Nighthawk Energy strikes oil at Jolly Ranch

UK junior Nighthawk Energy has made a conventional oil discovery with its latest probe at the Jolly Ranch play in Colorado’s Denver-Julesburg basin.

http://www.upstreamonline.com/live/article1300048.ece

3 December 2012

NIGHTHAWK ENERGY PLC

Drilling Update

New Mississippian oil discovery at Steamboat Hansen 8-10 well

Nighthawk, the US focused shale oil development and production company (AIM: HAWK and OTCQX: NHEGY), announces an update on its drilling program including a new oil discovery at the Steamboat Hansen 8-10 well at its 100% controlled and operated project at Jolly Ranch in the Denver-Julesburg Basin, Colorado.

Highlights

· The Steamboat Hansen 8-10 well, the fourth well in Nighthawk’s 2012 drilling program, has discovered a Mississippian age, conventional oil-bearing reservoir at a depth of just over 8,000 feet

· The reservoir has been logged and tested and the well has been brought onto production

· Internal analysis indicates potential oil initially in place of 4 to 8 million barrels

· Planning for further development of the reservoir is underway

· Open-hole logging of the Steamboat Hansen 8-10 has identified oil producing potential in the Cherokee shale formation at a depth of around 7,400 feet

· Well confirms significant potential in Nighthawk’s hitherto undrilled northern acreage and this area now to be separately identified as the Smoky Hill Project*

· Whistler 6-22, the final well in the drilling program and also located in the Smoky Hill project area, currently being tested in the Cherokee and Marmaton formations

Steamboat Hansen 8-10 Well
(Nighthawk 100% Working Interest/80% Net Revenue Interest)

The Steamboat Hansen 8-10 well is the fourth well in Nighthawk’s 2012 five well drilling program. The well was successfully drilled to its target depth of 8,500 feet in seven days. The well was logged and cased.

This is the most northerly well drilled on Nighthawk acreage, over 20 miles north of the recently drilled John Craig 6-2 well, and 45 miles north of the older Craig wells. It is the first well drilled in this area for over 25 years. The well had two primary objectives, to establish the commercial potential of the Cherokee shale formations in this northern area and to test a specific Mississippian structure identified from 3D seismic analysis.

Both objectives have been successfully achieved with the open-hole logs identifying oil producing potential in the Cherokee shale formation. However, further testing and completion of this zone will not be undertaken until the newly discovered deeper oil reservoir is produced.

This structure is Mississippian in age and the well penetrated two oil-bearing intervals totaling thirty-eight feet between 8,025 and 8,065 feet deep. These intervals were logged and a bottom hole pressure build-up was performed. Both oil-bearing intervals were tested and the results showed a 75:25 oil/water ratio. The well was completed naturally without acid stimulation or clean-up.

Initial analysis of the oil shows it to be a light 38-40 degree API, slightly viscous oil. Appropriate production facilities, including heated storage tanks, have been installed and commercial production commenced on 28 November 2012. An update on production rates will be issued once steady production has been established.

Nighthawk’s analysis of the reservoir indicates potential for oil initially in place of 4 to 8 million barrels depending on assumptions around the areal extent of the structure. The Company is commissioning an independent assessment of the reservoir potential which will provide greater detail on the oil in place and the potential recovery factors.

Further development work is likely to be required to fully evaluate this discovery.