Nighthawk Energy Regulatory News (HAWK)

25 September 2013

NIGHTHAWK ENERGY PLC

("Nighthawk" or "the Company")

Unaudited Interim Results for the six month period ended 30 June 2013

Nighthawk, the US focused oil development and production company (AIM: HAWK and OTCQX: NHEGY), announces its half yearly results for the six months ended 30 June 2013.

Financial Highlights

· Revenues of US$5.7 million increase tenfold on the same period 2012 and by 250% on the second half of 2012

· Operating profit before impairments of US$1.3 million compared to a loss of US$2.6 million for the first half of 2012 and a loss of US$1.25 million in the second half of 2012

· Positive operating cash-flow of US$4.7 million compared to negative operating cash-flow of US$3.2 million in first half of 2012

· Cash at 30 June 2013 of US$7.0 million (30 June 2012: US$9.2 million)

Operational Highlights

· Gross oil production of 85,609 barrels (Nighthawk approximately 80% net revenue interest) compared with 24,667 barrels in the second half of 2012 (+250%)

· Four new producing wells drilled and completed on the Arikaree Creek oil-field

· Average daily production of 1,661 barrels/day in August 2013

Post Period Events

· Completion of the acquisition of the remaining 25% working interest in the Smoky Hill and Jolly Ranch projects

· Proposal to undertake a capital reduction

· Investec Bank plc position as joint broker ended

Enquiries:

Chairman's Statement

The half year ending 30 June 2013 has been a very successful period for Nighthawk. Total gross production from the Smoky Hill and Jolly Ranch projects in Colorado was 85,609 bbls of oil, an increase of approximately 250% on production in the second half of 2012. Average daily gross oil production increased from 276 barrels/day in December 2012 to over 1,000 barrels/day in June 2013 and has continued to increase to the reported 1,661 barrels/day in August 2013.

Following the Settlement Agreement concluded with Running Foxes Petroleum, Inc. ("RFP") in October 2012, Nighthawk has and had throughout the period an approximate 80% net revenue interest in production and a 100% working interest in its projects. The increased net revenue interest, benefit of two new wells and strong oil prices during the period led to net revenues increasing to US$5.7 million, from US$1.6 million in the second half of 2012. The increased levels of production enabled the Company to report an operating profit of US$1.3 million before accounting for exceptional items.

This success began with the discovery of the Arikaree Creek oilfield by the Steamboat Hansen 8-10 well in November 2012. During the first half of 2013 Nighthawk drilled four further successful wells in the field all of which are now in production. The Taos 1-10 well and the Big Sky 4-11 well produce around 500 and 400 barrels/day respectively with no water production. The Silverton 16-10 and Snowbird 9-15 were drilled in a different fault block in the field and produce around 250 barrels/day combined, together with some water production. After ten months of continuous production the Steamboat Hansen 8-10 well is producing 400 barrels/day, with no water and is showing no decline. Total cumulative oil production from this well now exceeds 85,000 barrels of oil.

As with the 2012 drilling program, the execution and management of the 2013 drilling and completion program was highly effective, a credit to our team in Denver. Funding for the program was provided by short term loans from our highly supportive major shareholders and cashflow generation. Servicing and repayment of this debt is covered by the strong projected cash flows for the balance of this year and next.

These strong cash flows will be utilised to support the next phase of development at Arikaree Creek with drilling expected to re-commence in the coming weeks. During 2013 Nighthawk has also been able to allocate additional resources to its leasing strategy and has successfully reversed the declining trend of the past two years. Net acreage held by Nighthawk has risen to around 250,000 acres, up from around 225,000 at the start of the year (equivalent to the 300,000 acre gross figure referred to in the December 2012 report).

Post period end, Nighthawk completed an important milestone with the acquisition of the remaining 25% working interest in the Smoky Hill and Jolly Ranch projects from RFP for a cash consideration of US$12 million. The transaction was completed on 31 July 2013 and was funded by a short term loan from major shareholders, which is being repaid from current cash flows.

The Company has been totally transformed over the past 18 months and is now well positioned for further growth funded by existing cash resources and operational cash flows. With a rapid payback on wells drilled at Arikaree Creek, and multiple drilling locations in the field, we expect further increases in production once drilling resumes in the fourth quarter of 2013. In addition we plan to explore our extensive acreage for further discoveries analogous to Arikaree Creek, whilst also continuing to test the oil bearing Pennsylvanian formations at shallower depths.

A key aspect of our business strategy is to react quickly to changing circumstances and to create options for the sourcing and use of funds. As part of this strategy we intend to undertake a capital reduction which, it is anticipated, will put the Company in a position to be able to buy back shares and/or to pay a dividend, should it be considered appropriate to do so. Further information on this process is set out in the accompanying Chief Financial Officer's Statement and will be sent to shareholders shortly.

