Could This Rare Gas Be The Next Commodity To Boom?

July 14, 2021 - Global Investment Daily


Major commodity shortages all over the globe are wreaking havoc in the markets...and driving up prices of goods for consumers.

Most recently, a widespread shortage in the lumber market has generated a great deal of attention due to the impact this shortage is having on the price of home renovations and new home construction.

A global shortage of microchips is having a dramatic impact on the electronics market as well as new car manufacturing.

And additional shortages in agricultural products, building materials and cleaning products are also driving up prices and causing worry all over the globe. 

But a looming, potentially unavoidable shortage in one of the world’s most valuable commodities could soon trigger the most critical supply squeeze of our lifetime. 

It’s a commodity whose global market is predicted to be worth $18.1 billion by 2025 – with a compound annual growth rate (CAGR) of 11% over the next four years.

This commodity -- which is absolutely indispensable to a number of critical applications, including hard drives, fiber optic cables, semiconductor chips, superconductors, medical research, space exploration and more – is helium.

That’s right – helium.

What is often thought of only as part of a child’s birthday balloon is actually one of the world’s most critical – and irreplaceable – commodities.

And right now, we’re on the verge of a critical shortage.

Making matters worse is that, thanks to a combination of factors, there have been virtually no companies exploring for new sources of helium until very recently.

But one company – Avanti Energy Inc. ( TSX:AVN.V; US OTC:ARGYF) – has a technical team that previously made one of the most significant natural gas discoveries in the world, the Montney. This skill set will be crucial for unlocking a similar significant discovery for helium in North America.

And just recently, the company announced its intention to add to its already impressive portfolio of property, with the proposed acquisition of the license rights to explore approximately 50,000 acres of highly prospective helium properties in Montana.

With a premier portfolio of prospective helium properties – and a successful oil and gas exploration team in place – Avanti Energy (TSX:AVN.V; US OTC:ARGYF) appears to be positioned perfectly to offer significant upside potential as helium prices continue to rise.

And a significant rise in helium prices is just what the experts are now predicting…

Canaccord: “Demand is poised to grow for the foreseeable future...leading to a significant price increase.”

While it’s true that helium is the second most abundant element in the universe…it’s extremely rare on earth.

Most of the helium produced on earth is mined in natural gas formations.

For decades, the U.S. was the world’s largest producer of helium, accounting for as much as 40% of the worlds’ supply.

The world’s single largest source of helium for the past 70 years has been the U.S. Federal Helium Reserve (FHR) in Amarillo, Texas.

But within the past few years, the FHR stockpile has been depleted, leading to a surge in helium prices as explorers scramble to find new sources of helium.

According to the experts at Canaccord Genuity, “The helium market has been thrown into a state of flux with a major supply source being removed from the market. At the same time, we believe demand is poised to grow for the foreseeable future.”

Canaccord continued, “ With near-term replacement options limited, a supply gap is emerging, leading to a significant price increase.”

Just How Critical is Helium?

While helium is most commonly thought of as being used for the inflation of balloons, the truth is helium is used in a number of critical parts of daily life.

* Medical Industry – Helium is used to operate MRI machines and as part of respiratory treatments.

* Cryogenics – Helium is the only element that can come close to reaching absolute zero.

* Internet Connectivity – Fiber optic cables must be manufactured in a pure helium environment.

* Electronics – Many electronics and semiconductors – including mobile phones – require helium to be used at various stages of the production process.

* Computers – Helium-filled hard drives offer 50% higher storage capacity with 23% lower operating power.

* Car Air Bags – Helium is the gas of choice for effecting the near instantaneous deployment of air bags in cars.

Helium is used by companies like Amazon, Google and Netflix to help cool their data centers. And the Canadian government recently added helium to its critical minerals list.

So clearly, helium is a commodity that is absolutely essential in today’s world.

But with the largest single source of helium in the world diminishing– and a lack of exploration activity over the past several years to replenish our supply…

There seems to be no question that (1) helium prices are poised to continue climbing higher…and (2) any company that can help expedite bringing new helium supplies to market figures to be handsomely rewarded.

That’s why Avanti Energy Inc. (TSX:AVN.V; US OTC:ARGYF) right now appears to be such an attractive potential investment.

