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Highlands Natural Resources Plc: THE INVESTMENT CASE

Highlands Natural Resources: Well services technology worth three times current share price

DT Ultravert is on test with the oil field services giant Schlmberger and potentially solves the problem of ‘bashing’.
onshore drilling operation
INVESTMENT OVERVIEW: HNR The Big Picture
New technology can enhance existing oil fields

Highlands Natural Resources Plc’s (LON:HRN) breakthrough drilling technology is conservatively worth triple the current market capitalisation of the whole firm, a senior director told Proactive Investors.

DT Ultravert is on test with the oil field services giant Schlumberger (NYSE:SLB) and potentially solves the problem of  ‘bashing’.

This is a reservoir damaging problem seen in shale operations with high well density.

Bashing occurs when a new well (typically referred to as the ‘child’) is fracked in a close proximity to an older, already producing well (known as the ‘parent’).

Fracking fluids can infiltrate the well bore in the parent, causing damage that leads to reductions in both production and reserves.

Anything that prevents bashing could be a significant tool to oil companies under pressure as the crude price bobbles along below US$80 a barrel.

Cully Cavness, head of finance and business development at Highlands, said an independent validation of DT Ultravert had been carried out by a “third party engineer”.

It put a preliminary net present value on the technology of £38mln (US$50mln), using a 10.5% discount rate.

That compares with company’s current market capitalisation, which stands at £11mln.

“DT Ultravert could be that next phase; the solution for the economic and efficient of infilling of discoveries,” he told Proactive’s Juliet Mann.

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