TIDMHNR
RNS Number : 5190X
Highlands Natural Resources PLC
27 November 2017
27 November 2017
Highlands Natural Resources plc ('Highlands' or 'the
Company')
Interim Results
Highlands Natural Resources, the London-listed natural resources
company, is pleased to present its interim results for the period
to 30 September 2017.
Highlights
-- Successful drilling and completion of the Powell and
Wildhorse wells at the East Denver Project, with combined
production of 1,333 Boepd as at 22 November 2017. Production
continues to rise with IP expected in due course
-- Patents secured for potentially ground-breaking DT Ultravert
technology with two applications identified: parent-well protection
and re-fracking
-- Plans in motion to test the Eagle Formation at Helios Two
natural gas and helium project in Montana
-- GBP4.4 million raised during the period allowing development
of East Denver with a further GBP3 million raised post period for
further development in 2018
Chairman's Statement
I have pleasure in presenting the condensed consolidated
financial statements of Highlands Natural Resources plc for the six
months ended 30 September 2017.
Operating Review
This period included numerous milestone events for Highlands,
most notably the commencement of drilling and completion operations
at our core East Denver project, where the Company is now producing
oil and gas from its first two horizontal wells in the Niobrara
formation. In the build-up to drilling operations, the Company also
completed a series of transformational financings with third party
project equity participants, which allowed Highlands to fund its
drilling programme while minimizing dilution of public
shareholders. Highlands' operations team completed the first two
wells safely and efficiently, delivering each operational milestone
(spud, drilling, hydraulic fracturing, flow back) either on or
ahead of schedule. Taken together, the East Denver operations
programme ranks as the most sophisticated and logistically complex
project undertaken by the Company to date.
In addition to the significant progress achieved at East Denver,
the Company has also steadily advanced its ideas and concepts for
its helium and methane project in Montana, Helios Two, as well as
its innovative parent well protection and re-fracking technology,
DT Ultravert. These two projects are now both positioned for major
milestones in the coming period. During the first half of 2018 the
Company is planning to test the Eagle Formation in Montana and to
accelerate the deployment of DT Ultravert on the strength of
additional patent awards and recent court rulings in favour of
owners of parent wells which have been damaged by "bashing".
Overall, the Company is delivering on its stated strategy of
leveraging lower risk cash-flowing projects (East Denver) to
support the development of high-upside prospects (Helios Two and DT
Ultravert). Perhaps most important, we have assembled and retained
a complete team of oil and gas professionals, who collectively
position Highlands to execute and expand the Company's vision - I
could not be more proud of the colleagues we have attracted here at
Highlands.
East Denver Niobrara oil and gas project, Colorado
Starting in July 2016 the Company began assembling an acreage
position in the Niobrara shale play east of Denver, Colorado. The
Company ultimately secured a series of farm-out and lease
acquisitions enabling development of up to 24 two-mile horizontal
wells, of which the Company has now successfully drilled, completed
and, post-period end, commenced production on two wells. These
first wells, called Powell and Wildhorse after Colorado mountains,
are currently in the flow-back process, which involves removing the
fracture fluid from the Niobrara formation to facilitate
increasingly higher proportions of oil and gas production. While
oil and gas production volumes and percentages continue to climb
through this process, the two wells have already reached a combined
production rate of 1,333 Boepd as measured during the 24 hour
period ending 6:00pm on 22 November. The Company will announce a
definitive Initial Production ("IP") figure once production rates
stabilize. Production from East Denver marks a major milestone for
Highlands and the fulfilment of a long-term promise to shareholders
- first oil, first gas, and first revenue.
Successful delivery of two extended lateral shale wells
demonstrates the capabilities of Highlands' engineering and
operations teams, led by VP of Engineering Domingo Mata, who was
recruited for his operations-focused experience and significant
track record at Schlumberger. Drilling and fracking two mile
horizontal wells is one of the most complex and sophisticated
operations pursued by the onshore oil and gas industry, and I am
very proud of the safe and efficient outcome achieved by our
team.
