LONDON, Nov. 20, 2014 /PRNewswire/ -- Nighthawk, the US focused oil development and production company (AIM: HAWK and OTCQX: NHEGY), announces an update on production and drilling at its 100% controlled and operated Smoky Hill and Jolly Ranch projects in the Denver-Julesburg Basin, Colorado.
Highlights
- Average gross oil production from all wells in the calendar month of October 2014 was 1,886 barrels of oil per day ("bopd") and is currently in the 2,500-2,600 bopd range.
- Nighthawk's recently announced focus on capturing behind pipe production and reserves in completed wells and new drills is driving substantial new production. The drilling rig has been temporarily idled at no cost to Nighthawk, in order that the Company can focus on as many of these behind pipe opportunities as possible before the year end. The Company currently has three work over rigs in service pursuing behind pipe projects.
- The Snowbird 16-15 well was completed in a Pennsylvanian age formation earlier this month and has been producing at an average rate of production in excess of 500 bopd.
- The Salen 14-35 well was also completed in a Pennsylvanian age formation and has averaged approximately 150 bopd during its first 30 days of production.
- The Blackcomb 3-14, a newly drilled well, was completed in the Mississippian age formation and recently brought into production at 300 bopd.
- We are currently performing behind pipe recompletions in three wells and plan to bring any new production associated with these projects into service over the coming weeks. Additionally, Nighthawk will continue with the behind pipe pay campaign through the rest of 2014 and anticipates to have up to six more wells recompleted by the year end.
- 3D seismic analysis has been completed over the Snow King discovery area and a total of 17 new drilling locations have been identified. Plans are to drill the Keystone 3-7 and Snow King 9-32 locations prior to the year end.
- Nighthawk has completed its 3D seismic shoot around the Salen 14-35 location and expects to have its analysis completed by the year end.
(Nighthawk has an average Net Revenue Interest of approximately 81.5% in the gross oil production)
Production
The daily average gross production for the month of October 2014 was 1,886 bopd and gross production is currently in the 2,500 – 2,600 bopd range. With new wells coming on line recently and the on-going behind pipe recompletion program, Nighthawk is expecting production to continue to grow before the year end.
Drilling/Seismic
The Blackcomb 3-14 well was drilled to 8,300 ft and completed in a Mississippian age formation before being turned over to production. The drilling rig has been in an idle state at no cost to Nighthawk and it is planned to re-activate the drilling programme in early December 2014.
The Company has completed the new 3D seismic shoot over the Snow King structure and is in the early stages of permitting a number of additional drilling locations, bringing the total number of drilling locations to 17. The Company expects to begin drilling two of these locations in December 2014, with drilling commencing at the Keystone 3-7 and Snow King 9-32 wells. Additionally, the Company has completed its 3D seismic shoot in the Salen area and expects to have these results analysed by the year end.
Rick McCullough, Chairman of Nighthawk, commented:
"The new behind pipe programme we launched last month has far exceeded our expectations and may open up the possibility of new productive zones in many of our completed wells, especially those in our Arikaree Creek field as well as many of our John Craig locations. As a result of our early success in the Salen 14-35 and Snowbird 16-15 wells, we are accelerating our behind pipe completions and hope to recomplete several more wells before the year end.
"We have recently instituted a new commodity hedging program and have hedged a portion of our forward production. The use of financial derivatives, which is very common in the US energy markets, will allow us to provide more certainty around our future drilling programs and cash liquidity. This is an important achievement and will serve the Company and its shareholders well.
"Recent declining oil prices are concerning to many US-based operators such as Nighthawk. However, with our operating margins as high as 60% to 70%, we can earn a reasonable rate of return on our drilling capital at realized oil prices as low as $50 per barrel. While we may decide to slow our drilling somewhat because of these low prices, we continue to make sufficient returns on capital at oil prices much, much lower than most operators."
SOURCE Nighthawk Energy