LONDON (Alliance News) - Highlands Natural Resources PLC Monday said it no longer plans to sell the natural gas and helium project located in the US to Opera Investments PLC as the London-listed company opts to develop the asset itself.
Highlands shares were down 14% to 19.20 pence per share on Monday morning.
The company had agreed to sell its subsidiary, Highlands Helium Development Ltd, the owner of Highlands' Helios Two natural gas and helium project in Montana, US, back in June but said Monday there is a "mutual agreement" with Opera to terminate the deal.
Highlands now plans to develop Helios Two itself and said an update would be provided "in the coming weeks". The company did, however, state it will develop the project in two phases.
The first phase of work will have the goal of proving the concept of the project and to then establish requisite operating and marketing infrastructure. Highlands plans to use a three-well pattern, consisting of two production wells paired to a single injection well.
"Phase one is designed to be a fast-paced and capital-light program geared towards expeditiously establishing proof of concept and establishing critical infrastructure for expansion," said the company.
The first phase involves drilling the first three wells in order to establish concentrations and flow rates for natural gas, helium, water and other produced volumes.
Dependent on the success of those first three wells, Highlands proposes to install the separation, handling and midstream transportation infrastructure required to scale up operations, and said it is in discussions with third parties about their potential involvement in that activity.
The second phase will see Highlands drill further wells in sets of three to bring the project to "a point of self-sustaining economics".
Highlands said the second phase will require "either further funding or, alternatively, the involvement of third parties".
Opera Investments also confirmed the termination of the talks on Monday morning and said it remains confident it will be able to secure an acquisition in the future. It said it remains well-placed and it determined to continue pursuing its investment strategy.
Opera shares were untraded on Monday morning, having last traded at 7.50 pence. Shares in the company were restored to trading on Monday after the termination of the Highlands talks.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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