Originally oil and gas, Zoetic has recently moved into the CBD business
Company still has shale gas interests in wells in East Denver but these are likely to be sold
There is also a helium producing operation
New management team took over in September led by CEO Nick Tulloch
Originally known as Highlands Natural Resources, an oil and gas group with wells in Colorado, in March the company got into the CBD business and changed its name in August.
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.
Zoetic has launched a new CBD brand, called Chill, in the US with the first shipment of products in June.
The products are available in 18 Schrader Oil petrol stations and on the Chill website.
Zoetic 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, Zoetic said it retains the view that it will generate sufficient cash flow to cover all overheads for the current year.
At East Denver, Zoetic 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.
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.
Currently, Zoetic is looking to dispose of its oil and gas assets to focus solely on cannabis and hemp.
Away from its production arm, this is also 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.
Zoetic 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.
The 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.
Zoetic holds a 75% stake in the DT Ultravert technology patents.
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, which will help with a sale of these assets
Hydrogen/nitrogen mix found in Kansas, with the most significant beneficial results in cannabis and hemp plant