Big Sky Industrial Targets Helium, Carbon Revenue in Phase I Launch

Phase I is targeted to launch in the first quarter of next year , producing helium while capturing about 125,000 metric tons of carbon dioxide annually. Revenue is expected from helium sales, additional oil production through CO₂ injection, and federal 45Q carbon credits. Big Sky has secured an eight-figure, five-year helium offtake agreement with 100% take-or-pay terms at a base price of $285 per thousand cubic feet, while financing Phase I with approximately $17 million in equity and a $20 million debt facility. Expansion depends on completing the processing plant and obtaining approval for the company’s carbon-monitoring plan. Big Sky estimates Phase I could generate roughly $15 million in annual EBITDA and is exploring monetization of its expected 45Q credits for up to $80 million in upfront capital.

Big Sky Industrial Inc. Common Stock NASDAQ: BSIN is positioning itself as an industrial gas and carbon-management company while continuing to operate a legacy Montana oil business, Chief Executive Officer Ryan Smith said during Sidoti’s August conference. Smith said the company has shifted in recent years from a traditional oil-and-gas model toward helium production, carbon capture and sequestration, and enhanced oil recovery. The company still produces approximately 200 to 250 barrels of oil per day, almost entirely in Montana, with a stated PV-10 value of roughly $20 million, he said.

Big Sky plans to bring its initial helium and carbon-management operations online in the first quarter of next year, Smith said. The first phase is expected to capture and sequester approximately 125,000 metric tons of carbon dioxide annually. Under the planned operating model, gas from Big Sky’s wells will move through a gathering system to a processing facility that separates and purifies helium. The helium will be loaded into high-pressure transport tubes for collection by the company’s offtake partner, Smith said. Smith said the company will capture all carbon dioxide produced during helium processing. A portion will be permanently sequestered underground, while remaining volumes will be transported about 10 miles to the Cut Bank oil field for injection intended to increase reservoir pressure and oil production. The company expects to generate revenue from three areas: Helium sales; Incremental oil production associated with carbon dioxide injection; and Carbon-management incentives tied to captured, sequestered or utilized carbon dioxide.

Smith said Big Sky expects to receive $85 per metric ton through the federal Section 45Q carbon capture tax credit program, with the credit escalating by roughly 3% annually over 12 years. Based on Phase I volumes, he estimated the project could generate about $130 million in 45Q credits over that period.

The company signed a long-term helium offtake agreement in late March or early April, Smith said. While he did not identify the customer by name, he described it as the world’s largest industrial gas company and said the agreement was an eight-figure contract. The agreement carries a base helium price of $285 per thousand cubic feet, escalating with the Consumer Price Index over a five-yea...