Nighthawk's (LON:HAWK) shares fell after it announced it was disappointed that additional Spergen reserves were not found during its recent five-well drilling programme.
Drilling commenced with the Crested Butte 2-14 well located in the very eastern side of the Arikaree Creek field. The well was spudded on 10 September and was drilled to a total depth of 8,360 feet and within budget. Based on the company's 3D seismic interpretation of the location, it was initially thought to be west of the eastern bounding fault.
A statement says: "Instead, we drilled east of the fault and were below the fault. The Spergen formation contained mainly water but the well had oil shows in both the St Louis zone, a zone the company found previously in the Big Sky 14-11 well, and in two of the Marmaton zones."
The company has completed the well and based upon test production, expects production in the 100 bopd range once a pumping unit and production facilities are installed. On 22 September, drilling commenced on the Monarch 10-15 and was drilled to a total depth of 8,640 feet location in the Monarch Joint Development Area (JDA). This well was drilled under budget. The Monarch 10-15 location sits on the highest structure in the JDA and we expected to find oil in the Spergen formation. Unlike the Crested Butte 2-14 well, the Spergen formation in the Monarch 10-15 well indicated that the oil had at one time been present.
Nighthawk says this suggests that either the oil has migrated up hole to higher zones or off the structure to the East.
It adds: "During drilling, the Company encountered oil in the lower Atoka zone, a zone that we have never produced from, as well as shows in the upper Marmaton and Cherokee zones. The Company has performed completion work in the Atoka zone and are beginning to test production levels. Nighthawk also have plans to go up hole and test the Marmaton and Cherokee zones and an announcement will be made in due course about the results.
"The potential significance of the discovery of the Atoka zone is both the quality of the oil that we have found there and the fact that the zone is gas charged, potentially increasing production levels.
"Because of the lack of Spergen production in the Monarch well, the drilling plan was adjusted to move to a different part of the JDA to test another structure at the Kicking Horse location. This well was spudded on October 10 and reached a total depth of 8,541 feet. Based upon the results of the well logs and drilling, the Company has decided to plug and abandon this well. The total cost of this well was approximately $550,000.
"We are conferring with our JDA partner and spending time analysing these results and anticipate drilling the remaining planned wells prior to December 31, 2015."
The company also says it has made a filing seeking approval of its planned Arikaree Water Flood Project with the Colorado Oil and Gas Conservation Commission, the state oil and gas regulatory body. The Company filed the application for development of the project, including the location of the project and how it will impact mineral owners.
The projected financial feasibility of the project along with project economics will be submitted in early November. The final hearing with the COGCC is in early December. As previously reported, we anticipate the project will both increase the Ultimate Recovery of Oil (EUR) from the field as well as accelerate the year by year production volumes.
The original estimated Oil in Place (OIP) for this field was approximately 16 million barrels, primarily in the Spergen zone, with estimated ultimate recovery rates for booking of reserves at approximately 17%.
Chairman Rick McCullough said: "While our initial drilling results are still being fully evaluated, they are disappointing in that additional Spergen reserves were not found.
"The discovery of additional St Louis and the newly discovered Atoka reserves are encouraging and indicative of just how many oil-producing zones there are in this part of Colorado. Operators have previously drilled for this Atoka zone with little success. It is too early to determine how productive it may be, but additional testing is planned to try and determine these zones potential.
"The updated estimates associated with the Arikaree Creek Water Flood Project are extremely significant. When I joined the Company a year ago, Chuck Wilson, our Chief Operating Officer, and his team already thought the Arikaree Creek field might be a good candidate for a water flood solution. Now, with the work that he and the team have performed with third party technical advisors, the project shows excellent promise. The field has already been a great success for Nighthawk Energy and to think that there may be the possibility to recover another 3-4 times the amount of historical oil recovered to date, it is far beyond our original expectations.
"That comes at a great time with the company being able to increase its production and substantially increase its reserves without a significant expenditure of capital."
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Independent Resources (LON:IRG) has conditionally raised Â£800,000, before expenses, through the issue of 133,333,333 new ordinary shares at 0.6p apiece. Investors in the placing will also be issued with up to 133,333,333 placing warrants on the basis of one placing warrant for each placing share.
The warrants have an exercise price of 1.0p, a 66.66% premium to the placing price to raise up to a further Â£1.33m for the group. The warrants may be exercised at any time until 18 November 2017.
Proceeds of the placing will be used to:
Â· meet the company's share of the consideration paid by JVCO for the acquisition of a 50 per cent, interest in East Ghazalat;
Â· advance evaluation of business opportunities in Egypt and elsewhere in North Africa, including diligence costs
Â· cover short-term operating costs and preparation for the Ksar Hadada work programmes;
Â· contribute to working capital commitments of the group;
Â· pay transaction costs associated with the placing.
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Sefton Resources (LON:SER) has appointed Clement Chambers as CEO, and Michael Hodges as non-executive director. Both appointments were effective immediately.
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The sector's biggest riser was Iofina (LON:IOF) - up by more than 20,.9% in late trading - while the biggest faller was Caza Oil & Gas (LON:CAZA) - down by over 18.5%.
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