Nighthawk Energy Regulatory News (HAWK)

Monday 24 January 2011

NIGHTHAWK ENERGY PLC

("Nighthawk" or "the Company")

Jolly Ranch Reservoir Simulation Study

Study results in significant increase in model area oil in place estimates

Nighthawk, the US focused oil development and production company (AIM: HAWK and OTCQX: NHEGY), announces the completion of the Schlumberger Data and Consulting Services ("SDCS") Eclipseä reservoir simulation study and commencement by Gaffney, Cline and Associates (Houston) ("GCA") of the first reserves and contingent resources study on the Jolly Ranch Area.

Highlights

·; Completion of Eclipseä reservoir simulation model

·; Oil in place per acre in the target Cherokee and Atoka shale formations within the simulation study area approximately 14 times higher than previous oil in place estimates

·; Gaffney Cline and Associates commencing Reserves and Contingent Resource Report

Simulation Study

The completed reservoir simulation model was constructed to generate the likely long-term production behaviour of the Marmaton, Cherokee and Atoka horizons. For ease of modelling the three horizons of interest were split into seven fluids in-place sub-zones, as indicated in the table below. The Shale model sub-zone in the table refers to the more shale-prone areas of the mid-Cherokee horizon, whereas the Tebo and Cherokee model sub-zones refer to the more interbedded carbonate and dolomite dominated zones within the Cherokee shale package.

The model consisted of detailed areas of the Craig Ranch and Jolly Ranch project areas, totalling approximately 3,200 gross surface acres. The model comprised 1.9 million cells forming a simulation grid with current rock and fluid properties, well completion and pressure data.

Simulation Study Conclusions

Part of the scope of work was to reassess the Original Oil In Place ("OOIP") within the Cherokee and Atoka shale horizons, as well as the conventional Marmaton horizon within the study area. In addition, the water saturation levels within these zones, as tabulated below, were determined.

A recovery rate was assessed on the basis of a number of prediction scenarios with various well and economic parameters and cut offs. The recovery rate, as predicted by the simulation runs, is presented for each of the horizons below for the modelled area and is based on vertical wells on 40-acre well spacing.

Within the model the Marmaton conventional horizons are shown to have a zero recovery rate. This is driven by the water and oil production cut offs set in the model to reduce the length of time to converge each analysis.

The Jolly 10-5 well continues to produce around 7 bopd from the Marmaton in association with a large volume of formation water. The Marmaton is oil bearing as demonstrated in the table, but remains very much a secondary target to the shales.

Comparison with 2009 Original Oil in Place Report

The OOIP utilised in the simulation is an update figure on the work undertaken by Schlumberger in July 2009. Whilst the 2009 study had a wide area of focus of approximately 246,000 gross acres and attributed approximately 1.4 billion barrels of gross oil in place, the recent work has focused on a more detailed zone of approximately 3,200 gross acres around the Jolly Ranch and Craig Ranch areas where almost all of the drilling and production activity is concentrated.

However, as previously reported, there is good confidence in the continuity and uniform nature of the shale horizons across the wider project area and therefore there is confidence that the overall OOIP will have risen too.

Additional Work Scope

Given the significant increase in oil in place within the targeted shale horizons, Nighthawk has commissioned Schlumberger to undertake further field development scenarios. This will include variable well spacing as well as design and analysis of an optimal fraccing method for possible implementation in the field.

Reserves and Resources Study

The Eclipse model has been passed to GCA to undertake the reserves study, the conclusions of which will be announced when completed.

Tim Heeley, CEO of Nighthawk, commented:

"Whilst we are still in the early stages of developing the Jolly Ranch project, it is encouraging to see a significant increase in oil in place within the objective shale horizons.

"The simulation study further underlines the potential of Jolly Ranch; however, operational work remains to be undertaken in order to demonstrate that oil can be economically and consistently recovered from the field.

"The outcome of this study reinforces the conclusions of the recent Strategic Review and we look forward to updating the market on the Gaffney Cline study in due course."

Tim Heeley B.Eng (Hons) a member of the Society of Petroleum Engineers, Fellow of the Geological Society of London and a Chartered Energy Engineer, who is CEO of Nighthawk and has over 14 years of experience in the hydrocarbons industry, has approved the technical information contained in this announcement.

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