We are looking forward to further success and I would like to thank our shareholders, staff and suppliers for their valuable support over the past period.

Chief Financial Officer's Statement

The six month period ended 30 June 2013 saw further investment in new wells resulting in material production, revenue and cash flow growth.

Group revenues from continuing operations for the period were US$5.7 million (six months ended 31 December 2012: US$1.6 million; six months ended 30 June 2012: US$0.6 million). As explained in the Chairman's Statement, production growth in the period was driven primarily by the successful drilling and completion of new wells at the Arikaree Creek oilfield.

The healthy growth in revenues during the period led to a significant increase in gross profit to US$3.7 million (six months ended 31 December 2012: US$0.6 million; six months ended 30 June 2012: loss of US$0.3 million). Earnings before interest, taxation, depreciation and amortisation (adjusted for exceptional administrative expenses) were US$2.2 million (six months ended 31 December 2012: loss US$0.7 million; six months ended 30 June 2012: loss US$2.1 million).

The Group statutory loss for the period was US$0.8 million (six months ended 31 December 2012: loss of US$2.4 million; six months ended 30 June 2012: loss of US$19.3 million).

The exceptional administrative expense of US$1.5 million taken in the period relates to the directors determining that the legacy Craig Ranch 15-32H well on the Jolly Ranch project area was fully impaired at period end. Subsequently, post period end, the decision was taken to plug and abandon it.

Cash inflow from operating activities for the period was US$4.7 million (six months ended 31 December 2012: outflow of US$0.2 million; six months ended 30 June 2012: outflow of US$3.3 million). Whilst direct operating expenses rose as a result of a rise in production activity, administrative expenses remained broadly flat on the comparable period to 30 June 2012. Operational cash flow included cash-based costs of sales and administrative expenses of US$3.3 million (six months ended 31 December 2012: US$2.1 million; six months ended 30 June 2012: US$2.4 million).

Investing activities during the period of US$10.6 million comprised principally capital expenditure on drilling new wells at the Arikaree Creek oilfield, lease payments, 2D seismic purchases and well work-overs (six months ended 31 December 2012: US$9.1 million; six months ended 30 June 2012: US$11.9 million). Since the period end the Group invested a further US$12.0 million in purchasing the remaining 25% working interest in the Smoky Hill and Jolly Ranch Project from RFP.

Cash flow from financing activities during the period totaled US$10.7 million (six months ended 31 December 2012: US$2.5 million; six months ended 30 June 2012: US$22.7 million) and included the drawing of a US$5.0 million 15% coupon 12 month term loan and the issuing of £3.8 million (US$5.8 million) nominal 9% coupon convertible unsecured loan notes due June 2015. Since the period end the Group entered into and drew down on a US$12.0 million short term unsecured 9% coupon loan facility in order to fund the US$12.0 million purchase of the remaining 25% working interest in the Project. We have already commenced repayments against this facility and this currently stands at US$10.0 million.

At 30 June 2013, the Group held cash balances of US$7.0 million (31 December 2012: US$2.3 million; 30 June 2012: US$9.2 million).

Proposed Capital Reduction

The Company has also announced a proposed capital reduction that it intends to implement. An explanatory circular containing full details and notice of General Meeting (at which shareholder approval of the proposed capital reduction will be sought) will be posted to shareholders and available from the Company's website shortly.

In summary, the Board intends to seek shareholders' approval to reduce the Company's capital by cancelling the amount standing to the credit of the Company's share premium account and capitalising and then cancelling the amount standing to the credit of the Company's merger reserve so as to create realised profits. The Board also intends to seek shareholders' approval for the Company to make market purchases of its ordinary shares. As well as shareholder approval, the proposed capital reduction would also require approval of the Court.

The capital reduction process is a reorganisation of the Company's balance sheet reserves and it will not result in a change to the Company's ordinary shares' nominal value or issued share capital.

If approved, it is anticipated that the capital reduction will offer the Company the ability and flexibility to buy back ordinary shares and/or pay dividends to shareholders in the future if it is considered desirable to do so in light of continued operational success, production, income and cash flow growth.

Unaudited Condensed Consolidated Income Statement

Unaudited Condensed Consolidated Statement of Comprehensive Income

Unaudited Condensed Consolidated Balance Sheet

Unaudited Condensed Consolidated Statement of Changes in Equity

Unaudited Condensed Consolidated Cash Flow Statement

Notes to the consolidated cash flow statement

1. Reconciliation of profit before tax to cash generated from operations

Notes to the Unaudited Financial Information

for the 6 months ended 30 June 2013

Accounting policies

The interim financial information in this report has been prepared on the basis of the accounting policies set out in the audited financial statements for the 6 month period ended 31 December 2012, which complied with International Financial Reporting Standards as adopted for use in the European Union ("IFRS").

