Nighthawk Energy (LON:HAWK, OTCQX:NHEGY) has drawn down £1.9 million from an existing facility for the completion and recompletion of a number of wells that have already been drilled at the Jolly Ranch project in the US.
The company said that this work will allow it to obtain a better understanding of the completion techniques required to deliver value at the project.
The funds were drawn down from Nighthawk’s equity financing facility (EFF) with Darwin Strategic Limited, part of the Evolution Group.
Under the terms of the agreement, Nighthawk has allotted 20 million shares issued at a price of 9.5 pence to Darwin. This is Nighthawk’s second draw down since the EFF was announced in October 2010.
Last month, Nighthawk reported that the Eclipse reservoir simulation on Jolly Ranch suggested oil in place in the Cherokee and Atoka shale formations is some 14 times higher than previous estimates.
Edison Investment Research analyst Peter Dupont has said that based on the existing oil-initially-in-place, a 10 percent recovery rate and a valuation quotient of US$1 per barrel, Nighthawk’s 50 percent share of Jolly Ranch could tentatively be worth about US$120 million.
According to Dupont this would equate to 22 pence per share, compared to the current price of 9.9 pence.