TIDMHAWK
RNS Number : 1911D
Nighthawk Energy plc
23 October 2015
23 October 2015
NIGHTHAWK ENERGY PLC
("Nighthawk" or "the Company")
Operational Update
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 have
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 continue 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.
- Ends-
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCPGGBCUUPAPGP
(END) Dow Jones Newswires
October 23, 2015 02:00 ET (06:00 GMT)
Nighthawk Energy (LSE:HAWK)
Historical Stock Chart
From May 2024 to Jun 2024
Nighthawk Energy (LSE:HAWK)
Historical Stock Chart
From Jun 2023 to Jun 2024