Drilling and Production Update
May 09, 2014
OTC Disclosure News Service
Guildford, ENG, United Kingdom
– 9 May 2014
NIGHTHAWK ENERGY PLC
(“Nighthawk” or “the Company”)
Drilling and Production Update
Current gross oil production of 2,153 barrels/day
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 of 2,153 barrels/day (?bbls/day?) in the period 13 April 2014 to 6 May 2014
? Average gross oil production in April 2014 of 1,998 bbls/day (March 2014: 1,885 bbls/day)
? Drilling of John Craig 2-2 well completed with testing of Mississippian and Pennsylvanian formations to commence next week.
? Drilling program continuing with John Craig 10-10 well
(Nighthawk has an approximate 80% Net Revenue Interest* in the gross oil production)
Production
The Snow King 13-33 well commenced production on 12 April 2014. The well is located on a distinct structural feature four miles south-west of Arikaree Creek. Average gross oil production from all wells in the 24 day period since Snow King 13-33 commenced production was 2,153 bbls/day.
Over this period the Snow King 13-33 well performed strongly with the average gross production rate at the upper end of the 300-400 bbls/day range. Applications for permits to drill three additional Snow King wells have been submitted to the State of Colorado and these wells will be scheduled into our drilling program this summer.
Average gross oil production in April 2014 was 1,998 bbls/day, a monthly record production level. Production in April benefitted from the commencement of production at Snow King 13-33 and a steady 100 bbls/day contribution from the Pennsylvanian formation in the John Craig 1-2 well. There were a number of days of downtime on some of the wells which affected overall production levels.
Drilling
The drilling rig has completed the drilling of the John Craig 2-2 well and is expected to spud the John Craig 10-10 well within the next few days. Based on the recent success with Pennsylvanian production at the John Craig 1-2 well, the primary targets for additional production in these wells are the Pennsylvanian Morrow, Cherokee and Marmaton formations. Both wells will collect further valuable data on the Mississippian formations in this area which is some 25 miles south of Arikaree Creek.
Completion of the John Craig 2-2 well will commence next week and a number of potential oil bearing zones will be evaluated and tested.
Financing Arrangements
As previously disclosed discussions are currently underway with a number of potential providers of finance with the objective of re-financing all existing short-term, non-convertible loans with new longer term borrowing facilities. The Board is confident that these discussions will be successfully completed within the next two months enabling the Company to release free cash flow for additional drilling and development, which is expected to include both production and exploration drilling.
Expenditures on the John Craig 10-10 well and John Craig 2-2 completion are expected to commence in advance of completion of refinancing, and one of the Company?s existing lenders, Fastighetsaktiebolaget Korpralen (?FK?) has agreed to offer additional loan facilities of up to US$3 million if required. This additional lending will be on the same terms as the existing US$9 million FK loan which provides for three repayments of US$3 million each on or before 31 July 2014; 31 October 2014 and 31 January 2015. Any additional borrowing will be repaid with the first of these payments. Nighthawk has drawn on US$1.5 million of the new borrowing. The annual interest rate payable on the loan is 15%.
FK is associated with Johan Claesson, a non-executive director of the Company and the Company?s largest shareholder.
Stephen Gutteridge, Chairman of Nighthawk, commented:
?2,000 bbls/day is another milestone achieved in our drive to increase production and we intend to continue this rapid pace of development towards the next milestone of 3,000 bbl/day. We have multiple drilling opportunities and the Board will continue to ensure we are funded to keep our drilling rig fully utilised in proving up this potential. We are pleased with the initial performance of the Snow King well, and resources will now be committed to developing this discovery together with further drilling at Arikaree Creek, and we expect to announce details of the next phase of our drilling program in the coming weeks.?
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
Richard Baty
Henry Willcocks
020 7601 6100
This release includes additional documents. Select the link(s) below to view.
20140509 HAWK Drilling prod update final.pdf
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Article source: http://www.otcmarkets.com/stock/NHEGY/news?id=80323
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