Fri, 20th Apr 2018 17:45
20 April, 2018
Highlands Natural Resources plc ('Highlands' or 'the Company')
East Denver Project Funded for a Further 6 Wells
Highlands, the London-listed natural resources company, is pleased to announce that the East Denver Niobrara shale oil and gas project in Colorado (the "East Denver Project" or "East Denver") is now fully funded for at least six additional wells, to be drilled by 26 April 2018. This is pursuant to an Acquisition and Development Agreement (the "Agreement") with True Oil LLC ("True") entered into on 19 April, 2018.
Under the Agreement, Highlands receives an immediate payment of US$5.0 million and retains a 7.5% carried interest in all current and future East Denver wells. The entire capital costs of future East Denver wells will now be funded by Highlands' partners.
True Rig #33 has been mobilised to the East Denver location and will commence pad drilling in the coming days. The wells will be spud on the northern drilling and spacing unit ("DSU") bringing the total number of East Denver wells to eight.
The terms of the Company's previously announced funding agreements dated 7 July 2017 and 23 August 2017 are effectively replaced with this new structure, and the Company receives a further US$430,492 in up-front cash as part of that amendment and replacement. Highlands has divested 49.5% of its 57% working interest in the Wildhorse and Powell wells and will assign 49.5% of its 57% interest in future East Denver wells to True.
True has the option to assume operatorship of the East Denver project, and will advance the project using its significant operational and financial resources. With this in mind, today's Agreement paves a clear path to full field development of East Denver, starting with six new wells and potentially extending up to 24 total wells across the project's three DSU's.
Robert Price, Highlands' Chairman and CEO, said: "This transaction facilitates the rapid development of our East Denver assets and establishes a long-term relationship with one of the most respected names in the American oil and gas industry. The carried interest received from True's rapid drilling plan will provide lasting cash flow and value to Highlands, and constitutes a strong financial base from which Highlands can advance an exciting portfolio of projects.
"Long-term investors will recall that True Rig #33 successfully drilled the entirety of our first two East Denver wells, Wildhorse and Powell in 2017. True's technical familiarity with the East Denver project and our successful history together was an important factor in Highlands' decision to partner with True for the long-term development of the East Denver asset."
For further information:
Highlands Natural Resources plc
Robert Price +1 (0) 918 361 7000
Cantor Fitzgerald Europe
Nick Tulloch +44 (0) 20 7894 7000
Fiona Norman +44 (0) 20 3757 6880