Highlands, the London-listed natural resources company, is pleased to provide an update on its Colorado-based shale oil and gas projects.
At East Denver, surface casing for all six new wells has been completed and the current stage of drilling is scheduled to complete in towards the end of June. Supplementing this successful project, Highlands has acquired a consolidated package of 2,490 acres of oil and gas leases to the west of Denver, Colorado where the Company believes that up to 48 horizontal wells could be drilled, subject to regulatory approvals.
East Denver Operational Update:
· The current operational phase consists of drilling six horizontal wells with a lateral length extending two miles along the reservoir
· The wells are named Buckskin 5-64-15-16-1BHZ, Grizzly 5-64-15-16-1CHZ, Ouray 5-64-15-16-1CHZ, Thunder 5-64-15-16-1CHZ, Hagar 5-64-15-16-1CHZ and Citadel 5-64-15-16-1CHZ
· The surface casing for all six new wells, has been drilled, cased, cemented and secured
· The Highlands team is currently working on the lateral sections of the wells
· The Buckskin well has been drilled to a total depth of 17,997 ft, and it has been cased, cemented and secured
· Right after the Buckskin, the rig moved to the nearby Grizzly well which is currently drilling the lateral section and is expected to reach its total projected depth of 17,943 ft within the next 24 hours
· The Phase Two Drilling at East Denver is expected to be completed in towards the end of June
· As previously announced in 2017, the combined initial production rate for the first two wells at East Denver was 1,771 BOEPD and Highlands remains optimistic about the success of these six new wells
West Denver Project Highlights:
· The Company’s experience, capability and execution evidenced in the success at East Denver has led to the identification and acquisition of these high-quality assets in West Denver
· Up to 48 horizontal shale wells may be drilled, which is double the scale of the entire East Denver project (subject to regulatory and commercial approvals)
· 100% working interest across 2,490 net acres with the potential to increase the West Denver land position over time
· Similar operational environment and development process to the successful East Denver project, also located in the Denver Julesburg Basin of Colorado
· Total costs to date for the leases are US$50,000
Robert Price, Highlands’ Chairman and CEO, said: “West Denver will be a valuable addition to Highlands’ core shale strategy, which creates a growing foundation of cash flow from which the Company will advance its other projects. Following on from our success in our East Denver project, Highlands will aim to develop West Denver with third party funding and create value for our shareholders with our revenue generating assets and our upside projects.”
Advantageously Positioned for Development
The West Denver project benefits from several key advantages. Most notably, Highlands’ West Denver land position consists of straightforward oil and gas leases as opposed to the several farm outs that make up the East Denver project. Highlands has a direct 100% working interest in its West Denver assets and can develop the asset as a direct owner of real property interests. West Denver’s surface area is also largely unencumbered by urban development, and is consolidated into closely grouped parcels, which facilitates the permitting and development process.
The West Denver asset also bears numerous similarities with East Denver. The Niobrara formation shows prominently under the West Denver acreage, but is joined by other attractive shale targets including the Codell formation. West Denver is also ideally situated for pad-based operations similar to the efficient techniques employed by Highlands and its partners at East Denver. Highlands believes that, like East Denver, the opportunity presented by West Denver is suited to third party financing and management will seek to maintain a significant carried interest without dilution or capex burden for shareholders.
Highlands will begin the permitting process for West Denver, with a view towards establishing drilling and spacing units, wellbore density approvals, surface locations and drilling permits in 2018 in advance of potential drilling activity in 2019. Similar to East Denver, the West Denver project is expected to be primarily oil-focused, but is also anticipated to generate condensate natural gas liquids and natural gas as upside revenue stream opportunities.
West Denver sits between numerous proven and productive oil and gas fields in the broader Denver Julesburg Basin. To the north and northeast is the Wattenburg Field, which produces prolifically from thousands of Niobrara and Codell wells. To the south is the Soda Lake field, which notably produced shale oil from a vertical well completed without hydraulic fracturing. To the east is Highlands’ own East Denver project and the broader Lowry Bombing Range field. The nearest productive well is located approximately one mile from Highlands’ West Denver acreage and demonstrates light oil in the local reservoir with oil quality characteristics similar to East Denver.
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