The drilling operation was completed in an average of less than
two weeks per well to reach the full extent of the lateral. The
Company then utilised a "zipper fracking" technique to complete
both of the wells simultaneously to maximise the efficiency of the
fracking operation. The "frac" itself comprised 55 stages for each
well and took less than three weeks to complete from start to
finish.
The operation has been documented via a series of videos and
animations available on the Company's website, where shareholders
will gain a deeper appreciation for the complexities, scale,
technology and logistics involved in our East Denver project. The
horizontal drilling and hydraulic fracturing process implemented by
Highlands is representative of the broader shale revolution, which
has positioned the U.S. as the number one producer of oil and gas
in the world according to the Energy Information Administration
(EIA).
In order to fund the drilling with the minimum of dilution to
public shareholders, Highlands tapped into the mature shale-focused
private equity industry in the U.S., where hundreds of billions of
dollars are currently allocated to funding shale project
development. In this vein, Highlands recruited its VP of Finance
Cully Cavness to capitalise on his significant experience in energy
project financing, and also engaged Petrie Partners, an investment
bank with valuable relationships and market knowledge in the
upstream private equity space. Highlands then ran a competitive
funding process, ultimately receiving numerous term sheets and
financing offers for the East Denver project. Private equity
fundraising entails an intensive level of technical and economic
scrutiny, and I am pleased that the Company was able to choose from
a number of willing participants who had approved funding and
eventually signed deals with two prominent investors in the U.S.
oil and gas industry. These private equity financings achieve a
significant leveraging effect for public equity shareholders;
Highlands now keeps an initial 57% of project income rising to 70%
after reversion hurdles while paying only 51.25% of project
costs.
The Company deliberately chose to raise the minimum finance, and
thus minimum shareholder dilution, it felt was necessary in order
to develop the first two wells. With these two wells completed and
producing, the economics and viability of the project as a whole
are now better defined. The project entails significant further
well completion and the Company continues to pursue the potential
for additional third party financing, intended to further enhance
the project's economics. The Company expects to secure attractive
terms in this third transaction due to significantly de-risking the
project via proven operations and production. This third
transaction, if implemented, would further reduce the Company's
capex requirements while securing a disproportionate share of
income by virtue of carried and reversionary interests. These
financing dynamics are illustrated in the Company's Q4 2017 Market
Update Presentation, which is available on the Company's
website.
Looking forward, there will be several upcoming milestones for
East Denver: announcements of definitive IP rates; scheduling of
drilling for subsequent wells; potentially expanding the project
with additional acreage and drill sites; and potentially completing
an additional financing to further leverage public equity
investors' capital in the East Denver project. Perhaps most
important, the Company's next financial reporting will include
significant revenues. Already the company is producing 1,333
barrels of oil equivalent per day, even before we reach IP for the
two wells. The resulting revenue will significantly strengthen
Highlands' position, allowing for re-investment in subsequent wells
and other projects, and proves the potential of East Denver as a
scalable project moving forward.
DT Ultravert Technology
We are pleased to be advancing the commercialisation of DT
Ultravert, our potentially disruptive technology which has been
valued (NPV(10) ) at US$78 million to US$135 million by a Competent
Person's Report ('CPR') completed by RPS Knowledge Reservoir dated
6 January 2017. Highlands has identified two applications for the
technology, parent well protection and re-fracking, both of which
could present very significant revenue streams in the future.
During the period, Highlands has further de-risked the project by
securing four patent allowances by the U.S. Patent Office.
Moreover, Highlands' initial testing campaign in early 2017 in the
Piceance Basin delivered positive results, and suggests that the
technology can provide a practical solution for the widespread
challenge of parent well bashing. "Bashing" occurs during fracking
operations when the frac fluid of an adjacent well, or "child well"
infiltrates the wellbores of nearby parent wells. It is a growing
concern in the U.S. shale oil and gas industry as it reduces or
destroys the production and reserves associated with the parent
wells.
