Nighthawk Energy Regulatory News (HAWK)

14 March 2013

 NIGHTHAWK ENERGY PLC

("Nighthawk" or "the Company")

Final Results for the period ended 31 December 2012

Nighthawk, the US focused shale oil development and production company (AIM: HAWK and OTCQX: NHEGY), announces its final results for the six month period ended 31 December 2012.

Operational Highlights

·; Gross average production in the six month period of 134 barrels of oil per day, a 165% increase on the gross average for the year to 30 June 2012

·; Significant new Mississippian oil discovery by the Steamboat Hansen 8-10 well on the Smoky Hill project

·; Four further new wells successfully drilled with two wells completed for production from the Cherokee shale formation

·; Drilling program confirms widespread nature of the Cherokee shale and potential for oil production from multiple zones

Financial Highlights

·; Revenue in the six month period of US$1.6 million, a 65% increase on revenue in the full year to 30 June 2012

·; Six month normalised operating loss of US$1.3 million substantially reduced from US$4.8 million in the full year to 30 June 2012

The audited report and accounts will be available on the Company's website at www.nighthawkenergy.com later today and will be posted to Shareholders, as applicable, together with the notice of Annual General Meeting shortly.

Enquiries:

Chairman's Statement

The Company's last results announcement in September 2012, which covered the year ended 30 June 2012, confirmed the change of accounting period end to 31 December. Consequently this statement will primarily focus on the significant progress made by the Company in the six month period to 31 December 2012, although set within the context of 2012 as a full calendar year.

In the previous results announcement I was able to report that Nighthawk had commenced the drilling of the first new wells for three years at the Jolly Ranch project in Colorado, USA. This drilling program (our first as operator) was increased to five wells from the four planned, and was successfully completed on time and within budget. It has resulted in a significant step forward for Nighthawk, providing further evidence of the wide extent of the Cherokee shale oil potential, further upside potential in the Pennsylvanian and Mississippian, and substantially increasing production.

Operatorship

The Company entered into the drilling program following completion of a substantial work-over program on a number of older wells, and after extensive geo-science work to establish optimum new well locations. The work-overs yielded some small-scale additions to production, but their primary value was in providing additional information on the geology and sub-surface structure of the area.

As we reported at the time, we inherited as the new operator a variety of issues on these older wells which required extensive and expensive remedial action. These issues all dated back to the period prior to Nighthawk assuming operatorship, when ownership of the project was split 50/50 between Nighthawk and Running Foxes Petroleum. In October 2012 we announced that we had reached a settlement with Running Foxes on these outstanding issues, which resulted in Nighthawk receiving cash of approximately US$4.3 million net from the settlement and a simultaneous placing to fund a buy back and cancellation of Running Foxes' shares in Nighthawk. In addition, Nighthawk was granted an exclusive option to purchase Running Foxes' remaining 25% interest in the project for a consideration of between US$10 million and US$12 million. This option is valid until early July 2013.

Drilling

At this early stage in the development of Jolly Ranch, Nighthawk has the dual target of clearly establishing the widespread commerciality of the Cherokee shale oil play, whilst substantially increasing production from both the Cherokee and other potentially productive zones. For the drilling program, a strong focus on geo-science work, including re-interpretation of 3D seismic and purchase of additional 2D seismic, was used to pin-point high potential well locations.

Drilling of the five wells was low-cost and simple with all wells being vertical down to a basement level of 8,000 feet to 8,500 feet. The well locations were wide-spread over Nighthawk's lease acreage in order to evaluate the extent of the shale opportunity. All five wells were extensively logged and analysed to identify potential producible oil-bearing zones, of which there were multiple opportunities identified in each well.

