Helium accounts for around a fourth of the mass of all known elements; however, helium stocks are far lower in magnitude. Numerous investors are turning to helium stocks to propel their portfolios to new heights because helium is both a required and abundant element. Learn everything you need to know about helium stocks by reading on.
The Current Status of The Helium Shortage
To be fair, this year has been filled with numerous important news events. There is the land war in Europe, record inflation, and a billionaire buying Twitter like he's buying a vehicle, to mention a few. It is hardly surprising that the helium shortage has fallen to the bottom of the news cycle. In addition, there have been numerous shortages recently. In reality, it is getting increasingly difficult to stay up.
Almost immediately after the epidemic began, there was a shortage of toilet paper, masks, and medical equipment. A shortage of computer chips ensued shortly thereafter. This chip scarcity subsequently reduced the supply of several products, including new cars. Recently, there has been a shortage of infant formula; now, we have helium.
A helium deficiency may not seem catastrophic at first glance, and the majority of us simply use helium to fill balloons. However, helium is utilized in many more industries than might be expected.
Helium is utilized in hard drives, scientific research, medical magnetic resonance imaging (MRI), supercomputing, and space flight. In particular, NASA and the Department of Defense rely significantly on helium, and this fact alone suggests that helium extraction will rapidly become a top concern.
Similarly to natural gas, helium is a nonrenewable resource, and this indicates that the amount that can be collected from the Earth is limited. Businesses anticipating this scarcity and increasing the supply will undoubtedly increase their profits.
Why Is Helium So Valuable?
Helium has the lowest melting temperature of all the elements (-272,2 degrees Celsius), making it the ideal material for cooling applications. Everything from magnets in MRI equipment and ventilator machines to supercomputers and data centers is cooled using liquid helium. Approximately 30% of the world's helium supply is used in MRI scanners, while another 20% is used in the production of hard drives and semiconductors.
Given the world's voracious desire for data and the fact that large IT companies such as Google, Facebook, Amazon, and Netflix utilize helium extensively in their vast data centers, we believe this market segment will be one of the fastest-growing over the next decade or so.
The global helium market was worth roughly $10.6 billion in 2019 and is projected to reach $15.73 billion by 2023, expanding at a compound annual growth rate (CAGR) of 11%. Alarmedly, several experts warn that our helium supplies are becoming increasingly constrained, a trend that we believe may cause costs to skyrocket in the coming years.
A world without helium
Helium belongs to the so-called noble gases and is the second-lightest element known to man. Additionally, helium is the second most plentiful element in the universe, after hydrogen.
Helium is derived from two primary sources: primordial, which is a remnant of the planet's formation, and the radioactive decay of uranium and thorium in the earth's crust. The majority of helium is extracted from natural gas deposits.
Despite its abundance across the cosmos, helium is exceedingly uncommon in our atmosphere, with a concentration of about 5.2 parts per million (ppm). Due to its tiny weight and small atomic size, helium is extremely difficult to retain and easily escapes into space.
The United States has been the world's top producer for decades, accounting for over 40% of the supply. Unfortunately, the U.S. Federal Helium Reserve (FHR) in Amarillo, Texas, the world's largest single source of helium during the past seventy years, is now depleted since the FHR has halted the sale of crude helium to private businesses and designated the remaining stockpile for exclusively Federal users.
As a result, prices have been rising and may continue to do so for many years. Due to the fact that very few mines are being discovered and, according to some experts, no helium substitute is anticipated to be discovered for decades, the supply/demand imbalance is ripe for a helium price increase.
Helium Resources And Price
Ironically, helium is only found on Earth, and it is the second most abundant element in the universe after hydrogen, yet it is difficult to locate and extract on Earth.
The majority of extractable helium is created by radioactive decay in natural gas chambers. There is helium in the atmosphere, but only around five parts per million (ppm) of it can be extracted.
The United States has the biggest known reserves, followed by Algeria and Russia, in that order. Helium is a unique asset due to its relative scarcity. There may still be various potential applications for helium, but the supply is insufficient to match the demand.
