On September 1, 2016, Elon Musk’s Falcon 9 rocket burst into flames under mysterious circumstances.
Musk called it “the most difficult and complex failure we had in 14 years,” and it triggered an internal investigation into what caused the massive explosion.
Elon Musk even went as far as to have his team shoot a rifle at his own rockets to determine whether a SpaceX competitor like Amazon founder, Jeff Bezos, may have sabotaged this critical launch.
The investigation revealed that Bezos didn’t play a hand in the explosion, but it was instead traced back to a failure related to an increasingly rare substance.
While this rare gas nearly unleashed a storm between the world’s richest men 5 years ago…
A global shortage now threatens Bezos, Musk, and every other Big Tech giant today.
This element is critical to the success of Elon Musk and his SpaceX rockets.
In fact, it’s estimated that just one space rocket launch alone uses up to $12 million worth of this substance.
But it stretches far beyond just space travel.
The rare gas touches every single corner of the tech landscape, even playing into the global chip shortage which has captured headlines more and more over the last year.
That’s because it’s needed to create the tiny computer chips we find in every electronic device.
That includes everything from smart toasters to important medical equipment like MRIs and pacemakers.
It even powers the internet itself through the production of the fiber optic cables we need in order to build the information superhighway.
A shortage of this gas could soon threaten the entire tech industry, as demand has spiked for helium at a time when the largest supplier just pulled its name from the race.
The New York Times recently reported, “The global helium shortage is real.”
And the BBC reported, “The prices just keep going up and up.”
With a 12-month target price at $3.80, analysts at Beacon Securities have been predicting this could be just the start though as they are now preparing to break ground on the most exciting point in their upcoming project.
Now, the race is on as Avanti just signed the contract to begin drilling, scheduled to start just weeks from now in early December.
From 30 Top Prospects to the #1 Play
After narrowing that down to the 10 biggest opportunities, they moved to acquire the Greater Knappen project just a few months back.
Avanti’s Greater Knappen project spans ~69,000 acres, straddling the border of northern Montana and southern Alberta.
The team has already identified 10 structures for possible drill targets, and early estimates put the undiscovered, unrisked resource potential under the surface at between 1.4 billion and 8.9 billion cubic feet of helium.
That’s incredible upside potential for a company sitting at a market cap of around $70 million at the moment.
Those familiar with the space, already know how easy it is for exploration companies to report on potential alone.
To do the math, 55,000 cubic feet per day at $150/1,000 cubic feet adds up to roughly $3 million per year.
If they could keep producing at that rate for 5 years at its peak, and even continue to produce another 10 years at a lesser rate, that would put potential revenue in the tens of millions.
Those kinds of returns are simply unheard of at a time when the helium shortage has sent prices soaring.
The Billion Dollar Team Flocks to a New Up-and-Comer
For starters, the team’s pedigree stems back to the $10 billion oil and gas giant, Encana (now Ovintiv).
CEO, Chris Bakker, and VP of Subsurface, Genga Nadaraju, were both instrumental in identifying and developing a multi-billion dollar project there in the Montney Formation.
Plus, add to that the two geologists joining Avanti with an additional 50+ years of experience, and you’ve built a veritable dream team guiding the operations.
For those not familiar, the Montney Formation is North America’s largest natural gas play.
The natural gas from the property currently makes up 45% of Western Canada’s gas supply, according to analyst Wood Mackenzie, and that could rise to an estimated 65% by 2030.
The Montney has seen at least 9 major deals worth roughly C$2.3 billion in the past year.
Take that back to the past 15 years since beginning development, and that number quickly moves into the tens of billions.
With Avanti’s CEO, VP of Subsurface, and two geologists being critical pieces of developing a multi-billion project, that’s brought about an obvious question.
Why did a team with a multi-billion-dollar track record and decades of experience leave the oil and gas giant to join this small company with a market cap of about $70 million?
It’s hard to be sure, but that could help explain why analysts at Beacon Securities set their 12-month target price for Avanti at $3.80.
From current prices of under $1.50 per share, there could be even more potential if they make a discovery at Greater Knappen that’s even a small percentage of the size of the Montney.
Finding a team with their level of experience and success is extremely rare, and that gives good reason to be excited about the prospect that Avanti may be onto something major here.
What Comes Next?
As excitement has continued building in recent months, Avanti is now within weeks of breaking ground on the ~69,000 acres in Greater Knappen.
They have their sights set on drilling up to 6 wells between December 2021 and May 2022.
Results from the first well are expected to come sometime early in the New Year.
As Avanti Energy plans to continue drilling another well each month through the spring, that spells a flurry of activity and news coverage over at least the next 6 months.
However, that could be just the beginning as they’ve identified no fewer than 17 potential drill targets.
Now, as Avanti Energy Inc. (TSX:AVN.V; OTCMKTS:ARGYF) prepares to spud their first well in the coming weeks, eyes will be on them when they break ground amidst a helium shortage with implications for the biggest players in the tech world.
Other companies to watch capitalizing on the “new” resources:
As a global leader in hydrogen fuel cell technology, Ballard Power Systems (NASDAQ:BLPD) a Canadian company, with headquarters in Montreal is pushing for progress on the hydrogen car front. They design and manufacture fuel cell products that have helped make their mark across several industries including transportation where they are making strides towards greening our cities by helping reduce emissions from both private vehicles as well public transit buses to help save money at home or abroad!
