AIM quoted Nighthawk Energy plc (AIM:HAWK) is a dynamic UK registered energy company with a focus on the development of, and production from, hydrocarbon projects in the USA, a country with low political risk and a major shortfall in domestic oil and gas production.
Shale Oil specialist Nighthawk Energy (LON:HAWK, OTCQX:NHEGY) reported a rise in second quarter production from its Jolly Ranch project in Colorado, but reminded investors that most wells are on test and are not permanently producing.
Production in the second quarter rose to 3,079 barrels of oil net to Nighthawk compared with 2,062 barrels net to Nighthawk in the first quarter.
In its first quarter production update, the company had already flagged that second quarter production was expected to be higher due to increased workover activity and improved operational efficiencies to maintain production from the long-term test wells, namely the Craig 4-4 and Craig 16-32.
Nighthawk said the production figures should not be used to calculate a barrels-of-oil-per-day figure as the wells, which are predominantly on test, are intermittently taken offline for routine maintenance, modifications to pumping equipment, weather related conditions, workovers, recompletions or completion in new zones.
As the number of wells increases, the effect of individual wells being taken offline will have less impact on the overall production figures.
The previously announced completion and recompletion work continues. Work to further optimise costs and ensure reliable production is ongoing. Water and electricity lines have been laid to the Jolly 2-1, 16-1 and 10-5 wells.
The Jolly Ranch 2-1 well has been added to the current programme and was completed in the Cherokee A formation in late May 2011. The well was recently placed on pump and early volumes have indicated that the casing is likely to have a leak, which is inhibiting production. This will be remedied before being placed back on pump.
John Craig 7-2 was re-entered in late May 2011 to inspect the Cherokee A which had been previously fracced. Following analysis the fracture was shown not to have penetrated the Cherokee A and attempts were made to acidise the formation to see if production could be stimulated.
Whilst the horizon produced some oil it was not consistent enough to place on pump. However, the Fort Scott, which sits above the Cherokee A, was subsequently tested without any stimulation and produced sufficient oil for the well to be placed on pump to monitor the results.
Given the potential of the Cherokee A in this area; the 7-2 well sits approximately three miles to the North West of the Wiepking Fullerton Aloha Mula #1 which has produced over 220,000 barrels from a vertical Cherokee A well in the past two years, further drilling will be considered in this area.
In late June 2011, the Craig 15-34 well was tested in the Cherokee A and had oil shows during swabbing. The well was placed on pump in early July 2011.
Craig 7-34 is currently being acidised in the Cherokee A.
Further activities intended to enhance production from the following wells are now planned and being undertaken, Nighthawk added.