Update re Operations and Year-end Reserves

15 February 2017

NIGHTHAWK ENERGY PLC  (”Nighthawk” or ”the Company”)

Company Update
Nighthawk, the US focused oil development and production company (AIM: HAWK and OTCQX: NHEGY), announces an update to operations, year-end reserves and cash position.

Year-end Reserves Update
The Company has finalized its year-end reserve report and has received the audited Proved Developed Producing reserve report from the Company’s independent reserve engineering firm, Ryder Scott Company LP under SPE standards. The reserves were estimated using current production, anticipated decline curves, actual operating costs and future NYMEX prices ranging from $56.11 to $58.10

The reserve volumes, in barrels, are presented below:

31-Dec-16                                31-Dec-15
Audited

Proved Developed Producing (PDP)                                                     1,101,144                                 1,405,800
Proved Undeveloped (PUD)                                                                      442,063                                               0
Total Proved Reserves (audited)                                                            1,543,207                                 1,405,800

Probable Reserves                                                                                      1,800,00                                  1,423,015
Possible Reserves                                                                                          545,000                                   807,000
Total 3P reserves                                                                                       3,888,207                                3,635,815

 

Although the Company did not perform an audit of Probable and Possible Reserves at 31 December 2016, it is management’s opinion that the reserve amounts shown above accurately reflect the Probable and Possible reserve values as of 31 December 2016. The increase in Probable Reserves from 31 December 2015 is primarily due to improved response estimates and reclassification of reserves from the Possible Reserves classification due to the commencement of the water flood pilot project. The methodology used by the Company to arrive at 31 December 2016 Probable and Possible reserves is the same methodology as its independent reserve engineering firm.

The increase from prior year total Proved Reserves is due to reserves associated with Proved Undeveloped category which were deemed uneconomic at 2015 year-end pricing. Based upon current pricing as of 31 December 2016, certain PUDs are now economic and have therefore been included in the above table. The decrease in Proved Developed Producing, which is net of 2016 annual production of 482,119 gross barrels, is due to annual production consistent with expected normal decline curves.

Operations update

Water flood
As reported on 3 January 2017, the Company has commenced injection into both of the water flood pilot project injection wells. It is anticipated that as the injected water fills existing pore volume, consistent with normal nature of water flood projects, a measurable response will be seen. The Company expects this response to be during the second quarter 2017. As such, the incremental volumes expected from the water flood pilot project have not been included in the PDP reserves above but remain as Probable Reserves at the year-end. Once adequate response and evidence is seen as to the response, the reserves are expected to begin being reclassified to PDP.

Production
Total production for the month of January 2017 was approximately 43,595 gross (35,544 net) barrels as compared December 2016 production of 35,985 gross (28,885 net) barrels. The increase in production since December 2016 is due to the successful completion of a new zone in the Monarch 10-15 well, together with bringing wells back in production that were suspended during the installation of the water flood pilot project.

Year-end Cash Balance
As of 31 December 2016, the Company’s cash balance was US$5.6 million, of which approximately US$1.2m is committed for expenditure on the Arikaree Creek water flood pilot project. Total expenditures for the water flood pilot project are estimated to total $3.5 million. Based upon current projections, the Company will have adequate cash reserves to maintain its current normal operating activities through 2017.

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.

Enquiries:
Nighthawk Energy plc
Rick McCullough, Chairman +1 303 407 9600
Kurtis Hooley, Chief Financial Officer +44 (0) 20 3582 1350

Stockdale Securities Limited    +44 (0) 20 7601 6100
Richard Johnson
David Coaten

Water Flood Approval Update

11 May, 2016

NIGHTHAWK ENERGY PLC
(”Nighthawk” or ”the Company”)

Nighthawk, the US focused oil development and production company (AIM: HAWK and OTCQX: NHEGY), announces an update to the water flood project approval process.

Water Flood Project Approval

As previously announced on 8 March, 2016, the Colorado Oil and Gas Conservation Committee (”COGCC”) approved the Company’s application for the Arikaree Creek water flood project, subject to the Company obtaining 80% approval of the non-cost bearing interest owners (”Third Party Owners”) within six months of the date of approval, using an agreed upon revenue allocation method. On 4 May, 2016, the Company announced that the original water flood filing had been amended and filed with the COGCC to introduce a pilot project which reduced the acreage of the initial water flood area (”Pilot Project”). The Company has now received signed approvals from certain Third Party Owners that combined, exceed the required 80% approval threshold for the Pilot Project. The Third Party Owners agreed to a revenue allocation method based upon the COGCC staff recommendations.

