Highlands Natural Resources acquires Arizona carbon dioxide prospect leases

The London-listed firm said the first of the leases was subject only to ratification by the state, and it expected that within the next two weeks.

It said the area sat adjacent to land which was identified as a target for future CO2 production by Kinder Morgan, one of the leading suppliers of CO2 to the Permian Basin.

Plans had been developed to construct a pipeline from Apache County, Arizona to the existing pipeline network that provided CO2 for the Permian Basin.

Pricing for CO2 in the Permian Basin was usually linked to the price of WTI oil, the board explained, and when it declined in 2015, Kinder Morgan announced that it would not pursue the build.

The company's acquisition and maintenance of the leases would be at “minimal cost”, it said, and therefore the board believed that the recent sustained increase in oil prices signalled the right time to acquire the CO2 leases.

“Highlands has a growing portfolio of assets which have the potential to significantly enhance well productivity,” said chief executive officer Robert Price.

“This is an exciting project in an area identified by one of the region's leading producers as being prospective for CO2 and we look forward to evaluating it further.

“In the meantime we remain focused on increasing our cash flow through completion of the six additional wells currently being developed at our East Denver project, and on commercialising DT Ultravert through the acquisition of assets which have the potential to lower the cost for end users.”