IFRS is subject to amendment and interpretation by the International Accounting Standards Board ("IASB") and the IFRS Interpretations Committee and there is an on-going process of review and endorsement by the European Commission.

The financial information has been prepared on the basis of IFRS that the Directors expect to be applicable as at 31 December 2013, with the exception of IAS 34 Interim Financial Reporting.

The condensed financial information for the period ended 30 June 2013 set out in this interim report does not comprise the Group's statutory accounts as defined in section 434 of the Companies Act 2006.

The statutory accounts for the period ended 31 December 2012, which were prepared under IFRS, have been delivered to the Registrar of Companies. The auditors reported on these accounts; their report was unqualified; did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006, and did not include reference to any matters to which the auditor drew attention by way of emphasis.

1. Exceptional administrative expenses

The directors determined that the legacy Craig Ranch well was fully impaired at the period end. Subsequently, post period end, the decision was taken to plug and abandon it.

At the end of the June 2012 reporting period, 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%.

2. Loss per share attributable to the equity shareholders of the Company

As at 30 June 2013, 30 June 2012 and 31 December 2012 the options in issue are not dilutive under IAS 33, Earnings per Share, because they would have the effect of decreasing the loss per share. As such there is no difference between the basic and dilutive loss per share at these dates.

3. Taxation

There was a small current tax charge for the period in a US subsidiary of US$460, but no other current tax charge for the period due to the loss incurred (31 December 2012: debit of US$16,387, 30 June 2012: credit of US$6,188).

A deferred tax asset in respect of trading losses and share based payments has not been recognised due to the uncertainty over timing of future profits. The trading tax losses are recoverable against suitable future trading profits.

4. Share Capital

During the period to 30 June 2013, no shares have been issued.

During the comparative 6 month period to 30 June 2012, 291,940,340 shares were issued at 2.5p raising £7,298,509 (US$11,360,859).

During the 6 month period ended 31 December 2012, the Company issued a total 102,236,422 ordinary shares at a price of 4p per share raising £4,089,457 (US$6,365,649) and a total of 193,300,000 ordinary shares at a price of 2.5p per share on conversion of loan notes.

Additionally, during the 6 month period ended 31 December 2012, the Company bought back (at original cost of 2.5p per share) 102,236,422 ordinary shares. These shares and their corresponding premium of £2,300,320 were cancelled.

Following the issue of shares in the period to 31 December 2012, there were 942,235,420 ordinary shares of 0.25p each in issue.

5. Post Balance Sheet Events

On 4 July 2013 Nighthawk announced that it had formally notified RFP of its election to exercise its option to purchase the remaining 25% working interest in its Smoky Hill and Jolly Ranch projects in Colorado from RFP for cash consideration of US$12 million.

This acquisition was completed on 31 July 2013.

On 19 July 2013 Nighthawk announced that it had entered into a short-term debt facility to fund the above-mentioned acquisition:

· US$12 million unsecured loan with a term of six months from date of drawdown

· Facility provided by Fastighetsaktiebolaget Korporalen AB (the "Lender"), a company associated with Johan Claesson, the Company's major shareholder

· Interest rate of 9% per annum payable quarterly

· Principal repayments of US$1 million per month plus a residual payment of US$6 million. The Company may accelerate the repayments at its discretion and at no penalty

· The Lender has agreed to waive arrangement and legal fees and to lend on an unsecured basis. In consideration of this waiver, the Lender was granted 30 million warrants ("Warrants") to acquire ordinary shares of 0.25p each in the Company ("Shares") at a price of 7.25 pence per Share

· Warrants will expire on the second anniversary of the drawdown date

Also on 19 July 2013, Nighthawk announced that it had granted a total of 11.0 million share options to subscribe for ordinary shares of 0.25p each in the Company to certain directors, senior management and employees in accordance with the Company's Share Option Scheme, as follows:

· 6.0 million options have been granted to certain directors, senior management and employees with an exercise price of 6.24 pence per Share and which vest subject to the Company's share price achieving an average of 12 pence per Share over a period of 30 consecutive business days within two years of the date of grant. The Performance Condition Options lapse at midnight on the second anniversary of the date of grant irrespective of the Performance Condition having been met; and

· 5.0 million options have been offered to certain directors and senior management subject to a grant price of 0.65 pence (1 US cent) per option being paid by the option holder to the Company upon award. The Grant Price Options have an exercise price of 7.25 pence per Share and are exercisable immediately following payment of the grant price up until midnight on the second anniversary of the date of grant at which time they will lapse.

On 20 August 2013 Nighthawk issued 2,200,000 new ordinary shares of 0.25p each in satisfaction of conversion of £121,000 nominal of Nighthawk's 9 per cent. unsecured convertible loan notes.

6. Copies of the Half Yearly Report

A copy of this Half Yearly Report will be made available on the Company's website at www.nighthawkenergy.com.