The key results from the drilling program were as follows:-

·; The logs from all five wells showed excellent oil-bearing potential in the Cherokee shales

·; Four wells were completed in the Cherokee shale and two were brought into production

·; The fifth well discovered a deeper conventional oil reservoir in the Mississippian formation and this well has been successfully brought into production

·; Potential for production from multiple zones was identified in the Pennsylvanian in all five wells

·; Total production from the project increased from less than 35 barrels of oil per day when Nighthawk assumed the operatorship on 23rd January 2012 to 276 barrels of oil per day in December 2012

The Mississippian oil reservoir was discovered by the Steamboat Hansen 8-10 well, the most northerly well in the program, in an area which had not been drilled for over 25 years. This discovery has opened up new potential for adding reserves and production and the future development of this area is likely to focus on additional wells targeted at these Mississippian opportunities as well as continued proving up of the Cherokee. With the increased focus on this acreage, and the possibility of a distinct future development plan, we have decided to separately identify the area, comprising around 90,000 gross acres, as the Smoky Hill Project. The remaining, more southerly, 240,000 gross acres will continue to be identified as the Jolly Ranch Project.

Production

As a result of the success of the drilling program, total production in December 2012 and in the fourth calendar quarter of 2012 reached record levels for the project, and provides a solid platform for further growth. This growth was primarily driven by excellent production from the Steamboat Hansen 8-10 well, with additional contributions from two of the other new wells, the Knoss 6-21 and the John Craig 6-2. There was a limited contribution from the older wells.

Leasing

In addition to Nighthawk's investment in the new drilling program in 2012, additional funds were invested in managing the Company's acreage position and in the infrastructure required to maintain and grow production.

With around 500 different leases, with a wide range of renewal terms and periods, management of the land position is a full-time activity and financial resources need to be effectively allocated. Nighthawk's strategy is to focus on maintaining a large scale portfolio, in excess of 300,000 gross acres, one of the largest land positions in the area, but with high potential. The Company competes strongly to renew or add good quality acreage, but less attractive acreage has been allowed to lapse. South-East Colorado was a very active area for leasing in 2012 and a number of larger companies have aggressively built up land positions, occasionally top-leasing existing Nighthawk acreage on expiry. Against this competitive back-drop, Nighthawk has succeeded in retaining key acreage but the total land position has fallen from just over 400,000 gross acres to 330,000 gross acres.

The arrival of these larger companies with sizeable land portfolios will lead to increased drilling activity in the area in 2013. Nighthawk was the most active driller in 2012 and the success at Steamboat Hansen in particular has resulted in land values increasing. Further successful drilling around our acreage will benefit land values and whilst this has the positive impact of increasing the value of our existing acreage, it will also result in a continued competitive environment for lease renewals and additions.

During 2012, Nighthawk invested in significant additions and improvements to the Company's infrastructure. Brand new production facilities have been installed at the Steamboat Hansen 8-10, Knoss 6-21 and John Craig 6-2 locations. On those older wells capable of producing, equipment has been replaced or repaired. The increase in oil production has also resulted in a corresponding increase in water production, and the Company's salt-water disposal facilities have been upgraded accordingly.

In summary, 2012 was a year of turnaround and transformation for Nighthawk, as the Company now controls and operates a significant development project with solid production and major potential. At current oil prices, existing production is generating sufficient cash to cover the Company's operating costs and overheads, so every spare dollar will go into the further development of Smoky Hill and Jolly Ranch. With this foundation in place, we are confident that 2013 will see another major step forward.

Finally, I would like to thank our shareholders, suppliers and my colleagues for their support during the year.

Stephen Gutteridge

Executive Chairman

Chief Financial Officer's Statement

Following the change of Nighthawk's accounting period end to 31 December from 30 June, going forward the Group (being the Company and its subsidiaries) and Company will now report audited financial statements on an annual basis to 31 December and on a half-yearly unaudited basis to 30 June.

The six month period ended 31 December 2012 saw significant further funds being invested in developing operations primarily through the drilling of new wells across the Jolly Ranch and Smoky Hill project area which produced a highly material increase in production and oil sales revenues during the period.

At the financial year end, the Group held cash balances of US$2.3 million.

Revenues

Group revenues from continuing operations for the six month period ended 31 December 2012 were US$1,600,959 (year ended 30 June 2012: US$972,631; six months ended 31 December 2011: US$421,806).

