Highlands has two oil and gas projects and a total landholding of c 7,500 acres in Colorado. Both projects are highly prospective for the Niobrara shale formation:
- The producing East Denver project
- The West Denver development project
With two wells currently producing at the East Denver Project and six more expected to come into production in Q4 2018, a total of 72 well locations have been identified across both projects.
Highlands’ Colorado Shale division provides the Company with a long-term and scalable revenue stream.
Highlands drilled and completed two wells, Wildhorse and Powell, in 2017 and both are now in production. Following this, Highlands entered into an agreement with True Oil LLC in 2018 which sees the East Denver Project fully funded for at least six additional wells, in which Highlands has a 7.5% carried interest with no further capital cost for the company. Highlands also received a $5.4 million cash payment.
The first 6 additional wells are currently being developed targeting the Niobrara Shale formation and are expected to come into production in Q4 2018.This agreement has the potential to extend to the additional 16 well locations which have been identified.
This transaction, which saw True Oil assume all operational responsibilities for the project, has provided Highlands with additional time and resources which can be used to develop other projects, such as the West Denver Project.
Highlands owns a direct 100% working interest in leases covering 3,617 acres west of Denver where it believes it can drill at least 48 wells at the location. West Denver, with its surface area largely free of urban development and consolidated into closely grouped parcels, will allow Highlands to move through the permitting and development process efficiently, thereby facilitating greater mobility.
The project 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 development costs burden for shareholders.