By Tom Winnifrith | Monday 25 July 2016
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Highlands Natural Resources (HNR) is shameless in the way that it announce the most fantastically misleading news to ramp its shares to get another covert placing away. Today's announcement is a total shocker. It is paying $500,000 for the right to pick up 100% of the costs but just 80% of the revenues from six wells in Colorado. The numbers sound great...sadly they are just plain old bollocks as 10 minute's research on the internet shows. Highlands states:
The farm-in acreage is bordered by ConocoPhillips leases that have been delineated by producing horizontal wells ranking among the most productive in the Denver Julesburg Basin. The presence of nearby production provides important data for analysing and projecting the productivity of the wells planned in the farm-in acreage. Specifically, Highlands is able to use Conoco's well designs, completion methods and decline curves as analogs for its planned farm-in wells. Conoco has drilled numerous productive wells in its leases north of the farm-in acreage, including wells drilled within the township of the farm-in agreement as well as adjacent townships. The majority of Conoco's nearby horizontal wells with optimized completion techniques produced between 50,000 to 100,000 barrels of oil in their first six months of production.
To put this in context, a well producing more than 50,000 barrels of oil in its first six months would rank among the top 12% of all horizontal Niobrara wells based on 2,943 wells with sufficient data history as of May 2016 (data from IHS and Colorado Oil and Gas Conservation Commission). The Niobrara shale is the fourth largest tight oil play in the United States (ranked by current daily oil production), and produces approximately 371,000 barrels of oil per day according to the U.S. Energy Information Administration's July 2016 Drilling Productivity Report.
Fecking awesome. Er so lets look at ALL the wells currently producing in Arapahoe County HERE. As you can see ANNUAL output ranges from 0 barrels to 1,382 barrels of oil a A YEAR. Two wells out of of 100 are at 1000 barrels a YEAR or more. the average well is running at less than 0.5 barrels a day.
So Highlands will spunk half a Bernie for the right to fund 100% of the cost to get 80% of the revenues from a nodding donkey or two. This is sheer insanity. Its shareholders cannot earn an economic return from this whatever the oil price. It is madness. But who cares about real numbers, the ramptasic release has seen the shares race ahead to 30p. So what happens next?
Cenkos Securities and St Brides PR will both have another question to answer from St Peter on Judgement Day. How on earth did you sign off on this crap? Do you have no moral compass at all? I realise you guys have wages to pay but you you not doing something less sordid like selling heroin to schoolkids?
Meanwhile the spiv who can buy 25p warrants at 1p from DT Ultravert (i.e. the related company owned by Highlands bosses Paul Mendell and Robert Price) will be forward selling as many shares as he can to the morons so that he can then call down warrants to cover his short and make his "turn"
If this guy was anything other than a spiv, a flipper to morons, he would own a disclosable stake having already exercised 5 million warrants (equivalent to 13% of the equity). He has issued no TR1 so we know that he is a chancer, a flipper and a spiv (contrary to everything Highlands told us). Now as the morons buy into today's horseshit he will be licking his lips, preparing to take more of their money.
Highlands stinks. It has refused to answer question after question from us as you can see in our full coverage HERE. It is a manifestly worthless scam and all those involved are morally bankrupt and beneath contempt. The shares are a sell.
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