Mendell Helium Starts to Scale

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Dear Reader,

Helium is back in focus.

With conflict in the Middle East exposing the fragility of global supply chains, investors are being reminded of just how concentrated supply of this valuable gas really is.

It’s putting fresh attention on companies bringing on new supply in safer jurisdictions. And it helps explain why Mendell Helium (AQUIS:MDH) is beginning to gain some traction in the market.

Shares have risen strongly over the past few months, from around 3p to 6.7p at writing. But even so, with its market cap still coming in at just £10 million, the company remains very under the radar relative to both the progress it has made and the valuations of its comparable-stage peers.

With one well producing and another likely coming online imminently, Mendell is no longer just talking about potential—it’s starting to show investors what the route to real scale could look like.

This may not stay an overlooked story for much longer, so let’s look in more detail…

A US Helium Footprint
Helium is a niche commodity, but it’s an important one. The gas is used across healthcare, technology, manufacturing and research, and in many applications, there is no practical substitute.

Recent geopolitical tension has only sharpened the market’s focus on where future helium is going to come from. And against that backdrop, Mendell’s position looks increasingly interesting.

• The company is operating in the US, one of the world’s largest helium-consuming markets. That does not remove execution risk, but it does give the company a stronger backdrop than many of its peers trying to prove up an early-stage concept in higher risk jurisdictions.

Right now, the heart of the Mendell story lies in Fort Dodge, Kansas.

This is where Mendell is trying to build a repeatable helium production model rather than just prove up a one-well story. And that distinction is starting to show.

The company already had the original, producing Rost well, and it has this week successfully completeddrilling of a second well at Rost. This adds another source of production, but it also gives a better sense of how Mendell intends to develop the field from here.

Indeed, the new well was drilled with a larger casing design, which should allow for greater water removal and, in turn, potentially stronger gas production.

• Mendell is not just repeating the first step; it’s already improving on it. It suggests the company is learning quickly on the ground and applying those lessons straight away.

Scaling Up
One of the most interesting recent developments for Mendell is the proposal for a much larger helium production facility at Rost.

This would start with 1,000 Mcf per day of capacity and has been designed with future expansion in mind. However, the real significance is not just the headline number—it’s the fact this interest has come from outside the company.

For a business of Mendell’s size, third-party interest of this kind stands out. It suggests specialists looking at the asset can see enough potential to justify a much larger setup than what is there today.

Now, this is not something to treat as completed until the formal agreements are in place. But it adds real weight to the idea Fort Dodge could become something much bigger than a couple of producing wells.

Another encouraging development is the fact Mendell is beginning to attract support beyond the public market.

US investor participation in the second Rost well is a good example. It suggests there may be ways to help fund development that are less dilutive than repeatedly raising equity at PLC level.

That does not mean funding is no longer an issue, as small companies always need to think carefully about capital. But it does show management is looking for practical ways to accelerate development without simply defaulting to the market each time.

And if that model can be repeated across the many future wells Mendell is planning at Rost, it could help the company scale at a pace fast far beyond the market’s current expectations.

Likewise, Mendell also recently announced it had entered an agreement with Ritchie Exploration to recomplete the Schneweis well, around four miles south of Rost—another sign that experienced local operators are beginning to recognise the potential of Mendell’s approach.

Re-Rate Potential
It’s fair to say investors are beginning to recognise some of this progress; Mendell’s recent move from 3p is not insignificant. But even after that rise, the company remains tiny in market cap terms…

• At around £10 million, Mendell is still valued at only a fraction of where several UK-listed helium peers trade. Many are trading at £60 million-plus; some in the hundreds of millions.

That the gap will close is no guarantee—peer valuations can be noisy, and helium stories can move around quickly.

Still, the comparison is worth keeping in mind. The market has shown before that it is willing to put much larger valuations on helium companies once they gain scale, visibility and momentum.

Mendell is not there yet. But if it continues to execute, the current valuation may start to look increasingly modest relative to what the company is building. Remember, the company is planning to drill many more wells in the Fort Dodge area.

Catalysts Incoming
The next few months will be key. We’ll be watching for flow test results from Rost 2, progress on additional wells, further developments around Fort Dodge, and updates on the proposed larger production facility.

The move to AIM from Aquis is another important milestone. Better liquidity, broader visibility, and a wider pool of potential investors could all help bring the story to a larger audience.

None of this guarantees a re-rating. This remains a small company, and small companies come with execution risk. But the direction of travel is getting harder to miss.

• Mendell has moved from a more speculative concept to a much clearer operational growth story. That is why the company is starting to get noticed, and if the next round of milestones lands well, it may not remain under the radar for much longer.

For more, check out our recent interview with Mendell’s CEO Nick Tulloch here.

Best Wishes,
The StockBox Team