Highlands continues to advance the marketing of DT Ultravert
through several channels. The Company generated a series of
marketing materials including narrated 3D animations of both parent
well protection and re-fracking applications, which have been
widely viewed. Additionally, the Company has presented at major
industry events such as the North American Prospect Expo (NAPE) in
Houston, where DT Ultravert was also a high-profile sponsor.
Highlands' sales and marketing representatives have also met with
technical and commercial teams at shale operators in many of the
prominent U.S. shale plays. DT Ultravert has also received
increased attention in the media, including detailed coverage in
Oil and Gas Investor and Platts Energy Economist, two prominent
upstream-focused trade publications. At this point, DT Ultravert is
becoming a well-known concept in the industry, and Highlands is
moving ever closer to a potential tipping point of widespread
adoption.
Looking forward, Highlands is determined to provide the industry
with additional "proof of concept" of DT Ultravert's technical
success via additional field trials and demonstrations. The energy
industry can be slow to adopt new technologies and one important
technique for accelerating adoption is through field testing and
successful trials generating strong data support. Highlands is now
working to advance such trials and has gained traction with
potential hosts for DT Ultravert deployments in the near term.
One of the most significant events of the period was a landmark
federal jury's decision to award damages to a victim of well
bashing in August 2017. The court case, filed in the prolific oil
producing state of Oklahoma, centred on a vertical well operated by
a small company, which was bashed by a horizontal well drilled and
completed by a much larger operator (the well is now owned by Devon
Energy - a major publicly traded shale operator). The federal jury
ruled in favour of the small operator, and judged that Devon
Energy's well had caused trespass and nuisance, and that it is
required to pay the victims US$220,000 in damages, which is quite
significant for a small vertical well. This potentially
precedent-setting judgement is fresh in the industry's mind.
Highlands' hope is that our hard work in marketing DT Ultravert may
soon bear fruit as the industry scrambles to find a technology to
prevent the recurrence of similar liabilities. To be clear,
Highlands believes that there could be tens of thousands of similar
situations where operators may be liable for damages due to well
bashing, which could lead to a broad increase in demand for DT
Ultravert.
Helios Two helium and natural gas project, Montana
In line with our strategy to take advantage of the current
commodity price environment and supply/demand dynamics we acquired
a natural gas project in Montana with significant potential helium
upside in June 2016. Highlands subsequently drilled two wells in
the project, called Helios Two, and proved a discovery of both
methane and helium. A CPR dated 6 January 2017 by RPS Knowledge
Reservoir has indicated a "best estimate" NPV(10) of US$341 million
for the natural gas development project alone from only a 69,120
acre area. Highlands has now secured more than 105,000 acres in the
project area, which may extend to 1,000,000 acres regionally. RPS'
best estimate of 2.1 billion cubic feet ("bcf") of net attributable
helium for this same 69,120 acre area would be incremental to
natural gas development economics, and were not included in the
US$341 million NPV estimate. The Company notes that recent
government helium auctions secured pricing of US$119 per Mcf
(compared to approximately US$3.00 per Mcf for natural gas), and
that helium has recently been designated as a critical raw material
facing shortage by European authorities.
With this prospective value in mind, we were eager to commence a
drilling programme, so following a rapid permitting and planning
process, the Helios Well 5-52-16-22 began drilling in September
2016 targeting the Muddy Formation ("the Muddy Well"). The Company
executed its de-watering experiment, and initial results indicated
that a prolonged de-watering test at high flow rates could achieve
the desired result of significant methane and helium flow rates. A
long-term water disposal solution such as an injection well or
surface disposal permit will be required to advance the testing.
The Company wishes to highlight that testing to date is not
conclusive, and the project should be viewed in the "high risk"
category, albeit with a very high upside if successful.