Having now received the required 80% approval, the Company and its legal advisers are confident that regulatory approval for the sanction of the Pilot Project will be received at the COGCC’s hearings scheduled for 6-7 June, 2016, when it will consider the Company’s application to amend the original water flood filing. A further announcement will be made at the appropriate time.

Enquiries:

Nighthawk Energy plc

Rick McCullough, Chairman
+1 303 407 9600
Kurtis Hooley, Chief Financial Officer Elect
+44 (0) 20 3582 1350
Stockdale Securities Limited
+44 (0) 20 7601 6100
Alastair Stratton

Production Update Correction

5 April 2016

NIGHTHAWK ENERGY PLC
(”Nighthawk” or ”the Company”)

Production Update Correction
Nighthawk, the US focused oil development and production company (AIM: HAWK and OTCQX: NHEGY), announces a correction to the Company’s latest current production level update.

Production Update
On 1 April 2016, the Company issued an update (RNS: 8318T) of its production which contained volumes for 2016 that were inaccurate. Presented below are the correct numbers.


MONTHLY
Gross Net
2016 2015 2016 2015
Januari 43,915 63,605 36,031 52,183
Februari 40,809 55,979 33,444 45,843

DAILY AVERAGE
Gross Net
2016 2015 2016 2015
Januari 1,417 2,052 1,162 1,683
Februari 1,407 1,999 1,153 1,637

 

Gross and net* production, in barrels, for the first two months of 2016 is summarised below.

*Net production is based upon Nighthawk’s Net Revenue Interest of approximately 82%


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.

Enquiries:
Nighthawk Energy plc
Rick McCullough, Chairman
+1 303 407 9600
Kurtis Hooley, Chief Financial Officer
+44 (0) 20 3582 1350

Stockdale Securities Limited
+44 (0) 20 7601 6100
Alastair Stratton
Robert Finlay
David Coaten

Water Flood Approval and Year End Reserves Update

10 March, 2016
Water Flood Approval and Year End Reserves Update

Nighthawk, the US focused oil development and production company (AIM: HAWK and OTCQX: NHEGY), announces an update to the water flood project approval hearing and also reports the 31 December 2015 year end reserves.

Water Flood Project Approval
As previously disclosed, the Company made a filing seeking approval of its planned Arikaree Water Flood Enhanced Oil Recovery Project (the ”Project”) with the Colorado Oil and Gas Conservation Commission (the ”COGCC”), the state oil and gas regulatory body. On 8 March, 2016, the COGCC approved the Company’s application for the Project, subject to the Company obtaining 80% approval of the non-working interest owners within the next six months, using an agreed upon revenue allocation method. The Company believes that the required approvals will be obtained in the next few months. A further announcement will be made in due course.

As disclosed in the Company’s announcement of 23 October 2015, the Company’s preliminary estimates for the total Oil In Place (”OIP”) in the field potentially may be up to 16.6 million barrels. As shown in the table below, the estimated ultimate recovery under the water flood project ranges between 30%-40%. This compares to the current 17% recovery experience from the conventional wellbore production.
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.) (1.50) (1.50)
Estimated remaining recoverable reserves 3.48 5.14
PDP currently booked in reserve report 1.40 1.40
Estimated incremental recoverable reserves 2.08 3.74

 

During the course of preparing the Company’s regulatory filing, the Company engaged a third party engineering firm to make estimates using sophisticated, predictive reservoir models of the OIP, the ultimate recoveries of oil associated with the water flood project and how the oil would be produced once implemented.

The final estimates are closer to the high side preliminary estimates shown above. The original estimate for the high end of the range was 40% estimated recovery resulting in 6.64 million barrels, whereas the third party simulation model puts the estimated recovery at 38.8% and 6.57 million barrels. This engineering projection shows monthly production rates to more than double the current production under primary recovery for up to the next 5 years. The Company will be posting on its website, shortly, a presentation which provides a more detailed explanation of the Project and its benefits.

As detailed in the table below, the Company’s external reserve engineers have estimated the low side of the incremental reserves from the water flood project as Probable Reserves at 31 December 2015. The Company expects these reserves to be reclassified to the Proved Developed Producing category once capital for the Project is deployed and the Project becomes operational.

