Executes Re-Fracking Agreement for DT Ultravert

RNS Number : 4484N

Highlands Natural Resources PLC

26 October 2016

 

Highlands Natural Resources plc ('Highlands' or 'the Company')

Executes Re-Fracking Agreement for DT Ultravert

Highlands Natural Resources, the London-listed natural resources company, is pleased to announce that it has executed an agreement ("the Agreement") with a significant DJ Basin Operator ("Operator") enabling an additional commercial application of DT Ultravert Technology in a re-frack project located in the Denver Julesburg Basin ("DJ Basin") of eastern Colorado.

Highlights

·    Highlands to fund 100% of the re-frack costs and to receive 90% of revenue from all incremental production from the well until achieving a 200% return on investment

·    The Agreement covers one "Initial Well" with an option to extend to additional wells following completion of the Initial Well

·    Provides an additional demonstration of DT Ultravert technology following recent successful initial testing of DT Ultravert in the Piceance Basin with Laramie Energy, Schlumberger Limited and Calfrac Well Services Corp.

·    Programme designed to accelerate market acceptance of both re-fracking and "offsetting well frack protection" applications

Highlands CEO Robert B. Price said, "Following on from our successful initial testing of DT Ultravert in parent well protection applications in the Piceance Basin, I am delighted to announce the application of DT Ultravert in a re-frack in the DJ Basin, also in Colorado.  We believe that both offsetting well frack protection and re-fracking markets for DT Ultravert may be significant, and the key to advancing DT Ultravert will be data from real-world applications of the technology."

Further Information

Highlands and Operator have executed an agreement to complete a re-frack using the Company's DT Ultravert technology in one of Operator's existing vertical wellbores in the DJ Basin with an option to subsequently extend the Agreement into additional vertical or horizontal wells.  Highlands and Operator will first collaborate to identify a suitable "Initial Well" candidate, which will be a producing well completed with a legacy frack treatment. Highlands will then fund 100% of the costs to re-frack the well using its DT Ultravert technology.

Based on historical production decline rates in the Initial Well and nearby wells, Highlands and Operator will agree to a "Baseline Production" forecast.  Following the re-frack, Highlands will receive 90% of the revenue (net of certain operating costs) generated from oil and gas production over and above the Baseline Production forecast. This incremental production above the Baseline Production is referred to as "Wedge" production, and Operator will retain the remaining 10% of the Wedge production. If and when Highlands achieves a 200% return on investment, 100% of the remaining Wedge production will revert to Operator in perpetuity.

Highlands and Operator will begin discussions to identify the Initial Well immediately, and will update the market with an expected timeline for the first re-frack in due course.

THIS RELEASE CONTAINS INSIDE INFORMATION.

**ENDS**

For further information, please visit www.highlandsnr.com, or contact:

Robert Price	Highlands Natural Resources plc	+1 (0)  303 322 1066
Nick Tulloch	Cenkos Securities plc	[phone]
Neil McDonald	Cenkos Securities plc	[phone] / [phone]
Lottie Brocklehurst	St Brides Partners Ltd	[phone]
Elisabeth Cowell	St Brides Partners Ltd	[phone]

 

END

 

 

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