While drilling the first Helios Two well, the Company also
discovered methane and indications of helium in a shallower horizon
called the Eagle Formation. The Eagle Formation produced sufficient
gas to achieve a continuous and large (3-6ft) surface flare. The
Company noted that the Eagle Formation has analogues on the Cedar
Creek Anticline and in southern Alberta, Canada (Medicine Hat gas
field), both of which have been the basis of prolific shallow gas
fields that supported significant gas industries. As a result, the
Company drilled a second well targeting the Eagle Formation, which
again confirmed the presence of gas. Unfortunately, a contractor's
error during the logging phase ultimately required Highlands to
plug the second well before a production test was possible.
No further drilling and physical exploration work has been
carried out at Helios Two during the period whilst the Company has
concentrated resources on drilling at East Denver. Nonetheless, the
geological and technical teams at Highlands have progressed the
project through continuing to review and assess current information
and develop possibilities for exploiting this asset.
Moving forward, the Company remains very excited about the
shallow gas potential of the Eagle Formation as well as the natural
gas and helium prospect in the Muddy Formation. Highlands believes
that wells could be drilled quickly and inexpensively for the Eagle
Formation, and that a successful production test from the Eagle
could potentially unlock an expansive shallow gas field, over which
the Company already controls more than 105,000 acres. Highlands is
now planning a potential test of the Eagle Formation using the
original Helios well. This concept allows for a low-cost test of
the Eagle Formation (using an existing wellbore proven to penetrate
the target formation). The Company will release additional details
about the operation in due course.
Additional Projects
In addition to the three core projects outlined above, the
Company continues to leverage the creativity of its geology and
land teams to prospect for additional opportunities. Highlands aims
to build a significant and scalable portfolio allowing for
long-term value creation, and idea generation remains central to
this strategy.
Financial Review
During the six months to 30 September 2017 the Group raised over
GBP4.4 million (net of costs) from the issue of shares and exercise
of warrants. This has allowed the Group to move forward
specifically with the development of its East Denver project. Since
the period end, the Company has raised in excess of a further
GBP3.0 million (net of costs) to help fund its next stage of
development.
The first two wells at East Denver are likely to cost over GBP8
million to be drilled and completed in total, with about 50% of
that being provided by our working partners and the balance from
the Group's funds.
During the period the Group has spent GBP845,000 on its oil and
gas assets net of the funds contributed from our working partners
in the East Denver wells. As at 30 September 2017, the drilling
work on the Powell and Wildhorse wells had been completed and the
preparatory work for the fracking crews had just commenced. Since
the year end the fracking work, which constitutes over half of the
total well costs, has been completed and the flowback process
commenced. During this phase an initial amount of oil and gas will
be produced and extracted leading to the Group's first sales. We
expect receipt of our first revenues in December 2017.
The decision to concentrate the Group's resources on the East
Denver has necessarily meant that our DT Ultravert and Helios Two
projects have not been prioritised during the period. There has
been little direct spending on those projects in the past six
months, approximately GBP200,000 mostly on land leases. Once the
finances of the East Denver project are secure the Group intends to
re-energise these prospects with a judicious amount of targeted
spending to prove the value of the assets and fully assess the
opportunities.
The recruitment of people into our Denver team just over a year
ago means that our cost base has steadily increased over the past
year. In addition, there has been heavy expenditure in the past six
months in particular on obtaining financial support for our
projects. The Group expended significant sums on consultants, legal
and professional fees in respect of finding, assessing and
negotiating with our eventual working partners in East Denver as
well as on the Group's fundraising prospectus in July 2017.
Nonetheless, without such costs the Group would not have been in a
position to move ahead with its drilling programme and we will see
the benefits of this expenditure coming through the oil and gas
revenues generated in the current and future periods.
Looking ahead, the funds raised during the period together with
funds raised post period end and projected revenues from our first
two wells should provide the Group with sufficient working capital
for its immediate needs. Efforts are still being made to access
sufficient funds, either internally or externally, to further
develop the East Denver to its 24 well potential on a timely basis.
There is a balance to be struck between developing the project
quicker using additional external finance or slower through using
more of the internally generated funds and the Board will review
those options carefully in light of the results from the first two
wells.
