Nighthawk Energy update

Operational update:

  • Very challenging weather conditions resulted in a delay to the behind pipe program with HAWK focusing on new drilling commitments to retain important acreage.
  • As a result, production in December 2014 averaged 2,160 bpd (versus estimate of 2600 bpd) and in January 2015 averaged 2052 bpd (versus estimate of 2800 bpd). Total, in 2014, HAWK produced 706 319 bbls.
  • Three new wells drilled in the Snow King area: Keystone 3-7 put on production early January at 100 bpd; Mary Jane 8-5 in early stages of testing (initial rate exceeding 300 bpd) and Snow King 9-32 is being completed. Both Keystone and Mary Jane are candidates for dual completion later in March with potential to co-mingle production (Spergen with Marmaton).
  • 3D seismic as part of the recent JVs (Monarch and El Dorado) is ongoing.

Financial update:

  • Completed additional 2015 swaps bringing total oil hedges for remainder of 2015 to over US$71 per bbl and added costless collar for 2016 at US$55 floor / US$71 ceiling.
  • Completed first borrowing base redetermination in December 2014 maintaining initial US$35mm.

HAWK has provided its 2015 plans, which reflect the current oil price environment. Capex cut by 35% (from 2014 levels) and most of it is deferred until Q3/Q4 this year.

In H1/15 the behind pipe program will be important to support production levels at 2500 bpd and HAWK will employ 2-3 workover rigs to complete 25 behind pipe targets during 2015 at an estimated cost of US$3.6 million.

Drilling of new wells is planned for H2/15 with 11 new wells targeting the Spergen zone (7 for HAWK and 4 as part of the recent Monarch JV) at an estimated cost of US$19 million.

Operational results are somewhat mixed: while delays to the planned behind pipe program due to weather conditions are disappointing, results from the new wells in the Snow King area are encouraging.

The company will now release their updates on a quarterly basis (versus monthly) and the next one is expected in April. Another positive is that HAWK improved their hedging and the initial borrowing base (US$35 million) has been re-confirmed.

Adapted from press release by Joe Green

Published on 11/02/2015

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