14 Oct 2010 07:00
14 October 2010
NIGHTHAWK ENERGY PLC
("Nighthawk" or "the Company")
Completion of £25 million Equity Financing Facility
Nighthawk, the US focused oil and gas development and production company (AIM: HAWK and OTCQX: NHEGY), announces that it has secured a three year Equity Finance Facility of up to £25 million (the "EFF") with Darwin Strategic Limited ("Darwin"), a part of the Evolution Group.
Use of Proceeds
The funds available to draw down under the EFF will be used to continue the development of the Company's asset base. Although a five well drilling programme has been permitted at Jolly Ranch, the Company's lead project, the immediate operational focus is the completion and recompletion of a number of wells that have already been drilled. The objective will be to obtain a better understanding of the completion techniques required to deliver a commercial project with the added benefit of increased near-term production.
In parallel with the continuing development programme, the Company has commenced a strategic review of its asset base to ensure that future spend is focused on delivering shareholder value as rapidly as possible.
At the same time, Nighthawk continues to progress with Macquarie Tristone the marketing process to attract a potential farm-in partner for a proportion of the Jolly Ranch project. A number of firms have viewed the data room, but no offer has been received as yet. The process will continue, but in the event that a suitable transaction is not in prospect by the end of the year, the Board's current intention is to withdraw from the process until further progress has been made in understanding the drilling and completion techniques which are best suited to the Jolly Ranch project.
The Company has appointed Gaffney Cline & Associates to undertake a Reserves and Resource assessment of Jolly Ranch, the completion of this report is anticipated late Q4 2010/early Q1 2011 following completion of the Schlumberger Eclipse Reservoir simulation model.
Terms of the EFF
The EFF agreement, which is dated 13 October 2010, provides Nighthawk with a facility which (subject to certain limited restrictions) can be drawn down at any time over the next three years. The timing and amount of any draw down is at the discretion of Nighthawk.
Nighthawk is under no obligation to make a draw down and may make as many draw downs as it wishes, up to the total value of the EFF, by way of issuing subscription notices to Darwin. Following delivery of a subscription notice, Darwin will, subject to certain conditions, subscribe and Nighthawk will allot to Darwin new ordinary shares of 0.25p each in Nighthawk ("Ordinary Shares").
The subscription price for any Ordinary Shares to be subscribed by Darwin under a subscription notice will be at a 5.0% discount to an agreed reference price determined during 5, 10 or 15 trading days following delivery of a subscription notice (the "Pricing Period"). Nighthawk is also obliged to specify in each subscription notice a minimum price below which Ordinary Shares will not be issued. The Company will have the right (with the agreement of Darwin) to modify that minimum price at any time during the relevant Pricing Period.
The number of Ordinary Shares which may be issued under any individual subscription notice will primarily be determined by reference to the average daily trading volume of Nighthawk's ordinary shares over the 15 trading days preceding the issue of the relevant subscription notice. This may be reduced in certain circumstances, including where the minimum price is not maintained.
There is also an over-allotment facility available to Nighthawk, under which Nighthawk may, in any subscription notice, authorise Darwin at Darwin's discretion to increase the amount of the draw-down by up to the aggregate undrawn amount under the EFF, subject to certain limited restrictions.
Any subscription notice which Nighthawk may issue will only be valid to the extent that it has the requisite shareholder authority to issue the maximum number of Ordinary Shares that Darwin may be required to subscribe under the relevant subscription notice.
Darwin or the Company may terminate the EFF in specified circumstances. The issue of subscription notices is subject to specified pre-conditions. The Company has provided warranties and indemnities to Darwin and affiliated persons.
Nighthawk has entered into a warrant agreement dated 13 October 2010 for the grant to Darwin of warrants to subscribe for up to 3,000,000 Ordinary Shares, such warrants to be exercisable at a price of 20 pence per share and to be exercisable at any time prior to the expiry of 36 months following the date of the warrant agreement.
In addition, if the aggregate price paid for the Ordinary Shares allotted under the EFF by the second anniversary of the EFF is not equal to or more than £5 million (subject to certain exceptions), or if the EFF is terminated by Darwin in certain circumstances, then the Company will grant to Darwin warrants to subscribe for up to 1,500,000 Ordinary Shares, such warrants to be exercisable at a price of 10 pence per share and to be exercisable at any time prior to the expiry of 36 months following the date of the warrant agreement.
Tim Heeley, Chief Executive of Nighthawk, said:
"We are pleased to announce completion of the EFF agreement which will give us the financial flexibility to continue to develop Jolly Ranch and ultimately to deliver value for shareholders. We considered a number of financing options and it was clear that this route has the potential to deliver a lower level of dilution to existing shareholders as the Company will control the drawdown rate and the discount rate is more favourable than raising equity in the markets at present.
"The Board is seeking to balance the interests of existing shareholders with the need, as an E&P company in the early stages of development, for new capital to build value. We will proceed with a firm grip on spend levels and will undertake development in a focused manner. This approach together with the optionality afforded by the EFF is intended to enable us to progress in a financially controlled and proactive manner."
Nighthawk will issue preliminary results for the year ended 30 June 2010 before the end of October 2010.
About Darwin Strategic:
Darwin Strategic, a majority owned subsidiary of The Evolution Group, provides funding solutions for UK listed PLCs, including Equity Financing Facilities. Darwin Strategic has extensive experience in both corporate finance and secondary market trading, and offers bespoke funding solutions for companies beyond traditional debt and equity funding.
Enquiries:
| Nighthawk Energy plc Tim Heeley, Chief Executive Mike Thomsen, Executive Chairman |
020 7887 1454 +1 720 344 5154 |
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| Westhouse Securities Limited Tim Feather Matthew Johnson | 020 7601 6100 tim.feather@westhousesecurities.com matthew.johnson@westhousesecurities.com |
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| Matrix Corporate Capital LLP Louis Castro James Pope | 020 3206 7000 louis.castro@matrixgroup.co.uk james.pope@matrixgroup.co.uk |
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| Darwin Strategic Limited Paul Hennigan Anand Sambasivan | 020 3179 6173 paul.hennigan@darwin-strategic.com anand.sambasivan@darwin-strategic.com
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| Financial Dynamics Ben Brewerton Ed Westropp | 020 7831 3113 ben.brewerton@fd.com edward.westropp@fd.com |
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| Bishopsgate Communications Limited Nick Rome | 020 7562 3395 nick@bishopsgatecommunications.com |