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Zoetic International plc

Highlands Natural Resources makes rapid progress with new CBD operation

Snapshot

Highlands said the progress made by Zoetic since it established the cannabis business earlier this year has been "excellent”

cannabis plants

Quick facts: Zoetic International plc

Price: £0.05

Market: LSE
Market Cap: £7.62 m
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  • Originally oil and gas, Company has recently moved into the CBD business through its Zoetic subsidiary

  • Company still has shale gas interest in wells in East Denver

  • There is also a helium producing operation

 

How is it doing

Highlands Natural Resources Plc (LON:HNR) has undertaken a major shift in direction in recent months.

Originally an oil and gas group with wells in Colorado, in March Highlands got into the CBD business via the new Zoetic Organics subsidiary.

The company recently secured its first retail distribution and sales agreement, to supply products via Schrader Oil’s chain of eighteen convenience and gas stores. Schrader has invested £100,000 in the business as part of the deal.

Through Zoetic, the group has launched a new CBD brand, called Chill, in the US with the first shipment of products due the week beginning June 17. 

The products will be made available to buy in 18 Schrader Oil petrol stations and on the Chill website.

"To make delivery of our first products for retail within three months of commencing operations is an extraordinary achievement and is testament to the hard work of all of the team at Highlands and Zoetic," said Robert Price, Highlands executive chairman.

"We are optimistic about our early sales and will update investors in due course."

Gas production

Highlights told investors in May that its eight part-owned production wells at the East Denver project yielded around 2,700 barrels of oil per day and 4mln cubic feet of gas per day.

Five of the eight new wells are currently operating on a limited choke, restricting output with a view to maintaining pressure and extending well life.

The company owns a 7.5% interest in the wells, and, it said that the asset is generating monthly revenue above the company’s fixed operating costs.

Taking account of expected revenues across the whole group, Highlands said it retains the view that it will generate sufficient cash flow to cover all overheads for the current year.

At East Denver, Highlands has also received a US$58.5mln commitment from a US oil and gas-focused private equity group to support an expansion of up to 24 wells at the site.

According to HNR, the East Denver project has an NPV10 range for six wells of between US$23.3mln to US$30.1mln.

An estimate for the full 24 wells sees this estimate increase to between US$96.6mln to US$124.5mln.

DT Ultravert

Away from its production arm, HNR also has its DT Ultravert technology, which has been proven to prevent ‘well bashing’ and enhance well productivity.

The process involves the injection of nitrogen gas into an existing well at the same time as a new nearby well is fracked.

Highlands has enjoyed some early stage success in deploying the technology but needs its own nitrogen supply represents one of the largest cost inputs.

As a result, it has been looking to produce its own nitrogen from a project in Kansas.

HNR’s thinking is that if it can start producing its own nitrogen, it will not only reduce the cost for its customers, but it will also improve its own margins and possibly create another revenue stream if it becomes a supplier in its own right.

HNR holds a 75% stake in the DT Ultravert technology patents.

What the boss says : Robert Price, chief executive

"Our gas is a game changer for organic growing, we can increase the yield by 30%.  We supply the gas to the soil so it's a natural fertiliser. The plants look really beautiful. We bring gas from Kansas into Colorado and produce different oils from hemp."

Latest video

 

Inflexion points

Zoetic developing at a rapid rate with plans to launch a second brand and additional CBD products in coming weeks

Increasing production from the East Denver wells as more come on stream

Hydrogen/nitrogen mix found in Kansas, with the most signficant beneficial results in cannbis and hemp plant

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Investor Update: Highlands Natural Resources makes first CBD sales in UK

Headlines from the Proactive UK newsroom. Highlands Natural Resources (LON:HNR) has made its first sales in the UK of CBD brand Zoetic. The first product lines are CBD tinctures in four flavours - natural, peppermint, melon and blood orange.  Versarian (LON:VRS) CEO Neil Ricketts has...

on 9/8/19

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