10th Jun 2016 08:10
LONDON (Alliance News) - Highlands Natural Resources PLC on Friday said its DT Ultravert technology could be proven to be a game-changer for the global oil and gas industry within the next few months as the company continues to push toward commercialisation.
Despite the company's bullish prediction, Highlands shares were down 18% to 51.50 pence per share on Friday morning.
The DT Ultravert technology was developed by Diversion Technologies LLC. Highlands made a move last year to acquire a 75% interest and has since partnered up with oil services giant Schlumberger to advance the technology and make it commercial.
Schlumberger has struck a deal with one of its clients that is willing to test the DT Ultravert technology on its own wells that lie in the Piceance basin of western Colorado, US, and testing is expected to start in July and end, "at the latest", in September.
Highlands said it will not incur any costs as a result of that deal, and said results from those tests should be able to be published in the coming months, adding that successful results will lead to a "game-changing technology" for the oil and gas industry.
The technology re-fracks existing wells in order to improve efficiency and production levels, a very attractive proposition in the current oil price downturn as the industry's focus for maintaining or increasing production levels is on improving existing operations, rather than spending money on developing entirely new projects or wells.
With the US being the home of the shale boom, Highlands and its partners see the country as a key area for the commercialisation of DT Ultravert.
Notably, Highlands has 19 patent filings in the process of being approved as it continues to protect its potentially valuable technology. Those patents do not only cover the US but also Canada and the UK.
North Yorkshire Council recently approved the first fracking project in the UK for five years. Third Energy, a non-listed company, is preparing to frack an existing well at its site near the village of Kirby Misperton, between Malton and Pickering, potentially opening the flood gates for UK shale exploitation.
In addition, Highlands has recruited Domingo Mata, the former senior production engineer and stimulation domain manager of Schlumberger, to head up the commercialisation of the technology by appointing him as lead marketing manager of DT Ultravert.
Highlands also introduced another partner to push the technology back in May. Calfrac Well Services Corp agreed to license the DT Ultravert technology on a shared exclusivity basis for use on its own operations, which will involve royalty payments being paid to Highlands. On Friday, Highlands said talks between Calfrac and Schlumberger about that potential deal are ongoing.
If Highlands can finalise a deal with Calfrac, it could lead to DT Ultravert being deployed across seven US states.
In addition, Highlands said it is talking to Great Western Oil & Gas Co about the potential to use the technology to re-frack between 5 and 30 wells in the US. Highlands believes the wells in question are "prime candidates" for DT Ultravert, but warned no deal is guaranteed.
"With a superb team on side, and the potential to utilise DT Ultravert for a broader number of applications, we believe this is a positive time for the company and its shareholders. Whilst the logistical issues of water allocation in the Piceance Basin are frustrating, with terms agreed and the testing to be carried out at no cost to Highlands, we look forward to the results in the coming months," said the company.
By Joshua Warner; [email protected]; @JoshAlliance
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