RNS Number : 5701E
Nighthawk Energy plc
01 June 2012
1 June 2012
NIGHTHAWK ENERGY PLC
("Nighthawk" or "the Company")
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.
-- Work-over program on existing wells on schedule to be completed this month
-- Plans for new drilling well-advanced with permitting of 15-25 locations underway
-- Well locations for an initial four new wells selected
-- Overhaul and refurbishment of topside facilities and environmental remediation work continues
The down-hole aspects of the 15 well work-over program are largely complete with outstanding work scheduled for completion this month. One well has now been plugged and abandoned and whilst a final decision is still to be made, it is likely that one further well will require plugging and abandonment.
New Drilling Program
The extensive geo-science work undertaken over the past few months has identified a number of attractive drilling opportunities and the Company is seeking permits for 15-25 new well locations.
The locations for the initial four wells in the drilling program have been selected as high-impact opportunities and steps to secure an appropriate drilling rig and associated equipment are at an advanced stage.
These initial wells will be simple vertical drills to target depths of around 8,200-8,500 feet. The primary target will be the Cherokee formation but other zones with potential for oil production will be evaluated.
Drilling, logging and potential drill stem tests are expected to take around 15 days per well. Subject to evaluation of the drilling results, a work-over rig will be brought in for perforation, acidisation and further flow-testing which will determine the requirements for production equipment.
The first two wells will be located on the more northerly part of the Jolly Ranch acreage, and the second two wells, whilst geologically attractive in their own right, will also help retain sizeable lease positions. Drilling costs per well are not expected to exceed US$1 million.
Topside Facilities and Environmental Work
The work required to overhaul and refurbish existing topside production facilities has continued to absorb greater resources than envisaged when Nighthawk took over the operatorship of Jolly Ranch. A number of wells remained shut-in through April and May 2012 whilst pumps, engines, heater/treaters and tanks were repaired or replaced.
Work is now planned to upgrade electrical systems to required standards and to address outstanding environmental issues, which arose from work carried out prior to Nighthawk becoming operator. Remedial action has commenced in consultation with the Company's US legal counsel and it is anticipated that resolution of these issues will not have a material financial impact on the Company.
An update on second quarter production will be released in July 2012. Three wells were on production from mid-May 2012 and additional wells, with potential Marmaton production, are being started up this week.
Greater consistency in production levels is expected in June 2012. Early indications from the past two weeks suggest a material improvement over the first quarter.
Stephen Gutteridge, Chairman of Nighthawk, commented:
"The scale and extent of the work required to provide reliable, fit-for-purpose production facilities that meet required operating standards has been unwelcome, has absorbed resources and held back production. However, I am pleased that we have largely worked through these problems and are now able to focus on the new wells to be drilled in the second half of 2012.
"Our extensive geo-science work has identified excellent locations that strongly correlate with known significant producing wells on nearby acreage and we expect to confirm the drilling timetable in the coming weeks."
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.
Nighthawk Energy plc
Stephen Gutteridge, Chairman
Richard Swindells, Chief Financial
Officer 020 3582 1350
Westhouse Securities Limited 020 7601 6100
Richard Baty firstname.lastname@example.org
FTI Consulting 020 7831 3113
Ben Brewerton email@example.com
Ed Westropp firstname.lastname@example.org
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