Royal Helium Can Stock Price, News & Analysis

Royal Helium Ltd. (RHCCF) is an exploration, production and infrastructure company focused on the development of helium and associated gases. According to company disclosures, its business is built around prospective helium permits and leases located in Southern Saskatchewan and southeastern Alberta, within established helium corridors in Western Canada. The company’s activities place it within the broader energy sector and the oil and gas exploration and production industry, but with a specific emphasis on helium rather than conventional hydrocarbons.

Royal Helium states that its helium reservoirs are carried primarily with nitrogen. Nitrogen is not considered a greenhouse gas, and the company highlights that this reservoir characteristic contributes to a lower greenhouse gas footprint when compared with jurisdictions that rely on large-scale natural gas production for helium extraction. Based on the company’s own descriptions, helium extracted from wells in Saskatchewan and Alberta can be up to significantly less carbon intensive than helium extraction processes in other regions that depend on natural gas streams.

The company describes an extensive land position across Southern Saskatchewan and southeastern Alberta, with helium permits and leases that include four core areas containing multiple helium discoveries and widespread helium concentrations. This land position is reported to cover approximately 600,000 acres across Saskatchewan and Alberta’s helium corridors. Within this footprint, Royal Helium is associated with the Steveville plant facility and related pipeline infrastructure, which is described as being capable of processing 15,000 Mcf per day of raw gas. The Steveville plant facility and pipeline system form a key part of the company’s infrastructure platform for processing helium-bearing gas.

Royal Helium has also been involved in significant corporate and financial restructuring. The company and its subsidiaries, Royal Helium Exploration Limited and Imperial Helium Corp., entered proceedings under Canadian insolvency legislation, including a notice of intention to make a proposal under the Bankruptcy and Insolvency Act and proceedings under the Companies’ Creditors Arrangements Act (CCAA). These processes were intended to address working capital needs, creditor obligations and requirements to re-commission the Steveville Helium Facility, while providing a court-supervised framework to pursue a going-concern solution for the operations and to maximize asset value for stakeholders.

Following this restructuring phase, Royal Helium announced the closing of a reverse takeover transaction involving Keranic Industrial Gas Inc. under an amalgamation agreement among Royal, its subsidiaries and related entities. The transaction was implemented through a three-cornered amalgamation, resulting in Keranic and a Royal subsidiary amalgamating to form a new wholly owned subsidiary of Royal. In connection with a reverse vesting order, substantially all liabilities of the target companies, other than certain retained liabilities, were transferred to a separate entity, while the target companies retained their assets, which were acquired by Keranic. The transaction also involved a consolidation of Royal’s outstanding common shares on an 8:1 basis and amendments to Royal’s articles to create two classes of shares: Class A common voting shares and Class B preferred non-voting shares.

As part of the financing associated with the transaction, Keranic completed a brokered subscription receipt offering and a non-brokered common share offering. The proceeds from these offerings were used to satisfy the purchase price of the transaction. Immediately prior to closing, subscription receipts were exchanged for units consisting of Keranic shares and share purchase warrants, and additional broker warrants were issued. These securities were subsequently reflected in Royal’s capital structure through the amalgamation and share exchange mechanics described by the company.

A strategic investor, identified as an affiliate of AirLife Gases Private Limited, participated in the financing transactions and, based on company statements, acquired a significant interest in Royal’s Class A shares on a fully diluted basis following closing of the transaction. The strategic investor is described in Royal’s disclosure as a multi-national supplier and distributor of helium and specialty gases, offering both liquid and gaseous helium to a global customer base and operating from international facilities with ISO container-based transportation capabilities. Royal further reports that the strategic investor has secured long-term partnerships with helium producers and has an established distribution network supported by modern production facilities.

In connection with its investment, the strategic investor entered into an investor rights agreement with Royal. Under this agreement, the strategic investor has the right to nominate a number of directors sufficient to have majority representation on Royal’s board of directors, with one nominee serving as chair of the board. The strategic investor has also been granted corporate naming rights for Royal, subject to regulatory and shareholder approval. In addition, the strategic investor has been granted an exclusive right to enter into a helium and specialty gases offtake agreement covering all helium and other products produced by the target companies, on market terms.

Royal Helium’s capital structure has also included senior unsecured convertible debentures issued under debenture indentures with a trust company. The company has disclosed that it may satisfy interest payment obligations on these debentures through the issuance of common shares, in accordance with the terms of the indentures. In one disclosed instance, Royal elected to issue common shares at a specified price per share to holders of its 14.0% and 12.0% senior unsecured convertible debentures as payment for interest obligations, with the number of shares determined by a volume-weighted average price formula set out in the indentures.

During its restructuring efforts, Royal Helium pursued both out-of-court financing options and court-supervised processes. It announced the cancellation of a previously proposed private placement of debenture units after determining, in consultation with legal and financial advisors, that filing for protection under the Bankruptcy and Insolvency Act was in the best interests of the company and its stakeholders. The company has also indicated that the TSX Venture Exchange may review its listing status in light of these developments and that it intends to apply to have its Class A shares listed for trading on the TSX Venture Exchange, subject to regulatory approval.

