1 April 2016

 

NIGHTHAWK ENERGY PLC

(“Nighthawk” or “the Company”)

Borrowing Base Redetermination and Production Update

Nighthawk, the US focused oil development and production company (AIM: HAWK and OTCQX: NHEGY), announces the Company’s latest borrowing base redetermination under its Reserves Based Loan and current production levels.

 Reserves Based Loan (“RBL”)

 The Company has received notification of its quarterly borrowing base redetermination under its RBL with Commonwealth Bank of Australia (“CBA”). The redetermined borrowing base reflects the continued subdued oil price.  Consistent with many other operators’ reserve based loans in a challenging oil price environment, the Company’s borrowing base available to be drawn has been reduced from US$23.0 million to US$13.0 million.  The Company currently has US$23 million outstanding under its RBL as at March 31, 2016 and has approximately US$2 million of cash. The Company has been exploring options with CBA to address this deficit, including considering establishing a non-conforming tranche until the deficiency is resolved.  The Company expects to have a solution satisfactory to CBA and the Company by April 16, 2016.  Nighthawk is encouraged by CBA’s willingness to work with the Company during difficult market conditions.

 In anticipation of the renegotiation of the Company’s banking arrangements described above, certain RBL covenants have been waived until April 16, 2016 in order to allow CBA and the Company to amend the covenant and debt repayment provisions of the RBL to reflect anticipated Company results.   The Company expects that the new banking arrangements will be agreed by April 16, 2016 and a further announcement will be made at the appropriate time.

 Production Update

 The Company’s production continues to remain strong.  As shown in the below table, the month on month decline in 2016 is less than Nighthawk experienced in 2015.  The Company believes this is due to enhanced recovery projects implemented in the field and better than expected recoveries due to a natural water drive in the Arikaree Creek Field. 

Gross and net* production, in barrels, for the first two months of 2016 is summarised below.

 

Monthly

Daily Average

Gross

Net

Gross

Net

2016

2015

2016

2015

2016

2015

2016

2015

January

 53,554

 63,605

 43,915

 52,183

 1,728

 2,052

 1,417

 1,683

February

 49,767

 55,979

 40,809

 45,843

 1,716

 1,999

 1,407

 1,637

 

*Net production is based upon Nighthawk’s Net Revenue Interest of approximately 82%

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.


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