TIDMHAWK
RNS Number : 4884C
Nighthawk Energy plc
08 March 2011
8 March 2011
NIGHTHAWK ENERGY PLC
("Nighthawk" or "the Company")
Jolly Ranch Operations Update and Drilling Schedule
Nighthawk, the US focused oil development and production company
(AIM: HAWK and OTCQX: NHEGY), announces an update on the
recompletion and completion operations underway on existing wells
at Jolly Ranch and an upcoming drilling programme.
Highlights
-- Three completions/recompletions undertaken since January
-- Focus remains on finishing the current series of completions
and recompletions in line with the previously announced
programme
-- Four new wells planned targeting the Pennsylvanian Atoka and
Cherokee Shales with up to a further three shallower wells in the
Middle Mist area of Jolly Ranch, targeting the younger Cretaceous
aged Niobrara Shale formation and 'J' sands
-- Interim results for the period ended 31 December 2010 are
expected to be released in the week commencing 28 March 2011
Update on Completion Operations
The previously announced completion and recompletion work
continues with three of the six wells having been completed. Two of
these wells, the Craig 8-1 and Craig 4-33, have been placed on pump
for a period of test production with the third, the Williams 10-27,
expected to be placed on pump in due course.
Craig 8-1
Following the review of pulsed neutron logging results, the well
has been acidised, but not fracture stimulated, in the new
perforations in the Lower Atoka and in existing perforations in the
Cherokee. The well has been placed on pump and is currently
producing in a range between 10-30 BOPD gross. The well will be
assessed for fraccing at a later date.
Williams 10-27
The well was acidised and then fracced in zones in the Lower
Atoka at the end of February and is currently flowing back fluid
from this exercise. The first few hundred barrels of fluid returned
included up to a 50% oil cut. A new fracture stimulation
combination of various sand sizes and 4,000 bbls of fluid were used
to stimulate Lower Atoka shales and sandstones through new
perforations.
The well will be placed on pump in due course and production
rates monitored.
Craig 4-33
The well was acidised in zones in the Cherokee, Upper and Lower
Atoka and placed on pump and is currently producing between 20-30
BOPD gross.
Further activities intended to enhance production from the
following wells are now planned.
Well Completion Activity
John Craig 7-2 Upper Atoka - multiple new perforations and
acidisations
Cherokee C - reperforation and acidisation
Cherokee A - new perforation and acidisation
Fort Scott - multiple new perforations and
acidisations
Craig 12-33 Lower Atoka - acidise existing perforations
Cherokee A - new perforation and acidisation
Craig 15-34 Cherokee A - new perforation and acidisation
Drilling Programme
The next phase of drilling is expected to commence in the next
60 days depending on rig availability, and will comprise four
development wells in the core area around the Craig Ranch field all
focusing on the Pennsylvanian Atoka and Cherokee shales.
Up to a further three wells will be drilled, in the Middle Mist
area, to test the 'J' sands and the Cretaceous-aged Niobrara shale
formation, based on the results of 3D seismic. These formations are
currently the targets of numerous wells by other operators in the
Northern part of the Denver Basin, another US shale oil play.
The "J" sands and Niobrara formations lie at shallower target
depths of c.5,000 ft, and are planned to be drilled with a Coiled
Tubing unit, which should result in a considerably lower total cost
than the deeper Cherokee and Atoka wells at Jolly Ranch. Each
Niobrara well is currently estimated to cost around US$400,000
gross. The deeper wells are anticipated to cost around
US$1.5million gross to complete, excluding any fraccing/acidisation
operations.
Production Update
The Craig 16-32 was completed in the Cherokee and has been on
long-term test production since June 2010. Cumulative production is
over 11,700 BO with minimal water to date.
In mid-February the well was producing in the range of 35-45
BOPD gross when the pump failed. The pump was replaced and the well
came back on production at 90 BOPD gross in late February and is
currently maintaining a rate around 85 BOPD.
This uptick in production, albeit on one well and not guaranteed
to be sustained, is an encouraging sign for the continued
production and completion optimisation operations and indicates
optimised fracs and completions can produce significantly higher
quantities of oil.