Gross production during the period was driven to record levels for the Jolly Ranch and Smoky Hill project by new wells being drilled. Production growth was driven primarily by the newly drilled Steamboat Hansen 8-10 well as well as contributions from two other new wells, the Knoss 6-21 and the John Craig 6-2. Gross production for the six month period ended 31 December 2012 averaged 134.1 bbls/day (year ended 30 June 2012: 50.5 bbls/day; six months ended 31 December 2011: 63.3 bbls/day). The average sales price per barrel in the period was US$80.71 per barrel (year ended 30 June 2012: US$84.59 per barrel).

During the period to 31 December 2012, Nighthawk received an 80% net revenue interest on oil sales from new wells drilled as a result of our project partner, Running Foxes Petroleum, Inc. ("Running Foxes"), electing to non-consent its share of capital expenditure on new wells drilled during the period. Additionally, as a result of the settlement agreement entered into with Running Foxes on 8 October 2012, Nighthawk received an 80% net revenue interest on oil sales from all other wells on the Jolly Ranch and Smoky Hill project during the period and will continue to do so throughout the term of the option that Nighthawk holds to purchase the remaining 25% working interest in the project from Running Foxes.

Loss for the year

The Group loss for the period ended 31 December 2012 was US$2.4 million (year ended 30 June 2012: loss US$35.9 million; six months ended 31 December 2011: loss US$16.6 million). Normalised losses (adjusted for impairments, depreciation, amortisation, transaction costs and non-recurring finance charges) were US$1.3 million (year ended 30 June 2012: loss US$4.8 million; six months ended 31 December 2011: loss US$2.0 million). Two small impairments were recognised during the period which are discussed in more detail below.

Cost of sales during the period was US$1.0 million (year ended 30 June 2012: US$1.2 million; six month period ended 31 December 2011: US$0.4 million) which represents direct costs associated with wells that have been classified as commercial producers.

On-going administrative expenses during the period were US1.9 million (year ended 30 June 2012: US$4.6 million; six months ended 31 December 2011: US$2.3 million). The Group will continue to manage costs aggressively.

Impairment

During the six month period to 31 December 2012, the Group has taken impairments of US$0.6 million (year ended 30 June 2012: US$27.0 million; six months ended 31 December 2011: US$12.6 million) which relates to a decision taken post-period end to plug and abandon an old well on the Jolly Ranch project and also the sale of a royalty interest. In the audited financial statements for the year ended 30 June 2012 the Group made a prudent decision to recognise a total impairment of US$27.0 million against the Jolly Ranch and Smoky Hill projects. Although further material impairments are not envisaged, it may be necessary to recognise minor impairments if and when, for example, decisions are taken to plug and abandon legacy wells.

An impairment of £1.8 million has also been included in the parent company financial statements primarily to reduce the net investment in subsidiaries on the Parent Company Balance Sheet to match the capitalised value of net assets held in those subsidiaries. The quantum of this impairment during the period relates principally to costs in the US subsidiaries that are expensed as incurred and to the decision to plug and abandon a well.

Cash flow, investment and liquidity

Cash outflow from operating activities for the six month period ended 31 December 2012 was approximately US$0.2 million (year ended 30 June 2012: outflow US$5.6 million; six months ended 31 December 2011: outflow US$2.4 million) and included cash-based direct costs and administrative expenses of US$2.1 million (year ended 30 June 2012: US$4.7 million; six months ended 31 December 2011: US$1.9 million).

Cash flow used in investing activities during the period comprised capital expenditure of US$9.1 million (year ended 30 June 2012: US$4.8 million; six month period ended 31 December 2011: US$1.3 million), the majority of which was applied to the drilling and completion of five new wells in addition to lease renewals, acquisition of new leases and well work-overs.

Cash flow from financing activities during the period totalled US$2.5 million before expenses (year ended 30 June 2012: US$26.1 million; six months ended 31 December 2011: US$3.2 million) and comprised a placing of 102,236,422 new ordinary shares at 4.0p per share in connection with the buy back and cancellation of the same number of existing ordinary shares from Running Foxes at a price of 2.5p per share. The settlement, buy back and placing is explained in more detail below.

