Highlands Q & A!24 Jan 2019 17:52
Q. How many wells are we expecting to drill at Kansas (this year) and at what estimated cost per well?
A. As to the number of wells drilled, that will depend on what type and how many supply deals that can be struck. Our Barret well cost approximately $250,000 to drill and we do not expect wide variations from that figure.
Q. Are we planning to go it alone or enter into a jv in Kansas?
A. All options are being considered to monetise our Kansas assets. Since the development costs are relatively modest in oil & gas terms (compared with ED & WD for example) we would prefer to develop in-house if possible – but at this early stage we would not necessarily rule out a JV.
Q. It feels to many shareholders that we are kept in the dark about progress?? For example having waited 6 months since a major nitrogen discovery and it being talked of as company changing, we are fed acreage increases as a footnote to other information then we get a very small $8000 trial. Why have we heard nothing on all the other uses we have been told of? Why is there no mention of our commercial plans? Is the nitrogen not the right “type” for those applications??
A. Shareholders are always informed regarding major corporate developments. Acquisitions of acreage are part and parcel of oil & gas development and thus, unless significant, they are not announced in separate RNSs. Importantly, since we always try acquire acreage at modest cost, it is vital that we do not flag up our interest overtly to competitors. Nonetheless, as mentioned, updates have been found in “Notes to Editors.” As mentioned, we are pursuing the sale of our naturally occurring gasses from Kansas, both in gaseous and liquid form. Shareholders are aware that our gasses are highly pure and are suitable for all reasonable applications.
Q. If the cannabis trial is successful, what is the potential for that deal in terms of $$$$?
A. This is a rather “chicken and egg” question. Our end user, District 8, is keen for the trial’s success given that they wish to be as productive as possible versus their competitors that use hydroponic growing media. Only after the results are evaluated will we know the potential value of the soil amendment with our gas mixture. Our end user is keen to be organically compliant and to that end we are trying to achieve a type of organic status or compliance. Should we achieve organic status, that would likely add value to our product mix. As you know, Highlands has agreed to appoint District 8 as its distributor for horticultural and agricultural cannabis and industrial hemp growing operations in the United States and Canada.
Q. At what $ per mcf are we selling nitrogen? Are there any epiphany devices being used on the ED project?
A. Although Highlands has paid $9.00-$11.70 mcf for DTU applications , we are selling our nitrogen gas at higher values given its nature and the smaller quantities delivered in gas cannisters
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