de-risked. Add commercial hydrogen production to the package, and the strategic value multiplies.

A twenty-well helium field generating $80 million annually is valuable. A twenty-well helium-hydrogen field generating $85-90 million annually with additional tax credits, zero-carbon credentials, and domestic supply security is a strategic asset.

The majors won’t let an independent operator prove that dual helium-hydrogen production works at commercial scale.

The acquisition timeline may actually accelerate if these cores confirm what management believes they will.

The actual $ number becomes less important - they will have to have it.

Timeline and Near-Term Catalysts

Helix is now running a multi-track development program with four producing wells already online:

November 2025:

• Inez #1 re-entry and coring (next week) - this well is already producing, re-entry is specifically to core the ultramafic interval for hydrogen evidence

• Helium compressor delivery to site (unit likely already in US, onsite imminently)

• First helium production and sales from Darwin, Linda, Weil, and Inez #1 wells (end of November target remains on track)

December 2025:

• Core analysis results from ultramafic interval

• Inez #1 additional zone completions

• Processing plant fully commissioned and operational (compression unit is plug-and-play as testing/commissioning already complete)

Q1 2026:

• First helium revenue reported

• Annual revenue run rate established

• Potential offtake announcement (likely with hydrogen component if cores confirm)

• Additional well drilling to expand both helium and hydrogen production

The next 8-10 weeks will be among the most important in the company’s history.

Either we get confirmation that Rudyard is a genuine dual-resource helium-hydrogen field, or we revert to the helium-only business case (which remains compelling on its own).

Valuation Implications

My previous valuation assumed helium-only economics, but warrants updating based on industry comparables:

Near-term (Q1 2026 - 4-5 wells producing):

• $20 million annual revenue run rate

• At 5x revenue multiple (standard for producing helium companies): $100 million market cap (£70 million)

• Current market cap: £50 million

• Implied upside to fair value circa 40% (targeting 40p from current 28-29p)

Medium-term (2027-2028 - 20 wells producing, helium-only):

• $80 million annual revenue

• At 5-6x revenue multiple: $400-480 million market cap (£280-340 million)

• Represents 5-7x return from current levels

Bull case (hydrogen confirmed and commercial):

• Add $4 million annual hydrogen revenue per 20-well scenario (conservative)

• Total revenue potential: $84 million annually

• Apply 7-8x multiple (justified by dual-resource, zero-carbon profile, strategic value)

• Market cap: $590-670 million (£410-470m)

• Represents 8-9x return from current levels over 3-4 years

And if a major acquires Helix once both helium and hydrogen are proven, expect a significant premium to intrinsic value —potentially pushing valuations.

The Bottom Line

This RNS transforms hydrogen from ‘nice to have’ to ‘actively being proven.’

Core samples from the ultramafic interval will either:

• Confirm Rudyard as one of North America’s premier natural hydrogen prospects, or

• Reduce hydrogen to a longer-term research question while the helium business proceeds

Either way, the helium case remains intact.

But with four wells producing and compression arriving imminently, first helium revenue is now just weeks away.

If these cores show what Sears believes they will, Helix becomes something far more significant than a helium developer.

In the man’s own words:

‘We believe these core samples will be the first ever taken from an ultramafic zone at this depth in the U.S., and they provide a rare opportunity to study a live hydrogen-forming system in place.’

It becomes a clean energy pioneer sitting on one of the world’s only proven natural hydrogen resources.

The market cap still sits at £50 million.

Fair value on helium-only economics is £70 million (40p) once Q1 2026 revenue is reported.

But a year from now, with 10+ wells producing, it should be trading above £150 million.

If the geological hydrogen is there, this goes much higher.

And if the US government gets involved with policy support or strategic interest, blue sky potential awaits.