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Highlands Natural Resources spuds six new wells at East Denver oil and gas project

Highlands will now move on to drill out the lateral portion of each wellbore, with phase two of the drilling on track to be completed by the end of June
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Highlands has a 7.5% carried interest in all of the wells drilled at the project

Six new wells have been spudded at Highlands Natural Resources Plc’s (LON:HNR) East Denver oil and gas project in the US state of Colorado.

Work began on the wells – named Buckskin, Citadel, Hagar, Ouray, Thunder and Grizzly – last month and was funded by Highlands’ partners at the project.

The six new wells are in addition to two producing wells at East Denver – Wildhorse and Powell.

IN-DEPTH: HIghlands' projects offer multiple routes to goal

Phase two of the drilling, which will see Highlands drill out the lateral portion of each wellbore, is on track to be completed by the end of next month (June).

Highlands reckons there is the possibility for up to 24 wells to be drilled at the project, all of which would be funded under the current arrangement with its partners.

Those partners will take a 92.5% interest in the wells, like they have already done with Wildhorse and Powell, but that still leaves Highlands with a 7.5% carried interest which will provide “substantial revenues” going forward.

“The rapid development of these wells demonstrates the firm commitment of our partners to develop our East Denver Project,” said Highlands’ chairman and chief executive Robert Price.

“We are positioned to receive revenues from eight producing wells in Q4 2018, which will enable the acceleration of development across our existing and future portfolio projects.”

Price added: “Based on the strong production rates achieved at the existing producing wells at East Denver, I feel confident regarding the future cash flow potential of upcoming wells.”

Highlands shares closed slightly up at 20.2p on Thursday.

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