ZOE.L Regulatory News (ZOE)

25 March 2015

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

First Day of Dealings

Highlands Natural Resources plc, an oil and gas investment vehicle, announces the admission of its 20,000,000 ordinary shares of 5p each to the Official List and to trading on the Main Market of the London Stock Exchange ('Admission') today. The Company will be trading under the ticker symbol HNR. The Company's primary strategy is to acquire quality oil and gas assets with stable income, at current oil prices, from distressed companies.

Highlights

· CEO Robert Price is co-founder and former President of Palomar Natural Resources and a former advisory board member of San Leon Energy - has invested over £600,000, aligning him significantly with shareholders

· Highlands has identified opportunities to acquire quality assets with stable income while oil prices are weak

· 80/20 Model - Focussed on building a portfolio comprised of 80% production to provide stable income (20% ROI) along with significant upside through 20% world-wide exploration - this strategy will position the Company for future rebound in oil prices. 

· A range of acquisition opportunities are currently being evaluated through Highlands' highly experienced Board and Advisory Team with access to quality deal flow from banks and distressed companies

· Highlands' target projects may include a value enhancement component such as helium and/or iodine

Highlands CEO Robert Price said, "The current oil and gas environment presents an excellent market opportunity to acquire high quality assets from distressed companies. Many debt-ridden companies are becoming increasingly desperate. Our Main Market listing is focussed on capitalising on this by building a de-risked, revenue generative oil and gas portfolio which also benefits from exposure to exciting exploration upside potential. We believe that our 80:20 model is responsive to current investment criteria and will provide investors with exposure to oil and gas assets with stable income at current oil prices, thereby positioning us strongly for a price rebound in the future. 

"Our Board and Advisory team, which has exceptional avenues into both banks working with distressed oil and gas companies and industry professionals, is currently examining a wide range of opportunities. Not only do we have experience acquiring assets but also the proven operational expertise to develop them effectively. With this in mind, we are confident that we will have positive news regarding our corporate activity in due course and look forward to providing updates in respect to these exciting opportunities."

For further information, please visit www.highlandsnr.com, or contact:

Business Strategy and Execution

Background

Despite growth in the global economy Brent crude oil prices and the FTSE AIM Oil & Gas Index are both back to 2009 levels. The Board believes that the current weakness in oil prices will allow the Company to pursue value opportunities.

The technologies of horizontal drilling and hydraulic fracturing (fracking) have led the US to near oil independence and have produced abundant reserves of oil and gas, consequently putting significant pressure on the OPEC producers. The opportunities that come with an oversupply of oil & gas should continue as US producers are servicing their debt obligations. The Directors believe that oil and gas companies will be forced to de-leverage and divest the parts of their portfolios they deem "non-core."

Moreover, in order to preserve Group cash for core projects, some major oil & gas companies and independents alike have already announced 2015 budget decreases ranging from 20%-50%, but the Board believes these cuts are unlikely to compensate for all the debt obligations held in the oil & gas sector. The oversupply creates a state of disequilibrium, and therein lies the Company's opportunity.

The Opportunity

Germane to the Company's philosophy, and notwithstanding a) to d) set out below, is that any assets or targets acquired by the Company should be viable economically at the time of any acquisition. The Company intends primarily to acquire controlling interests in oil and gas leases, concessions and or companies, in particular:

a) Oil and Gas producing acquisitions and/or farm-outs: While the downward pressure on oil prices continues, oil & gas companies will be working through their loan covenants with bondholders and banks, taking focus away from their current acreage holdings. Oil & gas companies seeking ways to meet debt obligations may look to farm-out their acreage or divest their non-core assets. The Board believes the Company is well positioned to acquire farm-outs and production acquisitions. The Company intends to structure the farm-outs as joint ventures with other oil and gas companies, partnerships or individuals (the Partners). Those joint venture opportunities will either be financed by the Partners or be financed by raising of capital by the Company; or by a combination of both.

b) Development of acquired assets and/or farm-out agreements: The Directors will seek to raise capital to develop the acquired assets. CEO Robert B. Price is experienced in raising capital for oil and gas projects.

c) Internally generated ideas: Through his many contacts, CEO Robert B. Price is sent regularly potential opportunities, some of which may be suitable for adoption by the Company. In addition, potential opportunities may be submitted to the Board by members of the Advisory Board or by contacts of Advisory Board members. Highlands' target projects may include a value enhancement component such as helium and/or iodine. The Directors will make extensive use of the Advisory Board (see below) in evaluating such potential targets.

d) The eventual return to higher oil prices: The Directors believe that although oil prices are depressed currently, oil prices should eventually start to rise again. The Company should certainly benefit by acquiring projects that are viable at the current oil price.

Although nothing can be forecast, the Board believes the Company should be able to accrue value to shareholders participating at the initial public offering by:

1) making astute acquisitions at current prices to create value;

2) internally generating projects with enhanced components such as helium and iodine;

3) securing farm-outs at little or no cash cost;

4) developing and drilling of conventional and unconventional farm-outs;

5) taking advantage of an eventual recovery in oil prices.

Thus the Company should be well positioned to take advantage of the current relatively low oil price while looking ahead to capitalise on the oil market's eventual recovery. 

Potential Projects

The Directors will be investigating potential targets in the USA, European Union, East Asia & South-East/West Africa. The Directors will be seeking oil and gas producing acquisitions and/or farm-out agreements.

Once the Company has identified a target, the Board will call upon qualified executives from the Advisory Board (see below) to give specific project advice. Each adviser brings additional expertise in fields particular to the Company's aims, offering particular knowledge of acquisitions, divestments, petroleum engineering, geology, and oil drilling technologies. The Company's Advisory Board members, additionally, each bring an ensemble of valued industry contacts.