The Board believes that it is in the best interests of the
shareholders to progress all of the Group's key development
opportunities as soon as practicable and continues to discuss with
third parties the possibility of additional methods of financing
that could assist in the more rapid development and exploitation of
the Group's existing assets.
Directors
The Directors of the Company throughout the period were:
Robert Brooks Price
Jon Melvyn Davies
Directors' interests
At 30 September 2017 the Directors had the following interests
in the share capital of the company, which remain unchanged during
the period:
Ordinary shares Warrants over
ordinary shares
Robert Brooks Price 12,000,000 23,750,000
Jon Melvyn Davies 200,000 1,100,000
Corporate governance
The UK Corporate Governance Code (September 2014) ("the Code"),
as appended to the Listing Rules, sets out Principles of Good
Corporate Governance and Code Provisions which are applicable to
listed companies incorporated in the United Kingdom. As a standard
listed company, the Company is not subject to the UK Corporate
Governance Code but the Board recognises the value of applying the
principles of the code where appropriate and proportionate and has
endeavoured to do so where practicable.
Responsibility Statement
The Directors are responsible for preparing the Condensed
Consolidated Financial Statements in accordance with the Disclosure
and Transparency Rules of the United Kingdom's Financial Conduct
Authority ("DTR") and with International Accounting Standard 34 on
Interim Financial Reporting ("IAS 34"). The Directors confirm that,
to the best of their knowledge, this condensed consolidated interim
report has been prepared in accordance with IAS 34 as adopted by
the European Union. The interim management report includes a fair
review of the information required by DTR 4.2.7 and DTR 4.2.8,
namely:
-- an indication of important events that have occurred during
the six months ended 30 September 2017 and their impact on the
condensed consolidated financial statements for the period, and a
description of the principal risks and uncertainties for the
remaining six months of the financial year; and
-- related-party transactions that have taken place in the six
months ended 30 September 2017 and that have materially affected
the financial position or the performance of the enterprise during
that period.
Outlook
I am delighted with the progress now being made at East Denver.
Following our successful drilling and completion of the Powell and
Wildhorse we are shortly to receive our first revenues. During 2018
we shall be continuing our drilling programme and hope to be
increasing the tempo subject to the availability of finance. For a
small company to be able to access and develop a project as large
as this is a remarkable achievement and I thank all members of the
Highlands team for helping bring this project to life. With East
Denver now operational, the Company will be able to put more
resources behind the exciting Helios Two and DT Ultravert projects,
with expansion of testing and marketing scheduled for the first
half of 2018. Our recently completed fundraising helps provide the
Company with the working capital to seed this expansion.
We have several projects to develop and there are always new
possibilities and potential projects to investigate and I look
forward to 2018 with optimism. I thank all our shareholders for
your continued support.
Robert Price
Executive Chairman
27 November 2017
HIGHLANDS NATURAL RESOURCES PLC
CONDENSED CONSOLIDATED STATEMENT OF COMPREHESIVE INCOME
(UNAUDITED)
FOR THE SIX MONTHSED 30 SEPTEMBER 2017
Notes Unaudited Unaudited Audited
Six months ended 30 Six months ended 30 Year ended 31 March 2017
September 2017 September 2016
GBP GBP GBP
Revenue - - -
Administrative expenses (2,289,080) (1,459,646) (3,369,749)
Operating loss (2,289,080) (1,459,646) (3,369,749)
Finance income - 477 477
Loss on ordinary
activities before
taxation (2,289,080) (1,459,169) (3,369,272)
Taxation on loss on 3 - - -
ordinary activities
Loss for the period (2,289,080) (1,459,169) (3,369,272)
Foreign exchange
adjustment on
