Quantum has taken operational control of the Sagebrush Project in Colorado and now plans to mobilise for the extended production test at the Sagebrush – 1 well, which is expected to commence shortly after Easter and run for several weeks.
We maintain our Speculative Buy rating and target price of 0. 08 p/sh , which is based on our updated Risked NAV.
BIA approve operatorship to remove last regulatory hurdle to extended test
- Quantum has received notification that operatorship of the Sagebrush Project (90% WI) in Colorado has been approved by the Bureau of Indian Affairs (BIA), which was the final regulatory step required to take full operational control.
- The Company now plans to move into the next operational phase at Sagebrush, with mobilisation for the extended production test at the Sagebrush – 1 well expected to commence shortly after Easter and run over a number of weeks.
- We update our financial forecasts and NAV for the interim results and reiterate our 0. 08 p/sh target price , which is based on the risked valuation of the Company’s portfolio (0.3 0 p/sh unrisked ).
Sageb rush -1 well testing anticipated to confirm deeper helium potential
- The Sagebrush – 1 well historically encountered non – combustible gas with measured helium concentrations of ~2.76%, providing strong technical validation of the helium potential within the deeper Leadville Formation .
- Wireline logs identified ~94 feet of net gas pay and the drill stem test concluded with the well continuing to build pressure, suggesting the potential for stronger sustained flow rates using modern completion and stimulation techniques.
- Quantum plans to perform extended well production testing of the deeper Leadville intervals in the well over 2Q26 , which is designed to assess flow rates and confirm commercial deliverability of the helium resource.
Flagship development opportunity within the Four Corners helium fairway
- An independent resource evaluation confirmed the Sagebrush project as a technically credible helium project with 2U gross prospective helium resources of 134mmcf, which increases to 269 mmcf in the 3U case.
- The upcoming well test is designed to validate the resource estimates, provide data to de – risk the project, and contribute to the facilities planning required to unlock the full potential of the Sagebrush project towards commercialisation .
- This independently verified helium resource forms part of Quantum’s wider Colorado portfolio , which now totals more than 1 bcf of 2U gross helium resources across the Sagebrush and Coyote Wash projects in Colorado.
Reiterate SPECULATIVE BUY rating and 0.08 p/sh TP
- The advancement to testing at Sagebrush comes at a time of increasing global focus on helium supply security, with recent geopolitical developments in the Middle East disrupting a significant portion of global production leading to greater recognition of domestic capacity , particularly in the United States .
- We expect a steady stream of news flow in the coming months to validate Quantum’s resource estimates and further de – risk the wider portfolio, as well as providing the data needed to advance targets towards drill ready status in 2026 .
- Following positive results from the extended well test , we think that i nvestorscould look beyond our TP by attaching greater value to th e wider prospectivity in the portfolio, subject to the timing of the forward drilling programme.
Howard McLaughlin, Chief Executive Officer of Quantum Helium, said: “This is a major milestone for Quantum and reflects a significant amount of work by the team to advance Sagebrush through the regulatory framework.
We would also like to thank the Ute Mountain Ute Tribe for their continued support and engagement throughout, which has been invaluable in reaching this point, and we are grateful to our shareholders for their patience throughout what has been a detailed approval phase.
Receiving notification of operatorship approval marks a key step forward for the Company, allowing us to move into the next phase of activity, with mobilisation for the extended production test scheduled to commence shortly after the Easter break. Sagebrush-1 has already demonstrated the presence of helium, and this next stage is focused on confirming its commercial potential and advancing our resources towards reserves.
With increasing global focus on helium supply security, particularly in the United States, we believe Sagebrush is strongly positioned as we enter this important and exciting phase of operations.”
*SP Angel acts as Nomad and Broker to Quantum Helium.
Analysts
Arthur Parish – Arthur.Parish@spangel.co.uk – 0203 470 0476
John Meyer –John.Meyer@spangel.co.uk – 0203 470 0490
Simon Beardsmore – Simon.Beardsmore@spangel.co.uk – 0203 470 0484
Sergey Raevskiy –Sergey.Raevskiy@spangel.co.uk – 0203 470 0474
Sales
Richard Parlons –Richard.Parlons@spangel.co.uk – 0203 470 0472
Abigail Wayne –Abigail.Wayne@spangel.co.uk – 0203 470 0534
Rob Rees –Rob.Rees@spangel.co.uk – 0203 470 0535
Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471
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+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.
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