17th Aug 2015 08:39
LONDON (Alliance News) - Nighthawk Energy PLC on Monday said it has agreed a deal which will lead to the company substantially improving its cost margin whilst also announcing a 30% fall in costs related to its upcoming drilling programme.
The US oil and gas producer said it has entered into a six-month contract with the company that purchases its oil, which will lead to the Nighthawk's netback improving to USD7.00 per barrel from the previous netback of only USD5.40 per barrel. That contract will begin at the start of September.
The netback is used in the industry to reflect the revenue generated from one barrel of oil equivalent. The netback is the revenue after all costs associated with bringing the barrel to market.
In addition, the company said it will begin a five-well drilling programme in September at a cost of around USD1.4 million per well, which is 30% less than the costs experienced in 2014, it said.
The first well will be a development well in Arikaree Creek, and the other four wells will be in the Monarch joint development agreement, both in the US.
At the start of May, the company reported unrisked 3P reserves totalling 17.0 million barrels of oil equivalent net to the company. Around 4.0 million of those barrels are in the proven category. 3P refers to proven, probable and possible.
"To put our reserve and resource numbers in perspective, in our first three years of operations (late 2012 through today), our total cumulative oil production is in the 1.5 million barrel range," said Chairman Rock McCullough.
"We believe that the company's shares are undervalued. We are committed to closing that valuation gap through our accomplishments and effective communications of our plans and results," he added.
Nighthawk shares were up 5.9% to 4.13 pence per share on Monday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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