TIDMHAWK
RNS Number : 1869C
Nighthawk Energy plc
27 April 2012
Friday 27 April 2012
NIGHTHAWK ENERGY PLC
("Nighthawk" or "the Company")
Q1 Operations Update
Nighthawk, the US focused shale oil development and production
company (AIM: HAWK and OTCQX: NHEGY), announces an update on its
75% owned and operated project at Jolly Ranch in the
Denver-Julesburg Basin, Colorado.
Highlights
o Work-over and Geo-science programs continue on schedule
o Early results show increased potential for multi-zone
production without hydraulic fracture stimulation
o Plans for drilling of new wells now being accelerated
o Down-hole work completed on eleven wells
o Further top-side work now required to facilitate production
increase
Summary
The Jolly Ranch work-over and geo-science programs are
continuing on schedule. Two work-over rigs have been engaged
on-site over the past month and have completed the planned
down-hole work on eleven wells. Extensive work on the topside
production facilities is now underway.
The program has provided valuable additional data on these wells
and on the Jolly Ranch acreage as a whole. The Company has also
acquired and processed new log information on third party wells and
new seismic data.
The early conclusions from this work suggest increased potential
for production from a number of hydrocarbon-bearing zones. There is
also evidence that commercial production levels can be achieved
without hydraulic fracture stimulation, substantially reducing
development risks and costs.
The Board are encouraged by these early results and are seeking
to accelerate the planned drilling of new wells. Selection of well
locations, permitting work and assessment of rig requirements is
now underway.
Work-Over Program
The recompletion phase of the work-over program involves
firstly, down-hole work to prepare wells for short-term production
where possible, and secondly, extensive remedial work on the
topside facilities to ensure that any resulting production can be
properly treated, controlled, stored and measured.
The down-hole work carried out on eleven wells has variously
involved logging, well-bore cleaning, cement work, casing repair,
re-perforations and additional new perforations. Seven of the wells
had previously been hydraulic fracture stimulated in the Cherokee
zones and the recent work has revealed that this process has caused
formation damage. In those wells the damaged Cherokee formations
have been closed off and the promising higher Marmaton and other
formations perforated in preparation for production.
One well is now scheduled for plugging and abandonment. In
addition, both salt-water disposal wells have been cleaned up. Work
on the remaining four wells in the program is continuing.
The overhaul of topside facilities has proven to be more
extensive than initially projected. Pumps and engines require
repair and in some cases replacement. Heater-treaters are generally
in poor condition and are being cleaned and if necessary replaced.
New tanks are being brought in and existing ones cleaned and
tested. New electrical equipment is being installed and
infrastructure improved.
Extended lead times on new equipment will impact on the timing
of bringing some wells back into production. This is being
mitigated by deploying existing equipment in good condition, and
any available new equipment, to the wells with greatest
potential.
As a result, three wells were on production in April, with up to
six additional wells expected to commence production once topside
work is completed.
Production
Production from Jolly Ranch during the first quarter of 2012 has
been extensively impacted as wells were taken offline during the
work-over program which Nighthawk commenced upon becoming operator
on 23 January 2012. The Company expects the second quarter to be a
better guide to the level and consistency of production from
existing wells, whilst the third quarter should see the impact of
new drilling.
Gross Oil Production was as follows:-
Period Total Production Average Production
(bbls of Oil) (bbls oil/day)
--------- ----------------- -------------------
Q3 2011 6,480 70
--------- ----------------- -------------------
Q4 2011 5,161 56
--------- ----------------- -------------------
H2 2011 11,641 63
--------- ----------------- -------------------
Q1 2012 3,036 33
--------- ----------------- -------------------
(Prior to 23 January 2012 Nighthawk had 50% Working Interest/40%
Net Revenue Interest)
(Post 23 January 2012 Nighthawk has 75% Working Interest/60% Net
Revenue Interest)
Geo-Science Work
A significant amount of geo-science work has been undertaken and
completed over the past two months and substantial new sub-surface
information has been obtained from the work-over program.
Additional third-party well data and new seismic data have been
purchased and processed alongside existing data. The Board are very
encouraged by the initial results from this work, which indicate
that in addition to the Cherokee and Atoka formations, there are
both shallower and deeper formations that show significant
potential for production. In particular the Marmaton formation, at
typical depths of around 6,200 - 6,500 feet, is a proven oil
producer on neighbouring leases. Where these zones have been
perforated as part of the work-over program, substantial
accumulations of oil in some of the well-bores have been seen.
The work has also provided clear recommendations for new well
locations and the Company is pressing on with new drilling plans at
an accelerated pace.
Stephen Gutteridge, Chairman of Nighthawk, commented:
"We are pleased with the early results from the Jolly Ranch
work-over program and we expect production to increase through Q2
as wells that were unavoidably off-line in Q1 due to the work-overs
are brought back online. Whilst remedial work on equipment and
infrastructure will take a little longer than expected, there are
encouraging signs that our acreage gives access to a wider range of
potential oil producing zones than expected. With increased
activity and interest from the larger companies operating around
us, we are pressing ahead rapidly with our existing program and
accelerating our timetable for new drilling."
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
Richard Baty richard.baty@westhousesecurities.com
FTI Consulting 020 7831 3113
Ben Brewerton ben.brewerton@fticonsulting.com
Ed Westropp edward.westropp@fticonsulting.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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