Highlands Natural Resources PLC Update on the Helios Two Transaction (7452D)
July 11 2016 - 1:00AM
UK Regulatory
TIDMHNR TIDMOPRA
RNS Number : 7452D
Highlands Natural Resources PLC
11 July 2016
11 July 2016
This announcement contains inside information.
Highlands Natural Resources plc ('Highlands' or 'the
Company')
Update on the Helios Two Transaction
On 15 June 2016, Highlands, the London listed natural resources
company, announced that it had reached a heads of terms with London
listed Opera Investments Plc ("Opera") whereby Opera proposed to
acquire all of the issued share capital of Highland's subsidiary,
Highlands Helium Development Limited, the owner of Highlands'
Helios Two natural gas and helium project in Montana, USA ("Helios
Two").
Highlands announces that there is mutual agreement between Opera
and Highlands to terminate the Acquisition. Highlands now plans to
develop Helios Two itself and expects to provide shareholders with
further updates in the coming weeks. The directors of Highlands
wish the team at Opera well as it seeks further acquisition
opportunities.
Helios Two Development Plan
Highlands has developed a two-phase development plan for Helios
Two which is designed to first achieve proof of concept and
secondly achieve self-sustaining revenue and cashflow.
Phase One
The first phase of the Helios Two project will be to achieve
proof of concept and then establish requisite operating and
marketing infrastructure. Highlands plans to develop Helios Two
using a three-well pattern (a "Trident") consisting of two
production wells paired to a single injection well. Phase One
entails drilling and completion of the first Trident wells in order
to establish concentrations and flow rates for natural gas, helium,
water and other produced volumes.
Pending successful completion of the first Trident wells,
Highlands proposes to install the separation, handling and
midstream transportation infrastructure required to scale up
operations. Highlands is in discussions with third parties
regarding their potential involvement in this process.
Phase One is designed to be a fast-paced and capital-light
program geared towards expeditiously establishing proof of concept
and establishing critical infrastructure for expansion.
Phase Two
Building on the groundwork laid in Phase One, Highlands will
complete further Tridents in Phase Two in order to bring Helios Two
to a point of self-sustaining economics. The directors anticipate
that this phase of the project will require either further funding
or, alternatively, the involvement of third parties.
Highlands plans to develop Helios Two through dewatering,
whereby gas-cut water is pumped from the target formation to lower
reservoir pressure and release gas volumes trapped in fine pore
throats. This methodology has been successfully demonstrated and
commercialised in several plays around the world, which are
detailed in the Competent Person's Report published by Knowledge
Reservoir LLC dba RPS ("RPS") and available on Highlands' website.
Highlands notes recent speculation regarding the lack flow of water
or gas at the surface from a historic drill stem test ("DST")
located in the Helios Two prospect area. However, Highlands wishes
to reassure shareholders that a lack of surface flow is not only
common, but was expected for the Helios Two prospect area, which is
why RPS included significant pumping costs for all production and
injection wells in the project's economic modelling.
**ENDS**
For further information, please contact:
Highlands Natural Resources
plc
Robert Price +1 (0) 918 361 7000
Cenkos Securities plc
Neil McDonald +44 (0)131 220 9771
Nick Tulloch +44 (0)131 220 9772
St Brides Partners Ltd
+44 (0) 20 7236
Lottie Brocklehurst 1177
Elisabeth Cowell
This information is provided by RNS
The company news service from the London Stock Exchange
END
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