Avanti Energy’s Team of Successful Oil & Gas Executives Now Seeking New Discoveries of Helium Reserves

Avanti’s management team is made up of a group of highly successful former oil and gas executives, including four former employees of Encana Corp.

Many of the members of this dynamic leadership team were involved in the early stages of the discovery of the Montney Formation, one of the premier natural gas formations in North America.

Avanti CEO Chris Bakker has over two decades of experience in oil and gas, most recently working as a commercial negotiator with Encana/Ovintiv for major facilities and pipelines in the Montney gas play. 

His expertise includes all facets of Natural Gas Exploration like land acquisition, exploration, drilling, well production and facility integration and construction.

Vice President Genga Nadaraju has over two decades of experience in the oil & gas industry…Director Dr. Jim Wood has over 30 years of experience as a geologist specializing in reservoir characterization…VP Ali Esmail has spent the past 13 years specializing in reservoir engineering and prior experience as a facilities and process engineer totaling 20+ years. Senior Geophysicist Richard Balon has over 30 years of experience in the Western Canadian Sedimentary Basin.

This is an experienced team with an impressive track record of success in the oil and gas industry.

And now they seek to do it again.

This very same successful team is now using the same methodology at Avanti Energy (TSX:AVN.V; US OTC:ARGYF) to explore for what it hopes will prove to be some of the richest helium deposits in the world.

Helium is found by drilling wells, similar to natural gas. It is formed from radioactive decay of heavy elements like Uranium and Thorium.

Helium can be trapped under hard, non-porous rock where it cannot escape.

Avanti Energy’s focus is on helium-bearing non-hydrocarbon sources in Western Canada and Montana.

Canada is estimated to have the 5th largest helium reserves in the world, and they are virtually untapped…so there is tremendous opportunity for those companies who know where to look and how to efficiently explore.

Avanti’s team is using an approach and methodology similar to that which they successfully used to identify and assess the Montney Formation.

And the company has quickly assembled an impressive portfolio of properties that it hopes will put it on track to become the next major player in new helium discoveries.

Avanti Energy’s Impressive Portfolio of Highly Prospective Helium Properties

One of the things that has investors and analysts alike so intrigued with Avanti Energy’s potential is the company’s growing portfolio of prospective helium properties.

Although the deal is not yet complete, on June 14, the company announced that it had entered into agreements to acquire helium licenses from two new properties – totaling approximately 50,000 acres of land – in Montana.

This new Montana acquisition includes two properties – one large block (~46,000 acres) and one smaller block (~4,000 acres).

These properties feature several closed structural highs, ideal for the trapping of helium, that exhibit 70m to 170m of relief. Surrounding wells have helium shows in multiple Devonian and Cambrian targets with helium percentages of up to 2%.

Area helium shows are associated with favorably high nitrogen percentages of up to 96%.

This property in Montana adds to the company’s existing portfolio of properties in Alberta.

Avanti Energy (TSX:AVN.V; US OTC:ARGYF) already had approximately 9,500 acres north of the Alberta/Montana border.

In March 2021, the company acquired the license for over 6,000 acres of land highly prospective for helium-containing wells that were originally drilled for oil and gas from the government of Alberta.

This project – known as the Knappen project – is one of the company’s strategic targeted areas with nitrogen-rich helium in multiple zones. In addition, the presence of several deep structural high features in the area is ideal for trapping helium.

A previously abandoned natural gas well on the property showed 2.18% helium and 96% nitrogen in the Cambrian and 0.3% helium and up to 98% nitrogen in the Devonian.

The Knappen project resides in an area with confirmed reservoir rock and multiple DST’s with analyzed gas, and the potential for viable helium reserves over a larger basement structure.

In May 2021, Avanti acquired an additional strategic license in Alberta for ~2,500 acres that is highly prospective for helium extraction.

This project – the Aden project – resides in an area with a closed structural high that is ideal for trapping helium and multiple helium shows, of up to 2%, have been identified in and around the property.

Taken all together, this portfolio of properties represents a significant land base that should allow for a potentially lucrative multi-well drilling program upon exploration success.

Bottom Line: Avanti Energy Inc. (TSX:AVN.V; US OTC:ARGYF) Appears to Be the Best Way to Play the Coming Supply Crunch for this Valuable Commodity

One of the world’s most important – and most irreplaceable – commodities is now on the verge of a potentially historic supply crunch…

Yet most investors have never heard about the coming shortage.