In a recent release, the company stated, “In the starting phase of work under the framework agreement, a demonstration platform with a fuel cell powertrain solution will be co-developed, with Ballard providing the fuel cell subsystem and Linamar providing the rolling chassis, tanks, enclosures, cradles and other balance of plant. Following successful testing of the demonstration platform, Ballard and Linamar expect to form a joint venture”
For those looking for an alternative energy source, Enphase Energy (NASDAQ:ENPH has been leading the industry with its innovative power monitoring technology. The company was founded by four engineers from Silicon Valley who were trying to create a more efficient and affordable solar panel system that could be used by all sorts of people across America - not just techies like them! Nowadays they don't even need rooftops anymore: their products are tiny enough so you can put one on your desk at work or in any room as needed without blocking access points where other equipment might go
Enphase has remained a favorite on Wall Street throughout the year. Year-to-date, Enphase has seen its share price rise by leaps and bounds. And it’s only just getting started. As the renewable push kicks into high gear, and with the United States expected to spend over $1.7 trillion on green energy initiatives over the next decade, Enphase might just emerge as one of the biggest winners.
First Solar (NASDAQ:FSLR) a global renewable energy company headquartered in Tempe Arizona with over 27 years of experience and expertise designing photovoltaic products for residential use or large scale power plants, is now one of the most recognizable brands across all industries within their industry. The FirstSolar headquarters are where they manufacture thin-film modules made from cadmium telluride which can be used as an alternative to traditional silicon based cells on rooftops around America's cities allowing homeowners more options when it comes time to decide how much dough they want to put into solar panels themselves!
FirstSolar has been removed from Goldman Sachs; Conviction List mainly due to lower exposure to fast-growing solar markets in China, India, and Asia(75% of the company’s orders come from the United States). Others like Raymond James have moved to the sidelines on fears that First Solar might come under pressure if Biden repeals Section 201 tariffs that Trump placed on imported solar modules from China, while Morgan Stanley and J.P. Morgan have downgraded the stock after its recent run-up to multiyear highs.
DuPont Corporation (NYSE:DD)is a global science company with more than 60,000 employees. DuPont’s motto of “Better Living Through Chemistry” was applied to the development of products that help make agriculture sustainable and improve our daily lives. The company has introduced nylon, Lycra (spandex), Kevlar fiber, Tyvek home insulation and other new fibers as well as innovative solutions for existing materials such as color TV tubes, paints and coatings. DuPont developed some of the world's most important innovations in chemistry – like Teflon®, Corian® solid surfacing material, Kevlar®, Tyvek®, Nomex® protective clothing fabric and Sulfinol® fuel cells.
Over 20 years ago, DuPont was already knee-deep in the fuel cell game, forming an entire division dedicated to hydrogen fuel cell technology. Richard J. Angiullo, then-VP of DuPont Fluoroproducts explained, ``Increasing global energy requirements and the desire for new, alternative energy sources in many markets make fuel cells an exciting new growth opportunity for DuPont.” adding, “Fuel cells are a natural fit for DuPont technology and capabilities. More than 50 percent of a PEM fuel cell stack, the real transactional center of a fuel cell, can be made from DuPont materials.”
Bloom Energy (NYSE:BE) is a company that has been working on clean energy solutions for the world. The company was founded in 2001 and their mission statement is to "bring affordable, renewable power to homes and businesses everywhere." Their main product is called Bloom Box, which converts natural gas into electricity with a cleaner process than traditional methods. They have recently signed contracts with major companies such as Google, Wal-Mart, FedEx and Staples.
Bloom Energy's goal is to provide cheaper rates for both residential and commercial customers while also being environmentally friendly by using less fossil fuels. Their next steps are expanding globally so they can help as many people as possible get access to affordable power sources.
Another thing to consider in the fuel cell race is that Bloom Energy is targeting different markets than some of its competitors. They make large fuel cells for commercial buildings, whereas Plug and Ballard are mainly materials-handlers who supply forklifts, buses, trucks - similar vehicles with small transportation needs. This is key because it’s still a largely untapped market that Bloom can get in on early.
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:MOGO) 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.
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FORWARD LOOKING STATEMENTS. This publication contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this publication include that prices for helium will significantly increase due to global demand and use in a wide array of industries (including key technology sectors) and that helium will retain its value in the future due to the demand increases and overall shortage of supply; that the Avanti team will be able to develop and implement helium exploration models, including their own proprietary models, that may result in successful exploration and development efforts; that historical geological information and estimations will prove to be accurate or at least very indicative of helium; that high helium content targets exist in the Alberta and both Montana projects; and that Avanti will be able to carry out its business plans, including timing for drilling and exploration. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include that demand for helium is not as great as expected; that alternative commodities or compounds are used in applications which currently use helium, thus reducing the need for helium in the future; the degree of success of the coming drilling campaign; the accuracy of the initial estimates of helium on the land; the commercial viability of any obtainable helium, the ability to get any helium obtained to market; the accuracy of the production timeline estimates; that the Avanti team may be unable to develop any helium exploration models, including proprietary models, which allow successful exploration efforts on any of the Company’s current or future projects; that Avanti may not be able to finance its intended drilling programs to explore for helium or may otherwise not raise sufficient funds to carry out its business plans; that geological interpretations and technological results based on current data may change with more detailed information, analysis or testing; and that despite promise, there may be no commercially viable helium or other resources on any of Avanti’s properties. The forward-looking information contained herein is given as of the date hereof and we assume no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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