TIDMHNR
RNS Number : 7667P
Highlands Natural Resources PLC
31 May 2018
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY
HIGHLANDS TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE
MARKET ABUSE REGULATION (EU) NO. 596/2014 ("MAR"). ON THE
PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION
SERVICE ("RIS"), THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN
THE PUBLIC DOMAIN.
31 May 2018
Highlands Natural Resources plc ('Highlands' or 'the
Company')
Exploration of Nitrogen Reserves for DT Ultravert
Applications
Highlands, the London-listed natural resources company, is
pleased to announce that it has leased 800 acres in Kansas over a
terrain that the Company believes may contain abundant low-cost
nitrogen gas reserves. The Company intends to commence drilling
operations at the location within the next two weeks. If successful
in proving the nitrogen resource, Highlands has the opportunity to
become a low-cost nitrogen producer and, most importantly, would
secure nitrogen supplies for the Company's proprietary DT Ultravert
technology. The discovery could also position Highlands to be a
nitrogen supplier across a range of industries.
DT Ultravert Implications
As recently reported, Highlands has completed its second
deployment of DT Ultravert, which was conducted in the Permian
Basin shale oil field. The Company received US$194,750 from the
independent well operator for the deployment of the technology,
which amounted to approximately 50% of the total cost of the DT
Ultravert treatment. The deployment of DT Ultravert was successful
and, significantly, the exercise demonstrates that independent
upstream operators are willing and able to pay for DT Ultravert.
However, the Directors are aware that the profitable and
large-scale commercialization of DT Ultravert may depend on
improving its cost efficiency.
Nitrogen represents one of the single largest cost components in
a DT Ultravert deployment, as the process pumps significant
quantities of liquified and/or gaseous Nitrogen into wellbores.
Consequently, any cost reductions that can be secured represent an
obvious opportunity to improve the economics of DT Ultravert.
Prospect Detail and Development Plan
Highlands' nitrogen target in Kansas has been secured following
extensive prospecting and geologic research undertaken by the
Company's technical staff. Whilst the next step is exploratory
drilling with the consequent uncertainty that entails, the
opportunity in Kansas has been very cost effective and, as
explained below, the upsides are considerable.
Highlands will drill a vertical well to a depth of approximately
3,150 feet, perforate multiple zones and, if successful, hopes to
achieve sustained large quantities of long-term nitrogen flow rates
from the first well. Based on the project modelling carried out by
the Company's technical staff, one well could potentially supply
much of DT Ultravert's nitrogen needs. In addition to flow rate,
nitrogen purity is another important factor and, based on the
prospect's geologic model, Highlands believes it is possible to
achieve a highly profitable level of purity. To put the project
into context, if successful, Highlands could potentially supply
nitrogen for both its own DT Ultravert operations as well as third
party uses.
Some of the more commonly known industrial uses of Nitrogen
are:
1. Production of Nitric Acid (HNO3) and Ammonia (NH3) for commercial fertilizer production
2. Manufacturing complex electronics such as integrated
circuits, transistors and diodes as it is an integral part of
precision cutting and oxidation prevention
3. Various medical-pharmacological applications with Nitrous
Oxide being a medical and dental anaesthetic
4. Food preservation - it prevents the oxidation of food items
inside the packages, and enables industrial scale packaging and
protection of food items
5. Stainless steel production - its inert qualities can prevent the oxidation of steel
6. Production of explosives such as Nitro-glycerine.
Highlands has established itself as a bonded operator in Kansas,
expects to commence drilling operations within two weeks and will
notify the market upon spud of the well. The total drilling and
completion operation is then expected to take approximately one
week at a total cost of around US$250,000. Following the conclusion
of drilling operations, Highlands will test the well and update the
market with flow rates, nitrogen purity and other reservoir
characterization data.
Noting the low costs of Highlands' drilling programme, it is
possible that the project, if successful, could establish the
Company as a low-cost producer of nitrogen. At present, the gas is
traditionally produced through two industrial methods, both of
which can be high cost:
1. Air Separation Units (ASU), typically constructed by major
industrial gas companies, supply the majority of global Nitrogen.
Capital costs for ASU's are substantial in addition to long-term
operating costs and high-power consumption.
2. Membrane Nitrogen generators, often modular or mobile,
represent a comparatively minor share of total Nitrogen supply.
Operating costs for membrane generators remain high and purity of
nitrogen can vary great from system to system.
Robert Price, Highlands' Chairman and CEO, said: "We have been
delighted by the early success of DT Ultravert and interest within
the oil and gas industry for the solutions that it brings remains
high. It therefore makes sense for us to find methods to reduce the
cost of application - not only does this make the technology more
attractive but it provides us with the benefit of higher margins.
Our prospect in Kansas is at an early stage but it is nevertheless
an exciting opportunity for Highlands. For relatively low cost, we
can investigate the possibility of producing not only enough
nitrogen for our own needs but also potentially even becoming a
supplier in our own right, thereby creating another revenue stream
for the Company."
***ENDS***
For further information:
Highlands Natural Resources plc
Robert Price +1 (0) 303 322 1066
Cantor Fitzgerald Europe
Nick Tulloch +44 (0) 20 7894 7000
David Porter
Redleaf Communications
Elisabeth Cowell
Fiona Norman +44 (0) 20 3757 6880
Notes to Editors
Highlands (LSE: HNR.L) is a London-listed natural resources
company with a portfolio of high-potential oil, gas and helium
assets and technologies. The Company's core projects include:
-- East Denver Niobrara: a horizontal oil and gas project
targeting the Niobrara shale formation in a well-studied area of
the Denver Julesburg Basin. The Company has two wells drilled and
producing cash flow and is now fully funded for at least six
additional wells, to be delivered in the short term. It has a 7.5%
carried interest in existing and future wells.
-- DT Ultravert: a re-fracking and parent well protection
technology with four patents allowed and additional patents pending
in the United States and internationally. Highlands is advancing
commercial conversations with a range of oil and gas operators and
service providers to commercialize DT Ultravert technology.
-- Helios Two: a 220,000+ acre helium and natural gas prospect
in SE Montana with drilling and assessment operations ongoing.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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