Year-end Reserves

The Company has finalized its year-end reserve report and has received the audited 2P reserve report from the Company’s independent reserve engineering firm, Ryder Scott Company LP under SPE standards. The reserves were estimated using current production, anticipated decline curves, actual operating costs and an average realized price of $43.25/Bbl. The reserve volumes, in barrels, are presented below:

31 Dec 2015 31 Dec 2014
Proved Developed Producing 1,405,800 1,315,066
PUDs and PDNP 0 524,708
Total Proved Reserves 1,405,800 1,839,744
Probable Reserves (1) 1,423,015 0
Total Audited Reserves 2,828,815 1,839,744
Possible Reserves (2) 807,000 0

 

(1) Probable reserves represent water flood project response reserves around existing wellbores and projects in-fill wells
(2) Possible reserves are managyvement estimates of additional water flood potential using the low range of estimates recovery

 

The decrease from prior year total proved reserves is due to reserves associated with Proved Undeveloped (PUD’s) and Proved Developed Non-Producing (PDNP) categories which have been deemed uneconomic at current pricing. The increase in Proved Developed Producing, which is net of annual production of approximately 650,000 gross barrels, is due to better than projected production results in existing wells.

Rick McCullough, Chairman of Nighthawk, commented:

”The regulatory approval of the Arikaree Creek water flood project is a major accomplishment for the Company. The approval of this project, which was envisioned by Chuck Wilson and his team a couple of years ago, validates the quality of the technical analysis and the merits of the project for Nighthawk and the field’s landowners.

We hope to complete the project later this year once we obtain the 80% landowner approval levels. Once the project is completed, we expect to see a significant increase in daily and annual production as well as an increase in field reserve levels. This project is ideal for these market conditions and is the top priority of Nighthawk.”

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.

Enquiries:

Nighthawk Energy plc

Rick McCullough, Chairman                                          +1 303 407 9600
Kurtis Hooley, Chief Financial Officer Elect      +44 (0) 20 3582 1350

Stockdale Securities Limited                       +44 (0) 20 7601 6100
Alastair Stratton
Robert Finlay
David Coaten

 

Glossary

MMBLS – Million barrels of oil

Proved Reserves – Proved reserves are reserves that have a 90% chance of being higher than estimated and a 10% chance of being lower. Proved reserves include PDP, PDNP and PUD reserve classifications

PDP – Proved Developed Producing reserves are expected to be recovered from completion intervals (oil producing zones) that are open and producing at the time of the estimate

PDNP – Proved developed reserves that can be expected to be recovered from zones behind casing in existing wells, or from zones that shut-in for market conditions, pipeline connections or mechanical reasons and are capable of production, but the timing is uncertain.

PUDs – Reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion or opening of new zones of production.

2P – Proved and Probable Reserves

Probable Reserves – Probable reserves are reserves that have a 50% chance of being higher than estimated and a 50% chance of being lower

Possible Reserves – Possible reserves are reserves that have a 10% chance of being greater than estimated and a 90% chance of being smaller

SPE – The Society of Petroleum Engineers

 

 

 

 

Director’s Dealings

15 January 2016
NIGHTHAWK ENERGY PLC
(”Nighthawk” or ”the Company”)
Director’s Dealings
Nighthawk, a US focused oil company (AIM: HAWK and OTCQX: NHEGY), announces the following Director’s dealing.
The Company was notified on 23 December 2015 that on 22 December 2015 Johan Claesson, Non‐Executive Director, had transacted in
the Company’s ordinary shares. Full details of the transaction were received by the Company on 14 January, such that Mr Claesson sold
24,584,500 ordinary shares of 0.25 pence each (”Ordinary Shares”) at a price of 1 pence per Ordinary Share to a company connected to a
family member. However, this trade has been unwound. Mr Claesson’s beneficial interest in the Company remains at 159,365,297
Ordinary Shares, representing approximately 16.5 per cent. of the Company’s issued share capital.

Enquiries:
Nighthawk Energy plc
Rick McCullough, Executive Chairman +1 303 407 9600
Kurtis Hooley, Chief Financial Officer +44 (0) 20 3582 1350
Stockdale Securities Limited +44 (0) 20 7601 6100
Alastair Stration
Robert Finlay
David Coaten
This information is provided by RNS
The company news service from the London