At 31 December 2012, the Group held cash balances of US$2.3 million (30 June 2012: US$9.2 million; 31 December 2011: US$1.5 million).

Settlement, share buy back and placing

As announced on 9 October 2012, the Group entered into a settlement agreement with our project partner, Running Foxes, which settled all disputes between the Group and Running Foxes existing at that time and waived certain amounts potentially owed by the Company to Running Foxes. The Company entered into an agreement to buy back at 2.5p per share and cancel 102.2 million Nighthawk shares owned by Running Foxes financed by a new issue of shares in the Company pursuant to section 692(2) of the Companies Act. The Company issued 102.2 million new shares at 4.0p per share raising net proceeds of US$6.5 million, of which US$4.0 million was applied to the share buy back and the balance of US$2.5 million was invested in further drilling and development work. In addition, pursuant to the settlement agreement, Running Foxes paid Nighthawk an additional cash payment of US$1.8 million under the settlement agreement and also granted the Group an option to acquire its remaining 25% working interest in the Jolly Ranch and Smoky Hill project at a price of between US$10.0 million and US$12.0 million before 5 July 2013. Upon completion of the settlement and buy back agreements and the issue of new shares, Nighthawk received cash of approximately US$4.3 million net.

Shareholders' equity

As at 31 December 2012 there were 942,235,420 ordinary shares of 0.25 pence each in issue.

Additionally, a total of up to 356,900,000 new ordinary shares may be issued pursuant to the exercise of share options, warrants or convertible loan notes.

Cautionary Statement

This Annual Report contains certain judgements/assumptions and forward-looking statements and assumptions that are subject to the normal risks and uncertainties associated with the exploration, development and production of hydrocarbons. Whilst the Directors believe that expectations reflected throughout this Annual Report are reasonable based on the information available at the time of approval of this Annual Report, actual outcomes and results may be materially different due to factors either beyond the Group's reasonable control or within the Group's control but, for example, following a change in project plans or corporate strategy. Therefore absolute reliance should not be placed on these judgements/assumptions and forward-looking statements.

Richard Swindells

Chief Financial Officer

Consolidated Income Statement

for the 6 month period ended 31 December 2012

Consolidated Statement of Comprehensive Income and Expenditure

for the 6 month period ended 31 December 2012

Consolidated Balance Sheet

as at 31 December 2012

Consolidated Statement of Changes in Equity

for the 6 month period ended 31 December 2012

Consolidated Cash Flow Statement

for the 6 month period ended 31 December 2012

Notes

1. Basis of Accounting and Presentation of Financial Information

Whilst the financial information included in this announcement has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, it does not contain sufficient information to comply with IFRS as adopted by the European Union. Full financial statements that comply with IFRS as adopted by the European Union will be available to be downloaded from the Company's website at www.nighthawkenergy.com shortly.

The financial information set out in the announcement does not constitute the Company's statutory accounts for the period ended 31 December 2012 or the year ended 30 June 2012. The financial information for the period ended 31 December 2012 and the year ended 30 June 2012 are extracted from the statutory accounts of Nighthawk Energy plc. The Company's auditors reported on those accounts and their report was unqualified.

The Annual Report for the period ended 31 December 2012, including the auditors' report, and the notice of Annual General Meeting ("AGM") will be posted to shareholders, as applicable, shortly and will be available from the Company's website at www.nighthawkenergy.com. The AGM is to be held at the offices of FTI Consulting Limited, Holborn Gate, 26 Southampton Buildings, London WC2A 1PB on Wednesday 17 April 2013 at 11.00 a.m.

2. Revenue

An analysis of the Group's revenue for the year (excluding finance income) from continuing operations is as follows:

3. Exceptional administrative expenses

As a result of the acquisition on 23 January 2012 of an additional 25% interest in, and operatorship of, the Jolly Ranch project, an impairment was recognised in the financial statements for the prior financial year to revalue the Group's existing 50% interest down to the valuation informed by the fair value of the acquisition.

