January 30, 2015 - 12:19 PM EST
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Nighthawk Energy plc ("Nighthawk" or "the Company") Northern Lincoln County Joint Development Agreements

LONDON, Jan. 30, 2015 /PRNewswire/ -- Nighthawk, the US focused oil development and production company (AIM: HAWK and OTCQX: NHEGY), with its 100% controlled and operated projects in the southeastern Denver-Julesburg Basin, Colorado, announces details of two significant joint ventures that it has entered into in northern Lincoln County.

Highlights

  • Nighthawk has entered into two joint venture agreements ("JV's") in northern Lincoln County, Colorado.  The JVs are located southwest from the Company's Arikaree Creek field and Snow King project towards the town of Limon.  A map outlining the location and extent of these JVs will be available on the Company's website at www.nighthawkenergy.com/operations/joint-venture-2015/
  • Both JVs are with Cascade Petroleum LLC ("Cascade"), a private oil and gas exploration and production company formed in 2011 and based in Denver, Colorado.
  • Joint Venture One, named the Monarch Joint Venture, will be operated by Nighthawk and covers approximately 23,619 net mineral acres southwest from the Company's Arikaree Creek field and Snow King project.  After an initial earn-in commitment, Nighthawk will share the Monarch Joint Venture with Cascade on a 50:50 basis between the parties.  This agreement gives Nighthawk access to the potential upside in multiple additional Mississippian and Pennsylvanian structures identified by Nighthawk's geoscience team from 2D seismic data.  Nighthawk believes that these structures may have similar attributes to its existing Arikaree Creek and Snow King fields.
  • Joint Venture Two, named the El Dorado Joint Venture, covers approximately 40,372 net mineral acres and will be operated by Cascade.  It is located on both sides of the Monarch Joint Venture area and will be shared on a 85:15 basis (Cascade and Nighthawk respectively). Under Joint Venture Two, Nighthawk has the right, but not an obligation, to participate in a 15% working interest in any well drilled in the area by paying its share of the well costs.

Joint Venture One: the Monarch Joint Venture

Under the Monarch Joint Venture, Nighthawk has entered into a joint development agreement ("JDA") with Cascade pursuant to which each party has cross-assigned half of its interest in the acreage within the boundaries of the joint venture to the other party.  This has resulted in Nighthawk cross-assigning a 50% Working Interest in 6,197 net mineral acres to Cascade and Nighthawk receiving from Cascade a 50% Working Interest in 17,422 net mineral acres.  All acreage cross-assigned by both parties under this joint venture is non-producing at this time.

In order to earn in to this joint venture, under the terms of the agreement with Cascade, Nighthawk is required to bear 100% of the cost of the first six wells to be drilled within the boundaries of the joint venture, the first four of which must be drilled on or before December 31st 2015, and the remaining two on or before June 30th, 2016.  Nighthawk expects that the drill and completion of cost of each well will be in the range $1.5 million to $2.0 million. Nighthawk will earn a 50% share of the JV's NRI in the wells estimated to be approximately 40% of the gross revenues of each of these first six wells.  After the initial earn in by Nighthawk, the parties will share on a 50:50 basis all future cost incurred for drilling of additional wells.

Additionally, Cascade has initiated a 3D seismic acquisition program over the entire area covered by both Joint Ventures One and Two and, under the terms of the JDA, Nighthawk will bear 100% of the permitting, acquisition and processing cost of the 3D seismic program over the Monarch Joint Venture area, which is expected to amount to approximately $2.3 million. Nighthawk will have a proportional percentage ownership in the entire 3D covering both joint venture areas.

Joint Venture Two: the El Dorado Joint Venture

Under Joint Venture Two, Nighthawk has entered into a JDA with Cascade pursuant to which each party has cross-assigned to the other its acreage within the Joint Venture Two area based upon each party's proportionate share of the acreage.  This has resulted in Nighthawk cross-assigning 85% Working Interest in its 5,281 net mineral acres to Cascade and Nighthawk receiving from Cascade 15% Working Interest in 35,091 net mineral acres.  All acreage cross-assigned by both parties under Joint Venture Two is non-producing at this time.

As noted above, Cascade has initiated a 3D seismic acquisition program over the area covered by Joint Venture Two.  Under the terms of this joint venture, each party is required to bear its proportionate cost of the permitting, acquisition and processing costs of the 3D seismic based upon its leasehold interests within Joint Venture Two.

In both joint ventures, the parties will additionally enter into Joint Operating Agreements as is standard for such arrangements.

Rick McCullough, Chairman of Nighthawk, commented:

"Nighthawk and Cascade have both been operating independently in the Southern DJ Basin with an extensive overlapping footprint for some time and the combination of our experience in developing these conventional reservoirs along with this acreage has the potential to be significantly value enhancing.

"With the formation of these JVs, we will now be combining over 64,000 acres on and around similar structures to what Nighthawk has developed successfully in the Arikaree Creek and Snow King fields and will be collaborating to create value for both companies.  For Nighthawk, once 3D seismic has been shot and interpreted, the Monarch JV has the potential to add significantly to our inventory of future drilling locations on structures, albeit at 50% participation levels.  These JVs are very strategic for Nighthawk in its continuing growth efforts and we are delighted to be working with Cascade. "

Definitions

"Net Revenue Interest" or "NRI"

The share of oil, gas, and associated hydrocarbons produced, saved, and marketed, after satisfaction of all royalties, overriding royalties, or other similar burdens on or measured by production of oil, gas, and associated hydrocarbons.

Enquiries:

Nighthawk Energy plc


Rick McCullough, Chairman 

+1 303 407 9600

Richard Swindells, Chief Financial Officer

+44 (0) 20 3582 1350



Westhouse Securities Limited

+44 (0) 20 7601 6100

Alastair Stratton


Robert Finlay




Canaccord Genuity

+44 (0) 20 7523 8000

Neil Elliot


Tim Redfern


Henry Fitzgerald-O'Connor




FTI Consulting

+44 (0) 20 3727 1000

Ben Brewerton

[email protected]

Ed Westropp

[email protected]

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/nighthawk-energy-plc-nighthawk-or-the-company-northern-lincoln-county-joint-development-agreements-300028523.html

SOURCE Nighthawk Energy plc


Source: PR Newswire (January 30, 2015 - 12:19 PM EST)

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