consolidation (671,453) 16,977 (130,668)
Total comprehensive loss
for the period
attributable to the
equity holders (2,960,533) (1,442,192) (3,499,940)
------------------------ ------------------------ -------------------------
Loss per share (basic
and diluted)
attributable to the
equity holders (pence) 4 (2.91) p (3.91) p (6.69) p
------------------------ ------------------------ -------------------------
HIGHLANDS NATURAL RESOURCES PLC
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(UNAUDITED)
AS AT 30 SEPTEMBER 2017
Notes Unaudited Unaudited Audited
At 30 September 2017 At 30 September 2016 At 31 March 2017
GBP GBP GBP
NON -CURRENT ASSETS
Tangible assets 5 9,012 - 9,737
Intangible assets 6 5,846,034 1,029,558 5,001,958
---------------------- ---------------------- --------------------
5,855,046 1,029,558 5,011,695
---------------------- ---------------------- --------------------
CURRENT ASSETS
Trade and other receivables 1,164,348 72,222 384,827
Cash and cash equivalents 2,932,464 4,526,038 1,934,486
---------------------- ---------------------- --------------------
4,096,812 4,598,260 2,319,313
---------------------- ---------------------- --------------------
Total assets 9,951,858 5,627,818 7,331,008
---------------------- ---------------------- --------------------
CURRENT LIABILITIES
Trade and other payables 1,184,418 134,947 322,336
---------------------- ---------------------- --------------------
1,184,418 134,947 322,336
---------------------- ---------------------- --------------------
NET ASSETS 8,767,440 5,492,871 7,008,672
---------------------- ---------------------- --------------------
EQUITY ATTRIBUTABLE TO EQUITY
HOLDERS OF THE COMPANY
Share capital 7 5,230,654 2,714,367 3,389,367
Share premium account 7 10,456,235 4,961,521 7,639,622
Share based payments reserve 891,079 762,884 833,332
Foreign currency translation
reserve (812,702) 6,396 (141,249)
Retained loss (6,997,826) (2,952,297) (4,712,400)
TOTAL EQUITY 8,767,440 5,492,871 7,008,672
---------------------- ---------------------- --------------------
HIGHLANDS NATURAL RESOURCES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
FOR THE SIX MONTHSED 30 SEPTEMBER 2017
Share capital Share Premium Share based Foreign Retained loss Total
account payments Currency
reserve Translation
Reserve
GBP GBP GBP GBP GBP GBP
At 31 March
2016 1,491,175 643,575 1,077,582 (10,581) (1,807,826) 1,393,925
-------------- ---------------- ---------------- ---------------- -------------- --------------
Comprehensive
income for the
period
Loss for the
period - - - - (1,459,169) (1,459,169)
Other
comprehensive - - - - - -
income
Translation
adjustment - - - 16,977 - 16,977
-------------- ---------------- ---------------- ---------------- -------------- --------------
Total
comprehensive
loss for the
period
attributable
to the equity
holders - - - 16,977 (1,459,169) (1,442,192)
Exercise of
warrants - - (314,698) - 314,698 0
Shares issued
in the period 1,223,192 4,443,901 - - - 5.667,093
Cost relating
to share
issues - (125,955) - - - (125,955)
At 30 September
2016 2,714,367 4,961,521 762,884 6,396 (2,952,297) 5,492,871
-------------- ---------------- ---------------- ---------------- -------------- --------------
Comprehensive
income for the
period
Loss for the
period - - - - (1,910,103) (1,910,103)
Other
comprehensive - - - - - -
income
Translation
adjustment - - - (147,645) - (147,645)
-------------- ---------------- ---------------- ---------------- -------------- --------------
Total
comprehensive
loss for the
period
attributable
to the equity
holders - - - (147,645) (1,910,103) (2,057,748)
Issue of
warrants - - 220,448 - - 220,448
Exercise of
warrants - - (150,000) - 150,000 -
Shares issued
in the period 675,000 2,728,101 - - - 3,403,101
Cost relating
to share
issues - (50,000) - - - (50,000)
At 31 March
2017 3,389,367 7,639,622 833,332 (141,249) (4,712,400) 7,008,672
-------------- ---------------- ---------------- ---------------- -------------- --------------
Comprehensive
income for the
period
Loss for the
period - - - - (2,289,080) (2,289,080)
Other
comprehensive - - - - - -
income
Translation
adjustment - - - (671,453) - (671,453)
