I don’t think it’s worth diversifying in the helium space too much since DME is such a standout.
Avanti, Royal Helium, Imperial Helium, First Helium, and especially Helium One should all do quite well if everything goes works out for them.
However, most of these companies don’t have a plan for vertical integration, at least not by this winter like DME. Most of these companies, including Avanti I believe, will be selling crude helium, whereas DME will be selling refined 99.9999% pure helium for approximately ten times the price of crude.
Location is very important in the helium industry. When it comes to transporting the helium in 90°F heat, you lose about 2% of your load every hour. DME’s customers will be picking up the helium themselves, with no loss for the company. It’s unclear if Avanti or any other helium company will be able to strike the same deal, especially if they’re not dealing with end users.
It’s more costly to drill in the winter, and since Arizona’s winter is so short it’s not much of a burden on the company. Whereas winter in Saskatchewan, Alberta and BC can start as early as October for frozen temperatures and run as long as March. Although Avanti has an advantage here with the chinook winds running through Alberta and Montana.
Helium One benefits from a warm climate, but operating out of Tanzania brings its own set of risks and challenges.
I think Helium One is the best of the rest, since their properties could prove to be the best in the world, and they’re the only helium company so far that has the potential to be bigger than Desert Mountain Energy. For this reason I allocated about 1% of my portfolio to HLOGF. Otherwise I think allocating any money into another helium company other than DMEHF will almost guarantee me fewer returns in the short term and in the long term.
Look at the difference in how these stocks trade after news releases. DME is the only one that continues to climb. Just for fun I bought 15 shares of Avanti on May 11th, and so far I’m down 9%. I bought 75 shares of Royal Helium on April 19th, and I’m also down 9% on that stock. The last time I bought DME was on July 5th and I’m up 23% on those shares alone. In two years Avanti has climbed 408%, but in the same time frame DME is up 2263%, and they will continue to outperform because DME has a superior program.
The highest percentage of helium concentration Avanti hopes to see in any their wells is half of that which DME has already found in their second well. Avanti is hoping for 2%, while DME will be looking for 8-10% helium concentrations. DME was an early mover in the helium space. They could have bought leases in Montana or Saskatchewan, but they chose the Holbrook Basin in Arizona, which is known as the Saudi Arabia of helium.
For these reasons and many others, I’m damn near all-in on Desert Mountain Energy.
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