As opposed to other commodities, the price is neither fixed nor controlled and varies significantly based on the supply and amount of purity. However, liquid helium is significantly more expensive than helium gas due to the cost of liquidation.
As helium is a nonrenewable resource, it can only be extracted in two ways: as a byproduct of natural gas production or as a natural emission from uranium and thorium.
Three places account for 75% of the world's helium production: Ras Laffan Industrial City in Qatar, ExxonMobil in Wyoming, and the US Federal Helium Reserve run by the BLM in Texas.
However, the U.S. government is gradually reducing its role in the extraction and storage of helium, which could be transformative for the business and encourage the emergence of new private competitors. Regardless of who extracts helium, it remains a finite resource.
Due to its abundance, helium may not appear to be a wise investment at first glance.
However, there are expanding sectors with various helium applications. Helium is already in high demand, and emerging technologies based on its many applications are projected to increase its value.
Experts believe that the helium sector will be worth approximately $18 billion by 2025. Investing in helium does not guarantee returns, therefore diversify your portfolio and undertake extensive research on your helium stocks.
Total Helium (TSXV: TOH.V)
Total Helium is nearly as new as the helium deficiency itself. It was created in 2021 following the merger of Wintertide Ventures and Brooks Energy Company. Later, the organization changed its name to Total Helium. This business may be new to the helium industry, but it already possesses an important advantage. Specifically, North America has the largest conventional onshore natural gas and helium field.
This gas and helium field is located in western Kansas and is known as the Hugoton Gas Field. The Boltz35B 86,000-acre drilling project will expand this field.
Total Helium is just getting the ball rolling in terms of its drilling operations. The stock began trading on The TSX Venture Exchange on 11 November 2021. Three days later, drilling in Boltz 35B commenced. It has already secured a purchase deal to sell its helium, which is quite remarkable. It reached an agreement with an undisclosed global leader in industrial gases to purchase helium from Total Helium.
Total Helium has received two $950,000 payments. It has a high possibility of being one of the finest helium stocks to purchase in 2022 if its drilling efforts continue to be effective.
Linde PLC (NYSE: LIN)
Linde PLC is a global industrial gas and engineering firm established in the United Kingdom. Linde manufactures and distributes a variety of gasses, including oxygen, argon, helium, liquid gasses, and rare gasses.
It has a current market valuation of $143 billion, with over $31 billion in revenue from the previous year. Its products can be found in industries such as petroleum refining, healthcare, primary metals, space exploration, and electronics production.
Linde is one of the oldest industrial gas firms still in operation, having been founded in 1879. Linde PLC delivers gas processing equipment such as production, transport, and storage to its customers, but its atmospheric gas provision services are its primary source of revenue. The corporation presently operates in the markets of North America, South America, the Middle East, Africa, and Asia.
First Helium (TSXV: HELI)
First Helium is seeking to become North America's premier independent supplier of helium gas. The company has roughly 79,000 acres along the highly promising Worsley Trend in Northern Alberta and 276,000 acres in the Helium Fairway in Southern Alberta, close to present helium production.
In the wake of its spectacular 15-25 helium discovery well at the Worsley project, First Helium has identified multiple follow-up drill sites for future helium exploration and development around Worsley. Additionally, the leading Canadian helium stock has discovered a number of helium exploration opportunities on its Helium Fairway property.
Desert Mountain Energy (CVE: DME)
Desert Mountain Energy is yet another of the top helium stocks to purchase. It holds mining leases on 85,000 acres of northeastern Arizona land, and this is yet another recognized helium-rich hotspot region. On this land, Desert Mountain Energy has already dug four wells. Notably, this drilling process was done with equity, and desert Mountain Energy has no debt on its wells now.
In addition, it has sufficient funds to complete a well on the McCauley Helium Field, and it intends to make this well operational by the third quarter of 2022. Desert Mountain Energy shows no signs of decelerating in the near future, and it intends to construct 60-70 additional wells on its leased land during the following five years. Due to this, it may continue to be one of the top helium stocks to buy and hold in the near future.
Xebec Adsorption Stock (TSX)
Xebec Adsorption is not a helium company per se. It offers numerous solutions pertaining to renewable energy sources and gas purifications, including Helium purification.
