The Surprising Market Reaction to HyTerra's Announcement of 96% H2 in Samples from Their First Well

Last week, HyTerra announced that they had reached 96% hydrogen (H2) in samples from their Sue Duroche 3 well. Initially, the share price rose by 5.88%, from 0.034 to 0.036, following the announcement. However, it is now trading at 0.032, which is lower than before the announcement.

This reaction is reminiscent of what happened 18 months ago when Gold Hydrogen, another industry pioneer, announced similar results from their first well (i.e., a high percentage of hydrogen but not in commercial quantities). 

At that time, the stock price rose 51% in the following days, starting a rally that eventually peaked with a ~550% increase. Although this surge turned out to be an overreaction to data that did not yet confirm commercial viability, Gold Hydrogen still trades more than 150% higher than before the announcement. 

This suggests that the market views the drilling of a well that delivers data, including proof of hydrogen in the system, as valuable.

I agree with this reasoning, and I can't help but think that the market has misinterpreted the situation. Perhaps, in trying to counter what was likely an “over-the-top” response to the high hydrogen samples from Gold Hydrogen, the pendulum has swung too far in the other direction.

Here are some reasons why I believe the announcement from HyTerra should have had a positive impact on the share price, or could still have so in the future:

1. Hydrogen was proven in the system — not by relying on historical accidental shows or soil sampling, but by an actual purpose-drilled well. There are still very few wells in the world with this kind of data—likely fewer than 15.
2. HyTerra will be one of only four companies in the world with data from real natural hydrogen wells, and one of these companies is a joint venture partner with HyTerra in Nebraska. Gold Hydrogen is the only other publicly traded company with similar data. 
3. HyTerra has sufficient capital to complete the first phase of their drilling program, which will likely include drilling 3-4 more wells. They successfully drilled the first one on budget and on time.
4. HyTerra has the backing of a deep-pocketed shareholder, Fortescue Future Industries.
5. HyTerra operates in one of the best places in the world in terms of commercial potential. For example, local farmers use ammonia (made from hydrogen) directly as fertilizer, which is a relatively rare practice.

To conclude, I believe the news should have provoked a different market reaction. Perhaps we will see a shift in sentiment in the coming days or following announcements from HyTerra's upcoming wells. 

I would love to hear your thoughts - if you're seeing this via our newsletter, reply to the email, or feel free to reach out directly.

- Morten Stahl, Founder @ Natural Hydrogen Ventures