At the end of the prior financial year, an operating review was carried out which informed a further reduction in the value of the project assets and an additional impairment was recognised as a result. Each well was modelled on current production using expected decline rates at a long term oil price of US$ 80/boe and a discount rate of 10%.

Subsequent to the period end, the Group disposed of a royalty interest for less than book value. As a result, an impairment was recognised at 31 December 2012.

During the current period a decision was taken to plug and abandon the Jolly Ranch 4-13 well. As a result of this decision, the associated assets have been fully impaired as at 31 December 2012.

4. Loss Per Share

Basic loss per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

Given the Group's reported loss for the year share options and warrants are not taken into account when determining the weighted average number of ordinary shares in issue during the year and therefore the basic and diluted earnings per share are the same.

Basic loss per share

The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:

If the Company's share options and warrants were taken into consideration in respect of the Company's weighted average number of ordinary shares for the purposes of diluted earnings per share, it would be as follows:

5. Property, Plant and Equipment

Further to the impairments carried out in the prior financial year, no further impairments have been indicated during the current financial period, with the exception of the decision taken to plug and abandon the Jolly Ranch 4-13 well. Consequentially, a full impairment of the remaining value in this well has been recognised, as disclosed in note 3.

At the balance sheet date there were no further indications of impairment in respect of any of the projects.

6. Intangible Assets

Management review each exploration project for indication of impairment at each balance sheet date.

Such indications would include written off wells and relinquishment of development acreage.

Further to the impairments carried out in the prior financial year, no further impairments have been indicated during the current financial period in relation to Exploration Costs, with the exception of the decision taken to plug and abandon the Jolly Ranch 4-13 well. Consequentially, a full impairment of the remaining value in this well has been recognised, as disclosed in note 3.

Following an agreement being made after the balance sheet date to dispose of certain royalty assets for a value lower than their balance sheet value, these have also been impaired down to the estimated sale proceeds less costs to sell.

At the balance sheet date there were no further indications of impairment in respect of any of the projects.

7. Settlement agreement

On 8 October 2012, an agreement was reached regarding a settlement of Nighthawk's outstanding claims against Running Foxes Petroleum Inc ("RFP"), an option to purchase RFP's remaining 25% working interest in the Jolly Ranch and Smoky Hill Project, and a buy-back of RFP's entire holding of 102,236,422 shares in Nighthawk, linked to the placing and direct subscription of, in aggregate, an equal number of new ordinary shares with existing investors and institutional investors.

The key terms of the agreement were:

1. All existing claims on RFP under the terms of the Purchase and Sale Agreement (PSA) dated 23 January 2012 and the JOA to be settled by a cash amount, an option to purchase RFP's remaining 25% working interest in the Jolly Ranch project and a waiver of certain amounts potentially owed by the Group to RFP under the PSA.

2. The Company bought back RFP's entire holding of 102,236,422 shares in Nighthawk for a total consideration of £2.56 million (US$4.14 million), at a price of 2.5 pence per ordinary share. These shares have been cancelled, as disclosed in note 17. RFP retained US$2.30 million (£1.42 million) of this consideration and the balance of US$1.84 million (£1.14 million) was returned to the Group settling all outstanding claims against RFP.

3. RFP has granted the Group an exclusive 9 month option to purchase its remaining 25% interest in the Jolly Ranch and Smoky Hill Project which may be exercised at any time - the purchase price relates to the period during which the option is exercised:

a. 0-4 months US$10 million

b. 4-6 months US$11 million

c. 6-9 months US$12 million

This option has been evaluated based on an assumption that the Group would be most likely to exercise the option at US$12 million and not before this time, and as a result no value has been recognised in the Group's Balance Sheet in relation to the acquisition option.

4. All costs and revenues relating to RFP's working interest accrue to the Group during the option period. As this currently represents a small net operating loss, again no asset has been recognised in the Group's Balance Sheet in relation to this temporary assumption of working interest.

8. Cash Flow from Operating Activities

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