ZOE.L Regulatory News (ZOE)

10 June 2016

Highlands Natural Resources plc ('Highlands' or 'the Company')

DT Ultravert Update

Highlands Natural Resources, the London-listed natural resources company, is pleased to update shareholders regarding Diversion Technologies, LLC's ('Diversion') proprietary "DT Ultravert" re-fracking technology. Highlands owns a 75% stake in Diversion's current patent applications both in the US and globally.

· Domingo Mata, former Senior Production Engineer and Stimulation Domain Manager at Schlumberger, where he worked for 10 years, and a highly-regarded member of the well stimulation technology community, has joined the Company as the lead marketing manager of "DT Ultravert"

o Testament to the technology's potential to transform and significantly reduce the costs associated with unconventional exploration and production via re-fracking

· Schlumberger has reached agreement with their client to carry out testing of the DT Ultravert technology on some of the client's wells at no cost to Highlands or Diversion

o The test wells are located in the Piceance basin of western Colorado

o Water allocation logistics are currently being overcome and testing is now expected to take place between July and, at the latest, September

o The Company expect to be able to announce the results of these tests in the coming months and, if proved successful, DT Ultravert will represent a game-changing technology in the oil and gas industry, transforming the economics associated with increasing production through the re-fracking of previously fracked horizontal wells

· Highlands continues to work closely with Schlumberger and Calfrac to market DT Ultravert to numerous oil and gas companies across the USA

o Signed 2-year license agreement with Calfrac accelerates the marketing of DT Ultravert and creates potential for long-term recurring revenue stream

· Additional patents filed for "DT Ultravert" bringing Highlands' suite to a total of 19 patent filings, marketed jointly by Schlumberger and Calfrac in addition to Highlands' own dedicated marketing efforts

· Highlands is in discussions with Great Western Oil & Gas Co. in Denver, Colorado to re-frack between 5 and 30 wellbores

o Intensive candidate selection process indicates that these wells are prime candidates for DT Ultravert. The Company cannot predict whether these negotiations will be successful, however we will update shareholders in due course.

Highlands CEO Robert B. Price said, "Mr. Mata's decision to lead our marketing campaign for DT Ultravert is a further and significant endorsement of our technology's potential.  He is very well respected across the industry given his previous role as Senior Production Engineer and Stimulation Domain Manager of one of the leading oil field service companies globally. I am confident that his involvement will deliver us a range of exciting new leads and will help to solidify the range of ongoing discussions with oil and gas companies.

"As the provider of DT Ultravert technology, we have no influence over the timings or process of these initiatives but we are pleased to note that, not only have terms been agreed between Schlumberger and the field operator, to commence testing in the Piceance Basin of western Colorado but, significantly, the tests will be carried out at no cost to Highlands. As is not unusual in new procedures of this sort, there have been some logistical issues for the parties to contend with, the main one being water allocation. Whilst this has frustrated the original timetable, we understand that these challenges are being overcome.

"We have also submitted a total of 19 patent filings for DT Ultravert. This expanded suite of patent filings enables Highlands to open new markets by offering a broader set of solutions to the oil and gas industry.

"With a superb team on side, and the potential to utilise DT Ultravert for a broader number of applications, we believe this is a positive time for the Company and its shareholders. Whilst the logistical issues of water allocation in the Piceance Basin are frustrating, with terms agreed and the testing to be carried out at no cost to Highlands, we look forward to the results in the coming months."

DT Ultravert patents

The table below summarises the patent filings to date.

About Diversion and DT Ultravert

In May 2015, the Company acquired a 75 per cent. stake in US based Diversion's current and future patent applications both in the US and globally covering a new diverter well stimulation technology, known as "DT Ultravert". Diversion is a US based well stimulation technology company currently patenting its diverter technology, "DT Ultravert", internationally. Well stimulation (fracking) is a US$50 billion per year industry (source: Grandview Research report on the hydraulic fracturing market, October 2014) and re-stimulation is an emerging trend due to its ability to increase oil and gas production without the expense of drilling new wells.

By re-fracking a well using diversion technology, oil can be released without the cost of a newly drilled well. Development of innovative oil and gas field technology is likely to represent a highly disruptive force in the market. Highlands believes that with "DT Ultravert" it may have such a breakthrough and is currently in licensing discussions with major recognised oilfield service companies.

Considering the potential upside available if the technology proves successful, and the low capex required to roll out this type of business, which has a royalty-based revenue structure, the Board believes this is a very significant opportunity.

**ENDS**

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