17 July 2014
NIGHTHAWK ENERGY PLC
("Nighthawk" or "the Company")
Drilling and Production Update
Nighthawk, the US focused oil development and production company (AIM: HAWK and OTCQX: NHEGY), announces an update on drilling and production at its 100% controlled and operated Smoky Hill and Jolly Ranch projects in the Denver-Julesburg Basin, Colorado.
Highlights
· Average gross oil production from all wells in the calendar month of June 2014 was 2,062 bbls/day
· Total gross oil production from all wells in the half-year period to 30 June 2014 was 345,558 barrels, an increase of over 300% on the same period in 2013
· John Craig 2-2 well encountered a Pennsylvanian gas condensate discovery and an oil-bearing Lower Morrow zone. The gas condensate discovery tested significant natural gas production with a liquids content under natural flow conditions. Initial commercial production is expected to be from the Lower Morrow oil zone only
· John Craig 10-10 well commenced production from the Pennsylvanian formation during the second week of July 2014
· John Craig 4-2 well commenced production from the Pennsylvanian formation on 14 July 2014
· Drilling of the Snow King 12-33 well has been completed and logging is currently underway
· Drilling of the Knoss 9-20 exploration well has been completed and the well has been plugged and abandoned
Production
Gross Oil Production Quarter 2 2014
| Month | Total Production (Barrels of Oil) | Average Production (bbls/day) |
| April | 59,952 | 1,998 |
| May | 66,377 | 2,141 |
| June | 61,874 | 2,062 |
| Q2 2014 | 188,203 | 2,068 |
| Q2 2013 | 57,434 | 631 |
| HY1 2014 | 345,558 | 1,909 |
| HY1 2013 | 85,609 | 473 |
(Nighthawk has an average Net Revenue Interest* of approximately 81.5% in the gross oil production)
The John Craig 2-2 well encountered a Pennsylvanian gas condensate discovery. The well was put on test and under natural flow produced natural gas with a liquids content at pressures that were higher than those usually encountered in this area of the Denver-Julesberg basin. The volume of natural gas produced by the well on test was significant with flow rates consistently exceeding 4 million standard cubic feet of gas per day. The well also encountered an oil-bearing lower Morrow pay-zone and now testing of the gas condensate discovery has been completed, this zone is currently being completed for production.
Work is currently underway to evaluate the options for commercial development of the gas condensate discovery and to evaluate the potential reserves.
The John Craig 10-10 and 4-2 wells are both in production from Pennsylvanian formations, with production from the 10-10 well commencing in the second week of July 2014, and the 4-2 well on 14 July 2014.
Once the John Craig 2-2 oil zone is in production, total production from the John Craig area is expected to be in the range of 250-300 bbls/day, with significant upside if the gas condensate discovery can be commercially exploited.
During July, the Company will undertake routine pressure build up tests on two of the Arikaree Creek wells. These tests will assist in evaluating the field reserves and production profile and will result in each well being off-line for three days.
Drilling
Drilling of the Snow King 12-33 well to a target depth of 8,500 feet has been completed. Logging of the well is currently underway with first runs completed, but second runs encountering a blockage in the well-bore. The Snow King 12-33 was drilled to appraise the Mississippian potential to the north of the original Snow King discovery and initial analysis of the logs indicates significantly lower structure, possibly through faulting, with limited potential for additional production.
Appraisal drilling of the Snow King discovery will continue through the summer with two further well locations, the Snow King 5-33 and 6-33, already permitted.
Drilling of the Knoss 9-20 exploration well, twenty miles south-west of the John Craig area, has been completed. The well was drilled to a target depth of 8,600 feet and sidewall cores have been taken and the well has been comprehensively logged. Analysis of the well data is underway and the well will be plugged and abandoned.
Following drilling of the Snow King 12-33, the drilling rig will return to Arikaree Creek to drill the Blackcomb 12-14 well, which will potentially open up further locations on the southern lobe of the Arikaree Creek field.
Financing Arrangements
Discussions to finalise the detail of the Company’s new reserve based lending facility have taken longer than anticipated, but the Board still expects to complete the process in a timely manner.
Stephen Gutteridge, Chairman of Nighthawk, commented:
“The John Craig drilling campaign has confirmed commercial oil production potential in the Pennsylvanian formations. The gas condensate discovery in the John Craig 2-2 well is intriguing with very good flow rates, but will clearly require additional investment to commercially produce the discovery, and there are a number of options to evaluate before any final decisions are made.
”With the initial Snow King well still producing 400 bbls/day of oil, further development of this discovery remains a priority, despite the less than encouraging initial logs of the 12-33 well. Drilling of the next Snow King well is planned for August.”
Chuck Wilson, Chief Operating Officer of Nighthawk, who has over 33 years of experience in the oil and gas industry and meets the criteria of qualified persons under the AIM guidance note for mining and oil and gas companies, has reviewed and approved the technical information contained in this announcement.
- Ends-
Definitions
*Net revenue interest (NRI) - Nighthawk’s share of oil, gas, and associated hydrocarbons produced, saved, and marketed, after satisfaction of all royalties, overriding royalties, or other similar burdens on or measured by production of oil, gas, and associated hydrocarbons
Enquiries:
| Nighthawk Energy plc Stephen Gutteridge, Chairman Richard Swindells, Chief Financial Officer | 020 3582 1350 | |
| Westhouse Securities Limited Alastair Stratton Robert Finlay Henry Willcocks | 020 7601 6100 alastair.stratton@westhousesecurities.com robert.finlay@westhousesecurities.com henry.willcocks@westhousesecurities.com | |
| FTI Consulting Ben Brewerton Ed Westropp | 020 7831 3113 ben.brewerton@fticonsulting.com edward.westropp@fticonsulting.com | |
