LONDON (Alliance News) - Highlands Natural Resources PLC on Thursday said it expects to generate enough cash flow to cover its overheads in 2019 and it is on track to finish planting hemp for its Zoetic Organics business before the deadline.
Highlands, which invests in oil, gas, and technology, has a 7.5% carried interest in the East Denver shale project but also recently established a cannabis-focused business called Zoetic Organics.
At East Denver, combined oil production from all eight well is around 2,700 barrels of oil per day and combined gas production is approximately 4,000 Mcf per day. Five of the new wells are being operated on a limited choke size with the goal of maintaining well pressure and extending the lives of these wells.
The chokes are to be opened further in the coming weeks with the goal of maintaining a steady production 10% ahead of current levels.
Highlands said that, notwithstanding current flow rates, its interest is producing revenue in excess of its fixed operating costs. The company said its doe incur come variable expenditure but is developing two more revenues streams via the sales of nitrogen in Kansas and its "imminent retail sales" from Zoetic.
Given the expected revenue from these extra sources, Highlands fully expects to "generate sufficient cash flow to cover all overheads for the current year".
Zoetic is focused on the sale of its own branded products containing CBD, which is found in the cannabis flower. First deliveries from its current operations will be made to Schrader Oil convenience stores within the month with initial revenue recognised in June.
A direct-to-retail website has been created for Zoetic and the company is continuing to source its raw materials from Colorado until its own production begins.
Further to this, Zoetic has begun planting hemp outdoors with plans for two eight-acre fields. The deadline for planting is June 30, and work is expected to complete "well before that date". There are also plans to produce feminised hemp seeds to sell to other hemp producers.
Highlands Chief Executive and Executive Chair Robert Price said: "The progress made by Zoetic since we established this operation less than two months ago has been excellent. From a standing start, we have three revenue lines underway within the Zoetic business and I look forward to providing further updates as our retail sales develop. This is a fast-moving industry but the combination of our facilities and innovative management team has enabled us to take a flexible approach which I am confident will deliver good returns to our shareholders in the years to come. In the meantime, our East Denver project is being operated to the highest standards and providing regular revenue to Highlands."
Shares in Highlands Natural Resources were down 0.8% at 12.38 pence on Thursday afternoon.