LONDON (Alliance News) - Nighthawk Energy PLC Thursday said it has breached certain covenants under its reserve based loan provided by the Commonwealth Bank of Australia, forcing the company to enter negotiations to adjust the covenants.
Nighthawk was informed by the bank on Wednesday that it had not complied with the terms of the reserve based loan, principally the total debt to earnings before interest, tax, depreciation, amortisation and exploration expenses covenant, it said.
Fortunately, the bank has granted a waiver to Nighthawk as the pair enter talks about adjusting the covenant to produce a "long term solution" that the company can comply with.
Nighthawk is expecting the modifications to be in place before December 22, and said it does not expect it to lead to the maturity date of the loan changing.
In addition, production in November averaged 1,600 barrels of oil per day, of which 1,280 barrels were net to Nighthawk. That is down compared to the net production average of 1,417 barrels a day in the third quarter of 2015 - as production fell month-on-month throughout the entire quarter as its assets continue to suffer from natural declines.
In July, net production averaged 1,484 barrels per day before falling to 1,425 barrels a day in August to 1,338 barrels per day in September - with November's production results suggesting declines have continued.
Gross production between the start of 2015 and end of November came in at 608,000 barrels, equating to 1,821 barrels of oil per day. To put that into perspective, gross production averaged around 1,728 barrels in the third quarter of 2015.
Nighthawk also said it has hedged more of its production for 2016, with 66% of its anticipated production in the year hedged under the reserve based loan under various contracts at a weighted price of USD61.40 per barrel.
Brent was trading just over USD40 per barrel on Thursday morning.
Lastly, the company said its Water Flood project is progressing according to plan, with the formal hearing with the Colorado Oil and Gas Conservation Commission scheduled to take place on January 25. Nighthawk said although it can not predict the outcome of the hearing, it expects its application for the water flood unit to be approved.
Nighthawk shares were trading down 3.7% to 1.11 pence per share on Thursday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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