With the global helium market projected to continue growing at a CAGR of 11% -- reaching $18.1 billion by 2025 – there is significant opportunity in this space for those investors who know where to look.

The company that appears to offer the best way to play this coming “helium crunch” is Avanti Energy Inc. (TSX:AVN.V; US OTC:ARGYF).

- The company is led by a team of oil and gas executives with a history of success in the exploration space, including the discovery of the Montney Formation, one of the premier natural gas formations in North America.

- With an experienced team in place – and a roadmap for exploration success in place – the company has set about acquiring a portfolio of helium assets for exploration.

- The company’s Alberta-based assets – the Knappen and Aden projects – each appear to offer significant exploration upside, with the Aden project moving forward with a goal of drilling exploration wells by the end of the year.

- And the company recently added an impressive pair of new properties – totaling approximately 50,000 acres of land – in Montana. This package has multiple closed structural highs and very promising local analogue well results.

- This portfolio of properties gives the company potential helium discoveries on both sides of the border and a significant early advantage in the race to bring new helium discoveries to market as prices continue to soar.

Other companies to watch in the new tech and energy race:

Even old-school fossil fuel producers are getting in on the clean energy race. Suncor (TSX:SU) might be known mostly for its oil production. But it’s one of the few majors really pushing the boundaries. In fact, it has pioneered a number of high-tech solutions for finding, pumping, storing, and delivering its resources.  When the rebound in crude prices finally materializes, giants like Suncor are sure to do well out of it. While many of the oil majors have given up on oil sands production – those who focus on technological advancements in the area have a great long-term outlook. And that upside is further amplified by the fact that it is currently looking particularly under-valued compared to its peers.

Though that’s just one part of its business. Suncor is also a world leader in renewable energy innovations. Recently, the company invested $300 million in a wind farm located in Alberta. Additionally, as Canada moves away from oil, Suncor is well-positioned to take advantage of another one of the country’s resource reserves; Lithium. The best part? It doesn’t even have to move very far. In fact, Alberta’s oil sands are a major hotspot for lithium production.

As demand for energy continues to explode in a post-pandemic China, CNOOC Limited (TSX:CNU) will likely be one of the biggest winners in this boom. It’s the country’s most significant producer of offshore crude oil and natural gas and may well be one of the most controversial oil stocks for investors on the market. A label that has nothing to do with its operations, however.

Recently, U.S. regulators announced their intention to de-list Chinese companies from the New York Stock Exchange, going back on their announcement just a few days later. The sustained negative press surrounding Chinese companies, however, has put CNOOC in an uncomfortable position for investors. While many analysts see the company as significantly undervalued, it is still struggling to gain traction in U.S. markets. Though that could be changing as Biden works to ease tensions with China

The Descartes Systems Group Inc. (TSX:DSG) is a Canadian multinational technology company specializing in logistics software, supply chain management software, and cloud-based services for logistics businesses. Recently, Descartes announced that it has successfully deployed its advanced capacity matching solution, Descartes MacroPoint Capacity Matching. The solution provides greater visibility and transparency within their network of carriers and brokers. This move could solidify the company as a key player in transportation logistics which is essential-and-often-overlooked in the mitigation of rising carbon emissions.

Mogo Finance Technology Inc. (TSX:GO) is a new spin on unsecured credit, which is a burgeoning sub-segment of FinTech. Providing loan management, the ability to track spending, stress-free mortgages, and even credit score tracking, Mogo is at the forefront of an online movement to assist users with their financial needs.

Mogo’s software analyzes borrowers instantly and greatly reduces the traditionally cumbersome underwriting process for loans. It’s online only, so there’s very low overhead and a ton of cash to spend on marketing.  Labeled as “the Uber of finance” by CNBC, Mogo is definitely turning heads. With increasing membership growth and revenue lines continuing to improve, and a platform which many banks have failed to offer, Mogo could well become an acquisition target in the near future.

Canada’s renewable energy push is gaining speed, as well. Boralex Inc. (TSX:BLX) is one of Canada’s premier renewable energy firms. It played a major role in kickstarting the country’s domestic renewable boom. The company’s main renewable energies are produced through wind, hydroelectric, thermal and solar sources and help power the homes of many people across Canada and other parts of the world, including the United States, France and the United Kingdom. 

By: Jean Rivere

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