TIDMHAWK
RNS Number : 0813X
Nighthawk Energy plc
09 February 2012
NIGHTHAWK ENERGY PLC
("Nighthawk" or "the Company")
Operations Update
New Development Plan for Jolly Ranch
US$7.5 million Investment targeted at substantial increase in
Production
Nighthawk, the US focused shale oil development and production
company (AIM: HAWK and OTCQX: NHEGY), announces an update on its
operated project at Jolly Ranch in the Denver-Julesburg Basin,
Colorado.
Highlights
-- Fully funded US$7.5 million program to commence in March
-- Two work-over rigs to be simultaneously deployed working on 15 existing wells
-- 5 new wells planned to be drilled in second half of 2012
-- Substantial increase in production targeted
-- Additional geological studies and data gathering
Work-Over Program
Next month Nighthawk will commence a comprehensive work-over
program focussed on 15 existing wells on the Jolly Ranch Project.
Two work-over rigs are currently being contracted and are expected
on location in March. The work-over program is anticipated to
extend through most of the second quarter of 2012, with a total
gross cost of approximately US$750,000.
All the Jolly Ranch wells have been re-evaluated and specific
actions are planned for 15 existing wells. These plans will involve
a range of remedial work including: replacement of pumps, casing
and other faulty equipment; re-perforation of potentially
productive zones; and acidisation and other stimulation techniques.
New logging will be undertaken at a number of wells to gather
additional data on the Cherokee shale formation and other
potentially productive zones.
In addition to the planned work on potentially productive wells,
the review identified one older well as beyond repair and this will
be plugged and abandoned as part of the work program. Additional
topside remedial work will also be required at some of the well
locations.
New Drilling Program
Subsequent to the work-over program, Nighthawk plans and has
budgeted to drill 5 new wells to add production and further
establish the range and extent of the Cherokee shale on the
Company's acreage. Nighthawk expects at least one well to test the
possibility of Niobrara shales in the northerly acreage and also to
drill a horizontal step out from an existing vertical well. Subject
to the availability of drilling rigs, the first of the new wells is
currently anticipated to spud early in the second half of 2012. The
current gross cost estimate for the drilling program is US$6.75
million. The information obtained from the work-over program,
combined with the additional studies being undertaken, will better
inform decisions on well location and targets.
Additional Studies
The Jolly Ranch project comprises over 400,000 gross acres and
Nighthawk's primary objective is to clearly establish that this
acreage contains a highly valuable shale oil play. The work-over
and new drilling program is expected to provide important initial
steps in this process by increasing production and adding
substantial additional data on the Cherokee shale formation.
However, further work is needed to establish the certainty and
credibility of repeatable drilling and completion techniques and to
provide evidence of the continuity of the Cherokee formation over
the acreage.
The Company will shortly commence additional work comprising
logging of wells and re-interpretation of seismic data. Additional
seismic and geological basin studies are expected to be undertaken
at a later stage.
The Company has also noted the increased level of third party
leasing and drilling activity immediately adjacent to Jolly Ranch
and anticipates that additional valuable information will become
available from these activities.
Where practicable flow meters will be installed on all
commercially producing wells and will help give timely and accurate
production information to assist in the evaluation and study
process.
Investment and Production
During 2012 Nighthawk plans to invest an average of over
US$600,000 gross per month in increasing the flow rate and
sustainability of production from Jolly Ranch. This is the highest
level of monthly investment since January 2011 and compares with an
average gross investment of under $100,000 per month over the past
12 months, a period during which both partners were restricted by
cash shortage. The low level of investment in 2011 has had a marked
impact on production levels, a trend which Nighthawk intends to
reverse during 2012.
Gross Oil Production in 2011 was as follows:-
(In 2011 Nighthawk had a 50% working interest and a 40% Net
Revenue Interest)
Period Total Production Average Production
2011 (bbls of Oil) (bbls oil/day)
----------- -------------------- ----------------------
Q1 5,155 57
----------- -------------------- ----------------------
Q2 7,698 85
----------- -------------------- ----------------------
H1 12,853 71
----------- -------------------- ----------------------
Q3 6,480 70
----------- -------------------- ----------------------
Q4 5,161 56
----------- -------------------- ----------------------
H2 11,641 63
----------- -------------------- ----------------------
Full Year 24,494 67
----------- -------------------- ----------------------
Gross average production in January 2012 up to 23(rd) January
(when Nighthawk assumed the operatorship) was approximately 50
bbls/day
Stephen Gutteridge, Chairman of Nighthawk, said:
"We are now commencing the implementation of a completely new
development plan for Jolly Ranch, with Nighthawk in control as
operator and 75% working interest owner. Investment in the project
has been severely restricted over the past 12 months which has
resulted in lower production levels and the need for remedial work
on a number of wells. We will now change this with the commencement
of a US$7.5 million gross work program this year, with existing
wells being worked on and 5 new wells to be drilled in the second
half of 2012. Whilst we will not be able to fully quantify the
potential for increased production until we have some results from
the work-overs, we are confident that we can deliver a significant
uplift on current levels."
Chuck Wilson, Chief Operating Officer of Nighthawk, who has over
32 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
Enquiries:
Nighthawk Energy plc
Stephen Gutteridge, Chairman
Richard Swindells, Chief Financial
Officer 020 3582 1350
Westhouse Securities Limited 020 7601 6100
Tim Feather tim.feather@westhousesecurities.com
Richard Baty richard.baty@westhousesecurities.com
FTI Consulting 020 7831 3113
Ben Brewerton ben.brewerton@fticonsulting.com
Ed Westropp edward.westropp@fticonsulting.com
Notes.
With effect from 23 January 2012 Nighthawk became the operator
of the Jolly Ranch project with a 75% working interest and a 60%
net revenue interest.
Investment includes funds spent on well work-overs and new
drilling but excludes day-to-day operating costs and leasing
costs.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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