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Schlumberger-led tech test sends London small cap soaring

A Schlumberger-led team is pumping nitrogen into two existing wells at the same time as new wells are being fracked nearby.

a number of oil and gas drilling rigs close together
Highlands shares rose over 20% on Tuesday

News that Schlumberger (NYSE:SLB) has begun trialling a new piece of kit has sent shares in London listed junior Highlands Natural Resources Plc (LON:HNR) soaring.

Schlumberger has begun testing a new down-hole technology, called DT Ultravert, which among a number of field services applications could be a solution to ‘bashing’ - a reservoir damaging problem seen in shale operations with high well density.

Bashing occurs when a new well (typically referred to as the ‘child’ well) 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.

It is described as a growing concern for the US shale industry where investments have largely been focussing on lower risk infill drilling and many of operations are reliant on already pressured reserves based lending arrangements (where a reserve downgrade can have traumatic consequences).

Schlumberger’s test of the DT Ultravert technology is taking place in the Piceance Basin, Colorado.

A Schlumberger-led team is pumping nitrogen into two existing wells at the same time as new wells are being fracked nearby.

London listed Highlands Natural Resources (LON:HNR) - which also has exploration assets near Denver as well as a helium and natural gas venture in Montana – owns a majority stake in the DT Ultravert technology. It entered into a partnership with Schlumberger in 2015.

That tie-up is focussed on the use of the technology to re-frack wells, a process that could be a potential game changer as it would dramatically reduce the cost of maintaining output volumes for shale (as fewer new wells would be needed).

Highlands is covering the costs of the current ‘bashing’ trial, though talks are said to be underway between the two companies to potentially extend the scope of the existing partnership.

In London, Highlands Natural Resources shares gained 5.92p, 21.26%, to change hands at 33.80p each, which values the group at just under £15mln.

Quick facts: Zoetic International PLC

Price: 10.485 GBX

Market: LSE
Market Cap: £20.36 m

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