LONDON (Alliance News) - Nighthawk Energy PLC Friday said it has entered into two joint venture agreements for projects in Colorado in the US with Cascade Petroleum LLC, an independent oil and gas company also operating in the area.
"Nighthawk and Cascade have both been operating independently in the Southern DJ Basin with an extensive overlapping footprint for some time and the combination of our experience in developing these conventional reservoirs along with this acreage has the potential to be significantly value enhancing," said Chairman Rick McCullough.
The first agreement is for the Monarch joint venture, which will be focused on a 23,619 net mineral acre site south-west of Nighthawk's existing Arikaree Creek field and will be operated by Nighthawk. After an initial earn in commitment, Nighthawk will earn a 50% stake in the venture.
To earn its stake, Nighthawk are to fully fund the costs of the first six wells on the project, with four of the wells having to be drilled before the end of 2015. The company said each well would cost around USD1.5 million to USD2 million. Nighthawk will also be responsible for all permitting costs and will fund the 3D seismic programme for the project at a cost of around USD2.3 million.
"This agreement gives Nighthawk access to the potential upside in multiple additional Mississippian and Pennsylvanian structures identified by Nighthawk's geoscience team from 2D seismic data," said the company.
The second agreement, the El Dorado joint venture, will focus on a 40,372 net mineral acre site that is located on both sides of the Monarch venture, and will be operated by Cascade. Nighthawk will hold a 15% stake in the venture.
Nighthawk said it has the right, but is not obligated to participate in a 15% working interest in the El Dorado joint venture in any well drilled in the area by paying its share of the well costs.
"With the formation of these joint ventures, we will now be combining over 64,000 acres on and around similar structures to what Nighthawk has developed successfully in the Arikaree Creek and Snow King fields and will be collaborating to create value for both companies," said McCullough.
Nighthawk shares were up 5.9% to 7.15 pence per share on Friday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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