Overall, Royal Helium presents itself as a helium-focused exploration, production and infrastructure company with a substantial land position in Western Canada, helium-bearing reservoirs associated primarily with nitrogen, and processing infrastructure centered on the Steveville plant facility. Its recent history includes significant restructuring activity, a reverse takeover transaction involving Keranic Industrial Gas Inc., and the introduction of a strategic investor with board nomination rights and potential offtake arrangements for helium and specialty gases.

Key business characteristics

• Sector and industry: Energy sector, with activities in oil and gas exploration and production focused on helium and associated gases.
• Geographic focus: Prospective helium permits and leases across Southern Saskatchewan and southeastern Alberta, including areas described as Saskatchewan’s and Alberta’s helium corridors.
• Resource profile: Helium reservoirs carried primarily with nitrogen, which the company highlights as contributing to a lower greenhouse gas footprint relative to helium extracted from large-scale natural gas production.
• Infrastructure: The Steveville plant facility and pipeline infrastructure, described as capable of processing 15,000 Mcf per day of raw gas, and intended to be restarted and ramped to full capacity following completion of the restructuring transaction.
• Corporate developments: Participation in creditor protection and restructuring processes, a reverse takeover transaction with Keranic Industrial Gas Inc., and financing transactions involving subscription receipts, common shares and warrants.
• Strategic investor relationship: An affiliate of AirLife Gases Private Limited holding a significant interest in Royal’s Class A shares, with board nomination rights, corporate naming rights (subject to approvals), and an exclusive right to negotiate offtake agreements for helium and specialty gases produced by the target companies.

FAQs about Royal Helium Ltd.

• What does Royal Helium Ltd. do?
  Royal Helium Ltd. describes itself as an exploration, production and infrastructure company focused on the development of helium and associated gases. Its activities are centered on prospective helium permits and leases in Southern Saskatchewan and southeastern Alberta, along with processing infrastructure such as the Steveville plant facility and related pipelines.
• Where are Royal Helium’s operations located?
  According to the company, its extensive footprint includes prospective helium permits and leases across Southern Saskatchewan and southeastern Alberta. The company also refers to a large land position located across Saskatchewan’s and Alberta’s helium corridors and to the Steveville plant facility and pipeline infrastructure in this region.
• How does Royal Helium describe the environmental profile of its helium production?
  Royal Helium states that its helium reservoirs are carried primarily with nitrogen, which is not considered a greenhouse gas. The company indicates that helium extracted from wells in Saskatchewan and Alberta can be up to substantially less carbon intensive than helium extraction processes in jurisdictions that rely on large-scale natural gas production for helium extraction.
• What is the Steveville plant facility?
  The Steveville plant facility is described by Royal Helium as a processing plant with associated pipeline infrastructure capable of handling 15,000 Mcf per day of raw gas. The company has indicated that this facility is expected to restart production following completion of its restructuring transaction, with an eventual goal of reaching full capacity production.
• What restructuring steps has Royal Helium undertaken?
  Royal Helium and its subsidiaries filed a notice of intention to make a proposal under the Bankruptcy and Insolvency Act and were involved in proceedings under the Companies’ Creditors Arrangements Act. These steps were taken to obtain a stay of proceedings, address working capital and creditor obligations, and pursue a court-supervised process aimed at achieving a going-concern solution and maximizing asset value.
• What was the reverse takeover transaction involving Keranic Industrial Gas Inc.?
  Royal Helium reports that it completed a reverse takeover transaction with Keranic Industrial Gas Inc. under an amalgamation agreement. The transaction involved a three-cornered amalgamation in which Keranic and a Royal subsidiary amalgamated to form a new wholly owned subsidiary of Royal, with the target companies exiting CCAA proceedings and their assets being acquired by Keranic, while most liabilities were transferred to a separate entity under a reverse vesting order.
• Who is the strategic investor mentioned by Royal Helium?
  The strategic investor is described as an affiliate of AirLife Gases Private Limited, a multi-national supplier and distributor of helium and specialty gases. Royal Helium states that this investor participated in financing transactions related to the reverse takeover and, following closing, holds a significant portion of Royal’s fully diluted Class A shares.
• What rights does the strategic investor have in relation to Royal Helium?
  Royal Helium reports that the strategic investor has entered into an investor rights agreement that grants it the right to nominate enough directors to have majority representation on the board, with one nominee serving as chair. The strategic investor has also been granted corporate naming rights for Royal, subject to regulatory and shareholder approval, and an exclusive right to enter into a helium and specialty gases offtake agreement covering all products produced by the target companies, on market terms.
• How has Royal Helium managed its convertible debenture obligations?
  The company has issued senior unsecured convertible debentures under debenture indentures and has the right, under those indentures, to satisfy interest payment obligations through the issuance of common shares. In one disclosed case, Royal elected to pay interest on its 14.0% and 12.0% senior unsecured convertible debentures by issuing common shares at a specified price, with the number of shares determined by a volume-weighted average price formula.
• On which markets does Royal Helium’s stock trade?
  Royal Helium has identified its shares as trading on the TSX Venture Exchange under the symbol RHC and on the OTCQB market under the symbol RHCCF. The company has also indicated that the TSX Venture Exchange may place it under delisting review and that it intends to apply to have its Class A shares listed for trading on the TSX Venture Exchange, subject to approval.