Nighthawk Energy Regulatory News (HAWK)

29 September 2014

NIGHTHAWK ENERGY PLC

("Nighthawk" or "the Company")

$100 million Debt Facility 

Nighthawk, the US focused oil development and production company (AIM: HAWK and OTCQX: NHEGY), announces that it has completed the agreement with Commonwealth Bank of Australia ("CBA") for the US$100 million Reserve Based Lending ("RBL") facility announced last month.

Key Features of the RBL

· US$100 million Senior Secured Revolving RBL facility with an initial borrowing base of US$35 million

· Four year maturity with potential for extension by agreement

· Regular redeterminations based upon Nighthawk's petroleum reserves - first redetermination in late fourth quarter 2014

· Interest rates at a competitive premium to US Libor rates enabling Nighthawk to reduce substantially its borrowing costs

· The Company will be required to implement a hedging strategy and hedge a proportion of its forward production

· Restructuring and reduction of current debt

Background and Business Impact

The refinancing of Nighthawk in January 2012 provided the funding base to acquire a 100% working interest and operational control of the Company's acreage position in Colorado. This refinancing included amongst other mechanisms, convertible loan notes primarily issued to the Company's major shareholders.

Over the past two years Nighthawk has established a solid foundation for future expansion by focusing on rapid growth in production and cash generation. The Company has a relatively low cost base, both operational and overheads, and all free cash generated has been reinvested in drilling, development and geoscience. In order to maintain a fast pace of development, the Board has from time to time utilized access to short-term loans provided by the Company's major shareholders and other parties including additional convertible loan notes.

The RBL agreement with CBA provides the financial backing to restructure the current debt whilst increasing the level of investment in the business and maintaining the rapid pace of development that the Company has delivered over the past two years. As part of the agreement and as a condition for initial drawdown against the RBL facility, CBA required restructuring of Nighthawk's current debt.

Restructuring of Current Debt

· The redemption date on £5.17 million outstanding of zero coupon loan notes due January 2015 will be deferred to March 2019

· The redemption date on £3.14 million outstanding of 9% coupon loan notes due June 2015 will be deferred to March 2019

· $10 million of short-term unsecured debt will be repaid immediately

The Company has drilling and development plans in place for the balance of 2014 and early 2015 which includes further development drilling at Arikaree Creek and Snow King, the Company's first horizontal well, and further exploration of structural plays. In order to ensure certainty that funding is available for investment in this plan, repayment of the remaining balance of $10 million of short-term unsecured debt will be contractually deferred until March 2019. However, the Board considers it likely that further production growth and drilling success will result in an increase in the borrowing base of the RBL and earlier repayment of this remaining debt, subject to agreement with CBA.

Restructuring of Warrants

The Company has also agreed to an extension of the exercise dates on certain warrants issued to the providers of debt to the Company as follows:-

· 100 million warrants with a strike price of 5 pence per share were issued in January 2012 in lieu of interest payments on the zero coupon loan notes due January 2015. The exercise date on these warrants is extended initially to March 2019. Certain holders of these loan notes are restricted from conversion under Rule 9 of the UK Takeover code. The Company may claw back the exercise date to September 2017 in the event that it delivers by 23 January 2015 an arrangement which enables conversion by such holders without a breach of Rule 9 of the Takeover Code.

· 30 million warrants with a strike price of 7.25 pence per share were issued in July 2013 in lieu of security on the short-term funding provided to enable exercise of the option to purchase Running Foxes Petroleum Inc's remaining 25% working interest. The exercise date on these warrants is extended to March 2019 in lieu of security on the extended $10 million unsecured loan.

Related Party Matters

The restructuring of debt and warrants has been agreed between the lenders, principal warrant holders and Nighthawk's board of directors and meets CBA's requirements for initial drawdown of the new RBL facility. A significant proportion of the restructured debt and the warrants is held directly or indirectly by the Company's two largest shareholders Johan Claesson, who is also a non-Executive Director of the Company, and Peter Gyllenhammar.

The restructured debt and warrants held by Johan Claesson and parties associated with him is as follows:-

· £4.1 million of zero coupon loan notes due January 2015 to be deferred to March 2019

· £1.6 million of 9% coupon loan notes due June 2015 to be deferred to March 2019

· $10 million of short-term unsecured 15% coupon debt to be contractually deferred until March 2019

· 55 million warrants with a strike price of 5 pence per share issued in January 2012 with the exercise date extended to March 2019, with potential claw-back to September 2017

· 30 million warrants with a strike price of 7.25 pence per share issued in July 2013 with the exercise date extended to March 2019

Johan Claesson is a non-executive director and a substantial shareholder of the Company and therefore the restructuring of the debt and the warrants is a related party transaction under the AIM Rules for Companies. The Directors of Nighthawk (other than Johan Claesson) consider, having consulted with Westhouse Securities Limited, the Company's Nominated Adviser, that the terms of the transaction are fair and reasonable in so far as the Company's shareholders are concerned.

The restructured debt and warrants held by Peter Gyllenhammar and parties associated with him is as follows:-

· £0.6 million of zero coupon loan notes due January 2015 to be deferred to March 2019

· £0.3 million of 9% coupon loan notes due June 2015 to be deferred to March 2019

· 20 million warrants with a strike price of 5 pence per share issued in January 2012 with the exercise date extended to March 2019, with potential claw-back to September 2017

Stephen Gutteridge, Chairman of Nighthawk, commented:

"We are pleased to have closed the RBL agreement with the Commonwealth Bank of Australia. We have ambitious drilling and development plans for the rest of this year and next and our first priority as a board is to ensure that we can fund those plans and maintain the momentum that we have built up over the past two years. With the immediate repayment of $10 million of existing high coupon debt we will make substantial debt service cost savings, and the restructuring of the remaining debt will ensure that we retain the operational and financial flexibility to deliver increased value from the significant potential in our acreage."

- Ends-

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