LONDON, Oct. 23, 2015 /PRNewswire/ -- Nighthawk, the US
focused oil development and production company (AIM: HAWK and
OTCQX: NHEGY), with its 100% controlled and operated Smoky Hill and
Jolly Ranch projects in the Denver-Julesburg Basin, Colorado, announces details of its recent
drilling results and planned water flood project.
Drilling Updates
As previously announced in August, Nighthawk has initiated a 5
well drilling program for late 2015. Drilling commenced with the
Crested Butte 2-14 well located in
the very eastern side of the Arikaree Creek field. The well was
spudded on September 10 and was
drilled to a total depth of 8,360 feet and within budget. Based on
the Company's 3D seismic interpretation of the location, it was
initially thought to be west of the eastern bounding fault.
Instead, we drilled east of the fault and were below the fault. The
Spergen formation contained mainly water but the well had oil shows
in both the St Louis zone, a zone
the Company found previously in the Big Sky 14-11 well, and in two
of the Marmaton zones. The Company has completed the well and
based upon test production, expects production in the 100 bopd
range once a pumping unit and production facilities are
installed.
On September 22, drilling
commenced on the Monarch 10-15 and was drilled to a total depth of
8,640 feet location in the Monarch Joint Development Area (JDA).
This well was drilled under budget. The Monarch 10-15
location sits on the highest structure in the JDA and we
expected to find oil in the Spergen formation. Unlike the
Crested Butte 2-14 well, the
Spergen formation in the Monarch 10-15 well indicated that the oil
had at one time been present. This suggests that either the oil has
migrated up hole to higher zones or off the structure to the
East. During drilling, the Company encountered oil in the
lower Atoka zone, a zone that we have never produced from, as well
as shows in the upper Marmaton and Cherokee zones. The Company
has performed completion work in the Atoka zone and are beginning
to test production levels. Nighthawk also has plans to go up hole
and test the Marmaton and Cherokee zones and an announcement will
be made in due course about the results.
The potential significance of the discovery of the Atoka zone is
both the quality of the oil that we have found there and the fact
that the zone is gas charged, potentially increasing production
levels.
Because of the lack of Spergen production in the Monarch well,
the drilling plan was adjusted to move to a different part of the
JDA to test another structure at the Kicking Horse
location. This well was spudded on October 10 and reached a total depth of 8,541
feet. Based upon the results of the well logs and drilling, the
Company has decided to plug and abandon this well. The total
cost of this well was approximately $550,000.
We are conferring with our JDA partner and spending time
analysing these results and anticipate drilling the remaining
planned wells prior to December 31,
2015.
Arikaree Creek Water Flood Project- Revision In Estimated
EURs
The Company has made a filing seeking approval of its
planned Arikaree Water Flood Project with the Colorado Oil and Gas
Conservation Commission (the "COGCC"), the state oil and gas
regulatory body. The Company filed the application for
development of the project, including the location of the project
and how it will impact mineral owners. The projected financial
feasibility of the project along with project economics will be
submitted in early November. The final hearing with the COGCC is in
early December.
As previously reported, we anticipate the project will both
increase the Ultimate Recovery of Oil (EUR) from the field as well
as accelerate the year by year production volumes.
The original estimated Oil in Place (OIP) for this field was
approximately 16 million barrels, primarily in the Spergen zone,
with estimated ultimate recovery rates for booking of reserves at
approximately 17%.
Based upon further analysis of the project and the completion of
flow models, we estimate that the OIP to potentially be up to 16.6
million barrels with estimated ultimate recovery expected to
increase from 17% to between 30-40% with the water flood.
Presented below is a summary analysis of the estimated potential
reserves in this field:
|
Range
(in mmbbls)
|
|
Low
|
|
High
|
Estimated total
OIP
|
16.60
|
|
16.60
|
Estimated
Recovery
|
30%
|
|
40%
|
Total Estimated
Recovery
|
4.98
|
|
6.64
|
Production to date
(est.)
|
(1.30)
|
|
(1.30)
|
Estimated remaining
recoverable reserves
|
3.68
|
|
5.34
|
PDP currently booked
in reserve report
|
(2.60)
|
|
(2.60)
|
Estimated incremental
recoverable reserves
|
1.08
|
|
2.74
|
As shown in the above table, the potential increase over
existing PDP reserves is 41%-105%. The Company continues to
refine the flow model results to determine the optimum number and
placement of water injection wells in the field. This will
also allow us to more accurately predict the timing of recovery for
these reserves.
The Company has already seen an uptick in production in the
field over levels booked in our reserve reports due to the natural
water drive that exists in this area. As a result, these
incremental reserves are expected to be added as Probable Reserves
for our year-end reserve report. Once the project is
operational, and we begin to see increased production in the field,
we expect to transfer these reserves to the Proved Developed
Producing category as the performance of the project warrants.
Rick McCullough, Chairman of
Nighthawk, commented:
"While our initial drilling results are still being fully
evaluated, they are disappointing in that additional Spergen
reserves were not found. The discovery of additional St Louis
and the newly discovered Atoka reserves are encouraging and
indicative of just how many oil-producing zones there are in this
part of Colorado. Operators have
previously drilled for this Atoka zone with little success.
It is too early to determine how productive it may be, but
additional testing is planned to try and determine these zones
potential.
"The updated estimates associated with the Arikaree Creek Water
Flood Project are extremely significant. When I joined the Company
a year ago, Chuck Wilson, our Chief
Operating Officer, and his team already thought the Arikaree Creek
field might be a good candidate for a water flood
solution. Now, with the work that he and the team have
performed with third party technical advisors, the project shows
excellent promise. The field has already been a great success
for Nighthawk Energy and to think that there may be the possibility
to recover another 3-4 times the amount of historical oil recovered
to date, it is far beyond our original expectations. That
comes at a great time with the company being able to increase its
production and substantially increase its reserves without a
significant expenditure of capital."
Enquiries:
|
|
|
|
Nighthawk Energy
plc
|
|
Rick McCullough,
Chairman
|
+1 303 407 9600
|
Kurtis Hooley, Chief
Financial Officer Elect
|
+44 (0) 20 3582 1350
|
|
|
Westhouse
Securities Limited
|
+44 (0) 20 7601 6100
|
Alastair
Stratton
|
|
Robert
Finlay
|
|
|
|
Canaccord
Genuity
|
+44 (0) 20 7523 8000
|
Manuel
Santiago
|
|
Henry
Fitzgerald-O'Connor
|
|
|
|
FTI
Consulting
|
+44 (0) 20 3727 1000
|
Ben
Brewerton
|
ben.brewerton@fticonsulting.com
|
Ed
Westropp
|
edward.westropp@fticonsulting.com
|
Reserves and Resources
Nighthawk's internal estimates of its petroleum reserves are
made in accordance with SPE standards. This is the same
approach used by the Company when it last reported internal
estimates.
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.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/nighthawk-energy-plc-nighthawk-or-the-company-operational-update-300165424.html
SOURCE Nighthawk Energy plc