News & Analysis

Nighthawk Energy Plc (HAWK: AIM) review and analysis

By PSQ Analytics

Nighthawk Energy Plc focuses on the development and production of hydrocarbons across the US. The company has interests in four projects, all of which are operated by Running Foxes Petroleum Inc, its partner and holder of the remaining interest in the projects. The projects are as follows:

– Jolly Ranch Group Project: The company has a 50% interest in this shale oil project covering 370,000 gross acres. The current average test production level from this project is 150 bpd from 3 vertical development wells, with a further 10 awaiting completion in an acreage covering 15,000 – 20,000 acres. The oil produced has an API gravity ranging from 32-41 degrees and commands around a USD2

– USD5 per bbl premium to the WTI price. The post tax netback is 40% as a result of the favourable tax royalty regime for shale development in the US. A July 2009 independent evaluation by Schlumberger Data & Consulting Services calculated the P50 to be 1.462 bn bbls (gross) on 246,000 acreage.

– Revere Project: The company has an 80% interest in the Devon Oilfield and a 50% interest in the Buchanan, Worden and Xenia sections of Revere, covering more than 40,000 acres. The region is a mix of shallow gas and shallow waterflood oil and has low drilling costs per well. In October 2009, the company had 140 wells on primary production. The company also holds a 50% interest in a 12 km Bourbon County pipeline which transports products from the Xenia section. The oil at Revere has an API gravity ranging from 25-32 degrees and is priced at USD5 per bbl discount to the WTI price. A study by Oilfield Production Consultants Limited (OPC), at the Devon and Buchanan and Worden sections calculated the P50 figure to be 210.51 mn bbls (gross).

– Cisco Springs: The company has a 50% interest in this predominantly gas-based project covering 24,000 acres. An independent evaluation by OPC in October 2008 estimated 2P reserves at approximately 24 mn bbls of oil equivalent in place.

– Cliffs Shale Gas project: The company has an 80% interest in this shale gas project which covers 15,591acres. The interest is expected to contain more than 150 bn cubic feet (cf) of gas based on published data and in-house petrophysical analyses.

Key recent news

23 February 2010: The company announced an update on the Jolly Ranch project. Running Fox expects gross production at this field to increase from the existing test production of 150 bpd to an initial target of 1,000 bpd during 2010. As of the date of release, the company has USD18.3 mn in cash and zero debt.

03 November 2009: The company announced commencement of operation at its Xenia gas pipeline. The 8 wells drilled at Xenia have an aggregate flow rate of 650 thousand cf of gas per day. In its ongoing review, the OPC calculated the section to have P50 of 6.85 mn bbls. The acquisition of a 50% interest in the Bourbon County pipeline for USD0.5 mn was also announced.