Nighthawk Energy (ticker: HAWK, NHEGY) announced today that its Arikaree Creek water flood pilot project is expected to be pushed back until mid-November 2016, from Oct. 2016.
On 28 October 2016, the company performed a mechanical integrity test on the injection wells and was notified that it did not pass state specifications. Therefore, the company will carry out remediation work on the two injection wells to rectify the pressure drain-offs experienced. Nighthawk expects to be able to pass the state testing, depending on the required solution, in seven to 14 days.
This is the last remaining step to complete to bring the project online, the company said in a statement. All other construction and testing has been completed and injection equipment has been installed, ready to commence operations.
In order to comply with the terms of the company’s arrangement with its commercial lender, Commonwealth Bank of Australia, on 31 October 2016 the Company signed an amendment regarding project milestones, included in the 4th Amendment to the credit agreement which required water flood injection to commence by 31 October 2016 as well as initial well response by that date. The further amendment extends the water flood injection date to 15 November 2016 and initial well response to 30 November 2016. The Company anticipates meeting both these amended threshold dates.
Rick McCullough, Chairman of Nighthawk, commented: “The mechanical integrity testing that was not passed on the two injector wells only related to the wells holding pressure and is, from a technical standpoint, relatively easy to fix but does require the time to re-enter the well. Our operations team immediately began workover efforts following the test results and we are confident we will have the Pilot Project up and running within two weeks. This delay will not have a significant impact on either the revenues or volumes produced from the project.”