Nighthawk will update the market on production for the first
quarter of 2011 in May.
Interim Results for period ended 31 December 2010
The interim results for the Company, for the period ended 31
December 2010, are expected to be released in the week commencing
28 March 2011.
Summary
These initial results from the first three wells are encouraging
and show that recompleted wells are capable of higher levels of
production and that further progress is being made in unlocking
value at Jolly Ranch. In particular, it shows that the key to
demonstrating this value is by continuing to refine the completion
and fraccing methodology. As such, the focus of the current work
programme remains to show that production from the current wells
can be improved, while planned future drilling will add to the
overall knowledge base and production portfolio.
Tim Heeley, Chief Executive of Nighthawk Energy, commented:
"We are pleased that we continue to see signs that the potential
of the Jolly Ranch project is being unlocked. Increased production,
like that from the recompleted wells, is always good news and
activity on surrounding acreage continues to give us confidence in
the project. The key strategic objective remains to continue to
refine the applicability and the repeatability of the completion
operations.
"Further drilling will not only enhance our knowledge of the
play but will also provide a larger well portfolio from which to
produce."
Tim Heeley B.Eng (Hons) a member of the Society of Petroleum
Engineers, Fellow of the Geological Society of London and a
Chartered Energy Engineer, who is CEO of Nighthawk and has over 15
years of experience in the hydrocarbons industry, has approved the
technical information contained in this announcement.
Enquiries:
Nighthawk Energy plc 020 3405 1982
Tim Heeley, Chief Executive +1 720 344 5154
Mike Thomsen, Executive Chairman
Westhouse Securities Limited 020 7601 6100
Tim Feather tim.feather@westhousesecurities.com
Matthew Johnson matthew.johnson@westhousesecurities.com
Matrix Corporate Capital LLP 020 3206 7000
Louis Castro louis.castro@matrixgroup.co.uk
James Pope james.pope@matrixgroup.co.uk
Financial Dynamics 020 7831 3113
Ben Brewerton ben.brewerton@fd.com
Ed Westropp edward.westropp@fd.com
Notes to editors
Nighthawk is a focused oil and gas production and development
business with assets onshore USA.
The Company holds a 50% working interest in a shale oil project
in Colorado called the Jolly Ranch Group project ("Jolly Ranch").
Running Foxes Petroleum Inc. ("Running Foxes"), holds the remaining
working interest and is the operator of the project; comprising the
Jolly Ranch, Middle Mist and Mustang Creek areas, covering
approximately 410,000 gross acres of Lincoln, Elbert and Washington
Counties, Colorado.
Jolly Ranch lies within the southeast flank of the
Denver-Julesburg Basin, a major mid-continent hydrocarbon producing
basin. The source of the produced hydrocarbons is the black organic
shales that are interbedded with siliclastic and carbonate rocks.
The shales at Jolly Ranch are within the oil generation window and
there is reasonable certainty of reservoir and source rock
continuity throughout the project area.
To date, 19 wells of 7,500-8,000 feet have been drilled on a
core 50,000 acre area by Nighthawk and Running Foxes, all of which
have encountered multiple pay horizons.
The current work programme involves various testing and fraccing
procedures on numerous shale target formations to determine the
optimum production plan and also gain a greater understanding of
this non-conventional play. In addition to testing, Nighthawk's
main efforts have been focused on proving up the extent of the
asset to help establish the wider project value.
In January 2011 Schlumberger Data & Consulting Services
("Schlumberger"), completed an independent reservoir simulation
model of the core Craig Ranch area. The model consisted of detailed
areas of the Craig Ranch project area, totalling approximately
3,200 gross surface acres, and assessed the likely long-term
production behaviour of the Marmaton, Cherokee and Atoka horizons.
The simulation concluded that there were approximately 30,000
barrels of oil in place per acre in the Cherokee and Atoka shale
horizons and the average model area recovery rate was 7.5% on
40-acre spacings with vertical wells. Schlumberger has previously
stated that the regional continuity of the formations is such that
the resources in place are likely to be laterally continuous across
the total acreage.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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