Board and Advisory Board

Robert B. PricePresident and CEO

Robert B Price, a US citizen, is a successful oil and gas executive based in Denver, Colorado, USA who has worked on oil & gas projects in North America and Eastern Europe. Recently, as founder and former President, Mr. Price led Palomar Natural Resources' (Palomar) rapid growth in developing oil fields in the US Denver-Julesburg Basin and its drilling program in the US San Juan Basin. With over 1,000,000 acres in Poland, Palomar is currently drilling natural gas prospects in the Permian Basin. During his period in office, Mr. Price was instrumental in raising US$50,000,000 on behalf of Palomar. Mr. Price has also served on the advisory board of San Leon Energy plc, based in London, United Kingdom. Mr. Price's joint venture relationships with oil and gas service companies and exploration companies will establish the Company with a broad range of contacts including: experts; managers; entrepreneurs; and opinion-formers in the natural resources sector. Mr. Price will also liaise with members of the United Kingdom investment banking community, upon whom he can call to help achieve the Company's aims in securing farm-outs from independent and major oil & gas companies to establish holdings of significant acreage on behalf of the Company.

Mr. Price, originally from Colorado, immersed himself in Oklahoma's dynamic energy sector after receiving his Juris Doctorate Degree from the University of Tulsa. Immediately after law school he was named Vice President, Trust Officer and Oil and Gas Trust Energy Department Manager of the First National Bank and Trust Company, now JP Morgan Chase Bank. He later formed Brooks Energy Company, which was active in both oil and natural gas exploration and production in the Mid-Continent and Rocky Mountain regions. He also purchased a distributed electric generation business from Tulsa-based Williams Companies, and owned S&R Equipment, a natural gas compressor manufacturing company and rental business. A founder and Chairman of Zeledyne, Mr. Price purchased Ford Motor Company's Glass division with plants in Tulsa, Nashville and Juarez, Mexico employing more than 1,200 people.

Jon Melvyn Davies

Finance Director and Company Secretary

Melvyn Davies, British, has over 30 years' experience advising and assisting both large and small businesses across a wide range of industry sectors. Mr Davies founded his own Chartered Accountancy practice, Melvyn Davies & Co. in 1994, specialising in audit, primarily of regulated entities, and advice to owner managed businesses

From 1996 to 2010 Mr Davies was Finance Director and Company Secretary of the Silence Therapeutics plc group, where he played a critical role in all aspects of the Group's acquisitions policy along with day to day operational and financial issues. Mr. Davies was influential in listing the Group on AIM and later on the main board of the London Stock Exchange. He continued as Director and Secretary of the group until 2010, during which time the group expanded into Germany and the USA.

Mr. Davies is a Fellow of the Institute of Chartered Accountants in England and Wales, has an Honours degree in Mathematics and Management Studies.

Advisory Board

Randy Natvig

Randy Natvig has 24 years' experience of creating value in the oil and gas business at the forefront of changing innovations; most recently with Laramie Energy. He has expertise in acquisition evaluation and asset development.

Mr Natvig has managed multi-rig drilling programs in major Rockies basins and improved Estimated Ultimate Recoveries (EURs) and Internal Rates of Return (IRRs) through optimizing completions and infrastructure. He previously spent 14 years with Halliburton managing and designing hydraulic fracturing (fracking) techniques and improving drilling practices.

Jack Steinhauser

Jack Steinhauser is a business executive and financier with 32 years in oil & gas technologies and has developed, marketed and managed over seventy oil and gas exploration/development projects. Mr. Steinhauser has raised $200+million dollars for oil & gas projects and has experience as CEO and President of three public oil & gas exploration companies in Canada. He was a founder of Wind River Energy Corp., a TSX-listed public company and is current owner and President of Hunter Stuart Energy Advisors, Inc., a sell-side advisory firm specialized in divesting assets and financing joint drilling ventures. He has extensive experience with deal negotiations and operational aspects of oil & gas ventures in North and South America and Eastern Europe. Mr. Steinhauser's leadership in companies listed on the Vancouver, NASDAQ, Boston, and Toronto stock exchanges makes him an ideal advisor to the Company.

Mike Mullen

Mr. Mullen is President and founder Stimulation Petrophysics Consulting, an Independent consultant performing petrophysical evaluations in United States, Australia, United Kingdom, and South America. He spent 25 years at Halliburton developing analytical tools for conventional and unconventional reservoir treatments. He developed software models for Halliburton to evaluate Tide Sands, Shale Oil/Gas and Coalbed Methane. Mr. Mullen led a team of geoscientists to explore for shale gas/oil in France, Germany, Poland, and Spain. He has 38 years of wireline logging and formation evaluation experience and has worked extensively with government officials while CEO at Realm International, now part of San Leon Energy plc.

Paul Mendell

Paul is an oil and gas producer based in Castle Rock, Colorado. He was a founder of an AIM listed iodine producer, Iofina. Paul owns interests in over one hundred producing oil and gas wells which he has developed or from properties he acquired and were subsequently acquired by larger firms including Anadarko, EnCana, Noble, Bill Barrett Corporation, and others. This production is in Colorado, North Dakota and Oklahoma. Paul has made three new discoveries which were acquired by large companies including Enron and others. He is a self-educated geologist and is a well respected developer of new concepts in exploration for oil, gas, iodine and other commodities. Paul works for Mendell Energy, a Denver based independent oil and gas producer.

**ENDS**