ZOE.L Regulatory News (ZOE)

21 June 2017

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

U.S. Patent Office Issues Highlands' First DT Ultravert Patent for Parent Well Protection

Highlands, the London-listed natural resources company, is pleased to announce the issuance of U.S. Patent 9,683,165 (the "'165 Patent" or the "Issued Patent") related to "parent well protection," on 20 June 2017. This grant represents the first issued patent among Highlands' portfolio of pending patent applications related to parent well protection and re-fracking. Based on the review and approval process for the Issued Patent, the Company is optimistic that additional patent applications may be approved and issued in due course.

Highlights:

· The Issued Patent significantly enhances the Company's strategic marketing position as the sole provider of the patented DT Ultravert parent well protection processes

· Highlands is now in a position (if required) to enforce and seek financial compensation from companies that would infringe on the Company's patent, including oil and gas companies as well as service providers

· The Company continues to see parent well protection as a growing and economically significant challenge for the shale oil and gas industry

· RPS' Independent Opinion Report dated 6 January 2017 evaluated DT Ultravert with a potential NPV10 value range of US$78 to US$135 million based on projected revenue streams

With issuance of the '165 Patent, the Company attains significantly greater abilities to assert and enforce claims over key components of its intellectual property underpinning parent well protection. The '165 Patent includes broad coverage of gas injection into parent wells as a mitigating measure against "bashing" from fracking in nearby "child wells". The '165 Patent also applies to the process of enhancing child wells by injecting gasses into parent wells. These two applications, parent well protection and child well enhancement, represent core value propositions of DT Ultravert.

The issue of bashing and related child well underperformance is gaining increasing attention throughout the U.S. shale oil and gas industry. The topic has become a core challenge facing the development of maturing shale fields, as evidenced by recent articles such as:

· The Journal of Petroleum Technology, "Oil and Gas Producers Find Frac Hits in Shale Wells a Major Challenge", 7 April 2017 (https://www.spe.org/en/jpt/jpt-article-detail/?art=2819)

· Oil and Gas Investor Magazine, "Putting The Kibosh On Bashing", 1 February 2017 (http://www.oilandgasinvestor.com/ep-momentum-putting-kibosh-bashing-1461436#p=full)

· Society of Petroleum Engineers International, "Parent Well Refracturing: Economic Safety Nets", 5-6 May 2016 (https://www.onepetro.org/conference-paper/SPE-180200-MS)

For additional perspective, investors are encouraged to view illustrative animations related to "bashing" and "parent well protection" available at http://highlandsnr.com/technology/dt-ultavert/.

Highlands plans to leverage the '165 Patent to accelerate marketing efforts around DT Ultravert. Testing of DT Ultravert commenced in September 2016 in cooperation with Laramie Energy, Schlumberger and Calfrac. This testing has confirmed that DT Ultravert can achieve significant and sustained down-hole pressure that effectively diverts fluids from depleted areas of the reservoir; that DT Ultravert can prevent well bashing; and that the application of DT Ultravert can enhance the stimulation of child wells and improve production performance. The Company continues to meet with prominent oil and gas operators throughout the U.S. shale and gas industry on a regular basis to advance discussions towards the adoption and deployment of DT Ultravert, and the newly issued '165 Patent could help advance the Company's efforts towards a tipping point of market adoption.

Highlands' Chairman and CEO Robert Price said, "This is an important milestone in the development and commercialization of DT Ultravert, with the technology now validated as unique and proprietary. Highlands' strategic, marketing and intellectual property enforcement options significantly widen as a result of the issuance of our first patent. Whereas previous marketing efforts relied on the strength of Highlands' process design and operational acumen to deploy DT Ultravert, the Company is strengthened with the tangible power of a first enforceable issued patent. This adds an important ingredient to the DT Ultravert value proposition, and one that cannot be easily circumvented by competition as the market demand for parent well protection solutions grows.

"Moreover, we are currently working with the U.S. Patent office, as well as Patent Offices in other countries, to advance additional patent applications through each country's patent examination process. Based on our experience and learnings from the first patent review process, as well as feedback from legal counsel, my optimism has only increased regarding the Company's ability to secure additional patents in due course. This would only further strengthen our legal protections around DT Ultravert."

THIS RELEASE CONTAINS INSIDE INFORMATION.

**ENDS**

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

Notes to Editors

Highlands (LSE: HNR.L) is a London-listed natural resources company with a portfolio of high-potential oil, gas and helium assets and technologies. The company's core projects include:

· East Denver Niobrara: a farm-in opportunity for horizontal oil and gas wells targeting the Niobrara shale formation in a well-studied area of the Denver Julesburg Basin.

· DT Ultravert: a re-fracking and parent well protection technology with 20 patents pending in the United States and internationally. Highlands is advancing commercial conversations with a range of oil and gas operators to create revenue-sharing opportunities for DT Ultravert applications.

· Helios Two: a 105,000+ acre helium and natural gas prospect in SE Montana with drilling and assessment operations ongoing.