Public companies pursuing helium have sought guidance from securities regulators on how they should disclose information about their helium activities—occasionally expressing surprise that helium is not a “mineral project,” which would bring it under the resource industry disclosure rules, specifically National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101). Alternatively, helium is not a hydrocarbon “product type,” which would typically bring it under National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (NI 51-101).
Sounds like issuer heaven, right? Well, probably not, and our straw man returns with a battery of questions about helium.
Our company is pursuing helium. Does NI 51-101 or NI 43-101 apply?
Disclosure regarding the exploration and development of helium depends on circumstances specific to each company; however, NI 43-101 will never apply to the disclosure of helium. As for whether NI 51-101 applies, here we come to “product type,” where the oil and gas rule draws its boundary lines, listing 11 hydrocarbon types (heavy crude oil and conventional natural gas are two of them). Other stuff that comes out of a well isn’t in that list. But, if helium is recovered as a consequence of producing a product type, NI 51-101 may apply.
So, how would I disclose helium that is produced with natural gas?
When helium is a by-product of a product type listed under NI 51-101—for example, associated gas in a conventional natural gas well—the reporting issuer may be caught under NI 51-101. Companies can disclose helium in clearly demarcated, labelled and described sections within the body of their NI 51-101 disclosure, ensuring it is represented as additional information separate and distinct from their oil and gas disclosure.
But what if we’re just a helium company? It’s not a by-product of a natural gas well.
The general principles and framework of disclosure in NI 51-101 can be appropriately adapted to helium accumulations, but then it becomes important not to hint that you are disclosing the helium information in compliance with NI 51-101. The disclosure format can be similar to that used for NI 51-101 if it is clear that the disclosure is not NI 51-101 and does not misleadingly suggest that the same standards apply. Don’t, for example, use the same titles for the tables found in the Form 51-101F1 Statement of Reserves Data and Other Oil and Gas Information (Form 51-101F1).
Can our company have helium reserves?
Yes, however not as defined in NI 51-101, which only applies to reporting issuers engaged in oil and gas activities involving hydrocarbon product types listed in the rule’s definitions. However, The Canadian Oil and Gas Evaluation Handbook, which is mandated as the technical standard under NI 51-101, contains guidance on evaluating helium, following similar steps to those it sets out for hydrocarbons: determining volumes and values, classifying their uncertainty and commerciality, and reporting those results if they are material.
What should we call it, then?
You can call it reserves, or resources other than reserves, if you like, but because it doesn’t meet the definitions in NI 51-101, investors will need all technical terminology used to be clearly defined and explained, as there’s no uniform definition out there. The most helpful thing a company can do is say what it means—for example, that the helium reserves are estimates of the volume of helium in a drilled and tested reservoir, where that volume of helium is commercial.
That sounds like oil and gas reserves.
Not surprising, eh? Helium occurs as a subsurface gas, often with associated gases and liquids, including hydrocarbons, nitrogen and carbon dioxide. Like natural gas, it’s produced from wells. The exploration, development and practices to evaluate oil and gas reservoirs map naturally to helium projects, too.
Won’t investors expect disclosure under NI 51-101?
Possibly, which is why your disclosure should meet the requirements of the Securities Act of the appropriate jurisdiction and the disclosure rules made under it. The best way to stay inside those lines would be to:
» Define and explain technical terminology;
» Meet the applicable requirements of securities legislation;
» Make your disclosure balanced, complete and accurate;
» Refer to guidance from the Energy Group of the Alberta Securities Commission (ASC)—the 2022 Energy Matters Report—which has the most comprehensive discussion;
» Disclose the material information, like geological setting, the well test methods, parameters, results, and summaries of production facilities and infrastructure; and
» When in doubt, contact staff at the ASC regarding helium disclosure.
Staci Rollefstad is a senior evaluation engineer at the Alberta Securities Commission. James Whyte retired in 2023 from his role as a senior geologist at the Ontario Securities Commission. Both authors are writing in their private capacity.
