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Water Flood Approval and Year End Reserves Update

4 May 2016 07:00

RNS Number : 1430X
Nighthawk Energy plc
04 May 2016
 

 4 May 2016

 

NIGHTHAWK ENERGY PLC

("Nighthawk" or "the Company")

 

Water Flood Approval and Year End Reserves Update

 

Nighthawk, the US focused oil development and production company (AIM: HAWK and OTCQX: NHEGY), announces an update to the water flood project.

 

Water Flood Project Approval

 

As previously disclosed on 10 March 2016, the Company received conditional approval on 8 March, 2016 from the Colorado Oil and Gas Conservation Commission (the "COGCC") on the Company's planned Arikaree Water Flood Enhanced Oil Recovery Project (the "Project"). The COGCC approval was subject to the Company obtaining 80% approval of the non-cost bearing royalty interest owners ("Royalty Owners") within the next six months, using an agreed upon revenue allocation method.

 

Work to obtain sufficient approvals from Royalty Owners is continuing but in an effort to expedite the project, the Company filed an amendment on Friday April 29, to the original filing which reduces the size of the initial water flood area (the "Pilot"). It is anticipated that, as the Pilot achieves expected results, the remaining acreage from the original water flood proposal could be developed fully.

 

As disclosed in the Company's announcement of 23 October 2015, the Company's preliminary estimates for the total Oil in Place ("OIP") in the entire field potentially may be up to 16.6 million barrels. The estimated ultimate recovery under the water flood project ranges between 30%-40%. The following table provides comparison of the estimated recovery for the original water flood project and the new proposed Pilot project:

 

Original ProjectRange

Pilot ProjectRange

(in Mmbbls)

(in Mmbbls)

Low

High

Low

High

Estimated total OIP

16.6

16.6

8.6

8.6

Estimated Recovery

30%

40%

30%

40%

Total Estimated Recovery

4.98

6.64

2.6

3.4

Production to date (est.)

(1.5)

(1.5)

(0.4)

(0.4)

Estimated remaining recoverable reserves

3.5

5.1

2.2

3.0

PDP currently booked in reserve report

(1.4)

(1.4)

(0.7)

(0.7)

Estimated incremental recoverable reserves

2.1

3.7

1.5

2.3

 

 

As shown above, the Pilot is estimated to recover approximately 70% of the original incremental reserves whilst at $2.4m, the revised capital cost projections for the Pilot, is less than half of the originally projected capital costs ($5.1m). Due to lower actual historical production in the southern part of the field, the Pilot has a disproportionately higher share of the remaining OIP. Management is confident that expected required Royalty Owner approval level for the Pilot will be met. The amendment will be reviewed by the COGCC at its June meeting and it is anticipated that an approval will be received at that date. The Company will make additional disclosure to update in due time.

 

Chuck Wilson, Chief Operating Officer of Nighthawk, who has over 33 years of experience in the oil and gas industry and meets the criteria of qualified persons under the AIM guidance note for mining and oil and gas companies, has reviewed and approved the technical information contained in this announcement.

 

Enquiries:

 

Nighthawk Energy plc

Rick McCullough, Chairman 

+1 303 407 9600

Kurtis Hooley, Chief Financial Officer Elect

+44 (0) 20 3582 1350

Stockdale Securities Limited

+44 (0) 20 7601 6100

Alastair Stratton

Robert Finlay

David Coaten

Glossary

 

MMBLS - Million barrels of oil

OIP-Oil in place

SPE - The Society of Petroleum Engineers

PDP - Proved, developing, producing reserves

 

This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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