-------------- ---------------- ---------------- ---------------- -------------- --------------
Total
comprehensive
loss for the
period
attributable
to the equity
holders - - - (671,453) (2,289,080) (2,960,533)
Issue of
warrants - - 61,401 - - 61,401
Exercise of
warrants - - (3,654) - 3,654 -
Shares issued
in the period 1,841,287 3,205,541 - - - 5,046,828
Cost relating
to share
issues - (388,928) - - - (388,928)
At 30 September
2017 5,230,654 10,456,235 891,079 (812,702) (6,997,826) 8,767,440
-------------- ---------------- ---------------- ---------------- -------------- --------------
HIGHLANDS NATURAL RESOURCES PLC
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHSED 30 SEPTEMBER 2017
Unaudited Unaudited Audited
At 30 At 30 At 31
September September March
2017 2016 2017
GBP GBP GBP
Cash flow from operating
activities
Loss for the period (2,289,080) (1,459,169) (3,369,272)
Adjustments for:
Depreciation and amortisation
charges 36,714 41,042 85,750
Charge for the period in
respect of share based
payments 61,401 - 220,448
Costs settled by issue 241,100 - -
of shares
Operating cash flow before
working capital movements (1,949,865) (1,418,127) (3,063,074)
Increase in trade and other
receivables (779,521) (24,906) (337,511)
Increase in trade and other
payables 862,082 81,599 268,988
Net cash flow from operating
activities (1,867,304) (1,361,434) (3,131,597)
-------------- ------------ --------------
Cashflows from investing
activities
Purchase of tangible fixed
assets (1,293) - (11,876)
Investment in intangible
assets, exploration and
drilling rights (1,164,413) (384,703) (4,403,039)
Less: settled by issue
of share based payments - - 903,102
Net cash absorbed by investing
activities (1,165,706) (384,703) (3,511,813)
-------------- ------------ --------------
Cashflows from financing
activities
Net proceeds from issue
of shares 4,416,800 5,541,138 7,991,137
Net cash generated by financing
activities 4,416,800 5,541,138 7,991,137
-------------- ------------ --------------
Net increase in cash and
cash equivalents
As above 1,383,790 3,795,001 1,347,727
Cash and cash equivalents
at beginning of period 1,934,486 717,427 717,427
Foreign exchange adjustment
on opening balances (385,812) 13,610 (130,668)
Cash and cash equivalents
at end of period 2,932,464 4,526,038 1,934,486
-------------- ------------ --------------
HIGHLANDS NATURAL RESOURCES PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 SEPTEMBER 2017
1. GENERAL INFORMATION
Highlands Natural Resources plc ("the Company") and its
subsidiary companies (together "the Group") are primarily involved
in the oil and gas development sector.
The Company is incorporated and registered in England and Wales
as a public limited company under the Companies Act 2006 ("the
Act") with registered number 09309241. The registered office and
principal place of business in the United Kingdom is 9 Limes Road,
Beckenham, Kent BR3 6NS.
2. ACCOUNTING POLICIES
Basis of preparation
The interim condensed unaudited consolidated financial
statements for the period ended 30 September 2017 have been
prepared in accordance with IAS 34 Interim Financial Reporting. The
comparative figures for 31 March 2017 are extracted from the
Group's audited accounts to that date. The comparative figures for
the period ended 30 September 2016 are unaudited.
The condensed unaudited consolidated interim financial
statements of the Group have been prepared on the basis of the
accounting policies, presentation, methods of computation and
estimation techniques used in the preparation of the audited
accounts for the period ended 31 March 2017 and expected to be
adopted in the financial information by the Company in preparing
its annual report for the year ending 31 March 2018.
The financial information of the Company is presented in British
Pounds Sterling ("GBP").
3. INCOME TAX EXPENSE
No tax is applicable to the Company for the period ended 30
September 2017. No deferred income tax asset has been recognised in
respect of the losses carried forward, due to the uncertainty as to
whether the Company will generate sufficient profits in the
foreseeable future to prudently justify this.
