Highlands Natural Resources PLC Operations Update (2591K)
September 20 2016 - 2:01AM
UK Regulatory
TIDMHNR
RNS Number : 2591K
Highlands Natural Resources PLC
20 September 2016
20 September 2016
Highlands Natural Resources plc ('Highlands' or 'the
Company')
Operations Update
Highlands Natural Resources, the London-listed natural resources
company, is pleased to provide an operational update with regards
to recent progress at its onshore U.S. projects.
The Company has prepared a presentation providing an overview of
its projects, including the matters set out in this announcement,
which will be available on its website, www.highlandsnr.com, from
9.00 a.m. today.
Highlights
-- Testing of DT Ultravert in the Piceance Basin, U.S. has
commenced in cooperation with Laramie Energy ('Laramie'),
Schlumberger Limited ('Schlumberger') and Calfrac Well Services
Corp. ('Calfrac')
o Focused on testing the application of DT Ultravert to protect
existing wells from "bashing" ('Parent Well Protection
Campaign')
-- Independent Probable Reserves Report received on East Denver
Niobrara farm-in project indicating NPV(10) of US$21.5 million with
an IRR of 92% and a payback in approximately 11 months for six
horizontal wells
Highlands CEO Robert B. Price said, "I am proud of the work
completed by the Highlands team over the past several months. We
are making good progress on the testing and commercialisation of DT
Ultravert having commenced this Parent Well Protection Campaign. In
parallel with testing of the technology, Highlands has advanced
conversations with Schlumberger regarding an extension of the
original licensing agreement with enhanced optionality for
Highlands if Schlumberger crews are unavailable for any reason to
complete a DT Ultravert project in the future. We will provide the
market with additional updates on our progress with the
Schlumberger license extension in due course.
"It is also very positive to receive a third-party engineering
report indicating attractive economics at our East Denver Niobrara
project, which we continue to pursue in tandem with potential
project finance partners. In our third significant project, we
announced yesterday the commencement of drilling operations at our
Helios Two natural gas and helium prospect in Montana. I look
forward to meeting shareholders at our Annual General Meeting today
and introducing them to members of the Highlands team."
DT Ultravert Testing
Highlands is pleased to confirm that DT Ultravert tests have
commenced in cooperation with Laramie, Schlumberger and
Calfrac.
As previously announced, the Company has identified two
potential applications for DT Ultravert: to facilitate re-fracking
of horizontal wells, and to protect existing wells (known as
'parent wells') from damage caused by a new threat that has emerged
to the industry, known as 'bashing'. Bashing, which occurs during
fracking operations when the frac fluid of an adjacent well ('child
well') infiltrates the wellbores of nearby parent wells, is a
growing concern in the U.S. shale oil and gas industry. Bashing
reduces or destroys the production and reserves associated with the
parent wells. As well spacing decreases due to infill drilling, the
density of wellbores is increasing across many major shale plays.
It is a potentially serious problem as public oil and gas companies
that experience bashing must reduce their publicly announced
reserves proportionately, and banks also reduce their lending
limits in proportion to destruction of reserves and production.
In the Piceance Basin, wells are drilled and fracked in close
proximity (as dense as one well per 10 acres). Having experienced
issues related to "bashing" previously, Laramie and Highlands
collaboratively decided to test the application of DT Ultravert
diverter technology as a way of protecting parent wells from being
damaged in this way in the future.
Therefore, on 18 September 2016, the Company commenced its
Parent Well Protection Campaign. Schlumberger-operated pumping
crews began injecting nitrogen into two existing natural gas wells
in the Laramie-operated Piceance Basin natural gas field in western
Colorado, U.S.. Simultaneously, two new adjacent child wells were
fracked by Calfrac. With data from the effects of bashing in other
nearby wells, Laramie has a control group for comparison purposes.
Therefore Highlands' and Schlumberger's technical teams will be
able to compare the well production results of the protected parent
wells to nearby bashed parent wells in order to quantify any
beneficial effects of DT Ultravert. Highlands will release
additional details about the tests, including well performance and
comparisons to nearby bashed wells, once the results have been
analysed.
Highlands is financing all of the parent well protection costs
as part of its R&D and commercialisation efforts related to DT
Ultravert. The Company has an existing agreement with Schlumberger
in respect to testing DT Ultravert's role in the re-fracking of
horizontal wells and is currently negotiating an extension of this
agreement to include its Parent Well Protection Campaign.
Highlands continues to advance towards additional testing and
commercial applications of DT Ultravert in both parent well
protection and re-frac applications.
East Denver Niobrara Reserve Report
Highlands has commissioned and received an independent
engineering report from MaCartney Engineering, LLC for its East
Denver Niobrara farm-in project. As previously announced, Highlands
acquired the right to drill up to six wells in the Niobrara
formation on three sections in Arapahoe County, Colorado from
Renegade Oil and Gas Company. Highlands has subsequently filed
spacing unit applications with the relevant authorities, which if
successful, will enable up to two-mile horizontal well bores
originating from the farm-in locations controlled by Highlands.
These extended lateral wells are designed to further enhance well
economics and productivity.
MaCartney Engineering, LLC was retained to provide an
independent assessment of the economic potential of six 9,000-foot
horizontal wells. The report gives an NPV(10) figure for the
Probable Category (a category of potential oil and gas production
that is inferred from nearby production but not yet proven) of oil
and gas reserves of US$21.5 million with an IRR of 92% and a
payback in approximately 11 months. This report is based on NYMEX
strip oil and gas pricing as of 12 August 2016 and offset
production data comes from nearby Conoco wells.
Highlands is continuing to advance conversations with potential
industry and financing partners to fully develop the East Denver
Niobrara opportunity.
THIS RELEASE CONTAINS INSIDE INFORMATION.
**ENDS**
For further information, please visit www.highlandsnr.com, or
contact:
Highlands Natural +1 (0) 918 361
Robert Price Resources plc 7000
Cenkos Securities +44 (0) 131 220
Nick Tulloch plc 9772
+44 (0) 131 220
9771 /
Cenkos Securities +44 (0) 207 397
Neil McDonald plc 1953
St Brides Partners +44 (0) 20 7236
Lottie Brocklehurst Ltd 1177
St Brides Partners +44 (0) 20 7236
Elisabeth Cowell Ltd 1177
This information is provided by RNS
The company news service from the London Stock Exchange
END
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