This technology does not permit the capture/extraction of helium from its natural reserves, but it does enable helium-using industries to reclaim as much of it as possible. The plant of Xebec then cleanses it for another purpose.
Despite the fact that Xebec Adsorption is only indirectly a helium stock, it is a stock worth investigating. The share stock is a mere fraction of what it was before the big recession, and it is a very small/affordable stock of a firm with a great deal of potential and many revenue streams.
Suppose the stock is purchased during a slump. In that case, it has the ability to significantly deplete your capital, and its growth is not as dependent on helium supply and demand as the majority of other stocks on this list.
Global Helium Corp
Perhaps you have never heard of Global Helium (HECO.CN). Indeed, their IPO was announced in the second week of May 2021. HECO, headquartered in Saskatchewan, has secured three helium exploration permits covering a total of 85,000 hectares or 210,000 acres, with additional exploration rights still to be acquired. Global Helium will fully handle the drilling, completion, production, separation, and liquefaction phases of exploration and production and will construct and operate a liquefaction facility if the economy continues favorable.
You could add the stock to your watchlist. As the volume is now low and financial information is now available, it may be prudent to simply monitor this company.
On the 19th of May, 2021, Brad Nichol (Executive Chairman and Interim Chief Executive Officer) purchased $3.5k worth of shares.
Imperial Helium Corp. (OTCMKTS: IMPHF)
The Vancouver, Canada-based Imperial Helium Corp. is involved in several elements of helium production in North America.
It was established in 2018 under the name Rio Minera Capital Inc. The corporation focuses on acquiring, developing, and running Canadian helium resources.
By extracting, acquiring, and growing helium assets, the business offers helium to the North American market. Over 189,000 helium wells are screened for the presence of helium by a team of energy sector specialists, and over 2,000 of these wells have helium concentrations above 0.5%.
Royal Helium Stock (TSXV)
Royal Helium is headquartered in Saskatoon, and its land holdings in Saskatchewan are enormous relative to those of the other corporations on this list: 862,908 acres. The difficulty is the extremely low concentration (between 0.33% and 0.64%).
Nevertheless, given the company's land holdings, if it can manage its production and refining cost-effectively, it can generate significantly more helium from its comparatively poor sources than many other companies with helium-rich sources and higher concentrations of the noble gas.
However, the corporation may gain from the allegedly shorter drilling depths required to extract the gas.
Air Products & Chemicals Inc (NYSE: APD)
Air Products & Chemicals is a supplier of dozens of gases on a global scale. This consists of helium, argon, carbon dioxide, carbon monoxide, oxygen, hydrogen, nitrogen, and nitrogen monoxide. Its helium business has created cutting-edge extraction, production, distribution, and storage technology.
Additionally, Air Products & Chemicals is already extremely profitable. In the first quarter of 2022, it generated $2.95 billion in revenue and $530.5 million in net profits. Air Products & Chemicals is a fantastic option if you are searching for a slightly safer helium stock.
Avanti Energy Stock (TSXV)
The British Columbia-based gas exploration company Avanti Energy focuses on helium production in Western Canada and the United States. According to the firm, Canada has the fifth-largest helium deposits in the world, and they are almost unexplored due to the global concentration in the United States for helium.
Therefore, it is concentrating its exploration efforts domestically and in the United States, where reserves are easier to locate and exploit. The company owns approximately 69,000 acres of property in Canada and the United States and anticipates a helium percentage of 1 to 2 percent in the trapped supply beneath their land, which is in line with the industry norm.
The business anticipates well results in the third quarter of 2022 and helium purification by year's end. Although the stock is a mere ghost of its former glory, this can be an excellent cause to invest in the company.
If its stock has a reasonable prospect of returning to its former glory, it can multiply its investors' capital many times over.
Conclusion
Before investing in helium stocks, you should thoroughly investigate the firm. This stage is especially important for natural resource firms. These firms are virtually always required to clear regulatory hurdles before commencing mining. Also included in this procedure are environmental impact statements. If a corporation lacks the required approval, it may be forced to postpone or cancel its drilling for months.
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