4. LOSS PER SHARE
Basic loss per ordinary share is calculated by dividing the loss
attributable to equity holders of the company by the weighted
average number of ordinary shares in issue during the period.
Diluted earnings per share is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume conversion
of all dilutive potential ordinary shares. There are currently no
dilutive potential ordinary shares.
Weighted Loss
Earnings average per
number of share
shares
GBP Unit pence
Loss per share
attributed to
ordinary shareholders (2,289,080) 78,765,752 (2.91)
5. TANGIBLE ASSETS
Tangible assets comprise sundry office equipment.
Total
GBP
Cost at 31 March 2017 11,876
Additions during the period 1,293
Exchange adjustment (767)
-------
Cost carried forward 12,402
-------
Amortisation at 31 March 2016 2,139
Charge during the period 1,389
Exchange adjustment (138)
-------
Amortisation carried forward 3,390
-------
Net book value brought forward 9,737
-------
Net book value carried forward 9,012
-------
6. INTANGIBLE ASSETS
Intangible assets comprise the 75% stake in certain granted and
pending patents owned by Diversion Technologies LLC ("Diversion")
plus various leases and mining rights together with exploration and
development costs paid during the period.
Patent Exploration Total
rights and evaluation
assets
GBP GBP GBP
Cost at 31 March 2017 706,500 4,438,984 5,145,484
Additions during the
period - 1,164,413 1,164,413
Exchange adjustment - (285,914) (285,914)
-------- ---------------- ----------
Cost carried forward 706,500 5,317,483 6,023,983
-------- ---------------- ----------
Amortisation at 31
March 2016 129,525 14,001 143,526
Charge during the period 35,325 - 35,325
Exchange adjustment - (902) (902)
-------- ---------------- ----------
Amortisation carried
forward 164,850 13,099 177,949
-------- ---------------- ----------
Net book value brought
forward 576,975 4,424,983 5,001,958
-------- ---------------- ----------
Net book value carried
forward 541,650 5,304,384 5,846,034
-------- ---------------- ----------
7. SHARE CAPITAL & RESERVES
Allotted, called up and fully paid Ordinary shares of GBP0.05
each:
Number Share Capital Share Premium
of shares GBP GBP
Balance at 31 March
2017 67,787,349 3,389,367 7,639,622
28 April 2017 -
issue of shares
at 10p on exercise
of warrants 50,000 2,500 2,500
31 July 2017 -
placing, subscription
and open offer
at 12p 26,901,069 1,345,054 1,883,074
28 August 2017
- Issue of shares
in settlement of
fees 1,966,666 98,333 142,767
28 August 2017
- placing of shares
at 20p 7,818,000 390,900 1,172,700
30 August 2017
- issue of shares
at 10p on exercise
of warrants 90,000 4,500 4,500
Less:
Cost of share issues (388,928)
Balance at 30 September
2017 104,613,084 5,230,654 10,456,235
------------- -------------- --------------
The Company has only one class of share and all shares rank pari
passu in every respect.
Subsequent to the period end the Company issued the following
ordinary shares:
- on 23 October 2017, 45,981 shares upon the exercise of
warrants at a price of 10p per share, and
- on 17 November 2017, 11,304,616 shares under a subscription
agreement at a price of 30p per share before costs.
8. SUBSEQUENT EVENTS
As noted in Note 7, during October and November 2017 the Company
issued a further 11,350,597 ordinary shares generating an
additional GBP3,393,683 for the Company, before costs.
THIS RELEASE CONTAINS INSIDE INFORMATION
**ENDS**
For further information, please contact:
Highlands Natural Resources
plc
Robert Price +1 (0) 303 322 1066
Keith Bayley Rogers
+44 (0) 207 464
Brinsley Holman 4098
St Brides Partners Ltd
+44 (0) 20 7236
Lottie Wadham 1177
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DZLFLDFFLFBB
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November 27, 2017 02:00 ET (07:00 GMT)
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