LONDON (Alliance News) - Nighthawk Energy PLC Wednesday said gross production in 2014 was almost double that of 2013 and said it expects production to stabilise in the first half of 2015, while also outlining its plans for the year ahead, including cutting capital expenditure by some 35%.
The US-focused oil development and production company said 2014 gross production increased by 96% to 706,319 barrels, with a net 579,182 barrels.
However, the company said that the challenges ahead are adding new production to outpace the natural decline rates on existing wells, especially in the first half of 2015. It said that in an unstable commodity price environment and with no new wells to be drilled, it anticipates meeting this challenge through its behind-pipe programme.
Nighthawk's behind-pipe programme aims to tap oil zones that were separated from a drilled well bore by the casing pipe and cement. It said behind pipe opportunities can increase production, cash flow and reserves.
"While the US energy markets are experiencing difficult times, we have laid out plans for 2015 that we believe will allow us to continue to grow, albeit at more moderate levels, maintain our liquidity and set up our business for a possible ramping of operations in 2016 and beyond. Like other US operators, we are proposing to cut our capital expenditure by approximately 35% in 2015 compared to 2014," said Chairman Rick McCullough in a statement.
McCullough said that by the group deferring most of its capital spending until the third and fourth quarters, it hopes to take advantage of improved oil prices.
"We believe that we will be exiting the year with our highest levels of production and cash flows. We are very focused on reducing our costs and implementing progressive management processes that will drive continued growth in production, reserves and cash flows," McCullough added.
Nighthawk said it plans to drill 11 new wells targeting the Spergen zone during third and fourth quarters of 2015, costing an estimated USD19 million. It said it plans to complete 25 behind-pipe projects during the year with many of the projects targeted for the first and second quarter, at an estimated cost of USD3.6 million.
The company said it continues to monitor oil prices closely and seeks to augment its current hedge positions when market conditions are favourable. The company recently completed additional 2015 oil commodity swaps bringing total crude oil hedges for remainder 2015 at over USD71 per barrel for volumes equivalent to 60% of 2014 net production.
Nighthawk shares were trading 5.1% lower at 6.50 pence Wednesday morning.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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