Nighthawk, the US focused shale oil development and production company, announces an update on production and operations at its 100% controlled and operated Smoky Hill and Jolly Ranch projects in the Denver-Julesburg Basin, Colorado.
Average total oil production in January 2013 was 280 bbls/day, slightly ahead of the December 2012 level of 276 bbls/day. (Nighthawk 80% net revenue interest). The primary contributor to production was the Steamboat Hansen 8-10 well in the Smoky Hill area, which is producing very consistently with almost zero water.
Nighthawk net revenue from oil sales for the two months of December and January was well in excess of US$1 million. This exceeds the total revenues received by Nighthawk in the whole of the last full financial year (US$972,000).
Following the upgrade to the salt water disposal facilities in the Jolly Ranch area, the Knoss 6-21 well was brought back on-line on 10th January 2013 and oil production from the Cherokee shale formation built up gradually during the month as the initially high fluid levels in the well were pumped down.
Apart from the Steamboat Hansen 8-10 and the Knoss 6-21, the only other well on production in January was the Craig 16-32.
Following on from the drilling of five new wells in 2012, Nighthawk is currently planning to start its 2013 new drilling program in the second quarter. The planning and permitting process for a number of new wells in the Smoky Hill area is well underway. These wells will be primarily targeted at increasing production from conventional oil prospects close to the successful Steamboat Hansen 8-10 discovery.
Prior to the commencement of this new drilling program, Nighthawk is planning a work-over program with the objective of ensuring consistent production and cash-flow and minimal maintenance requirements and distractions once the new drilling campaign gets underway. A work-over rig is expected to resume operations at both Smoky Hill and Jolly Ranch in February.
The work-over program will cover both the newly-drilled wells and the older wells and is currently expected to include:-
· Additional work on the salt-water disposal wells
· Re-perforation and/or repair work to bring a number of wells back into production
· Integrity testing of one well and plugging and abandonment of another well, in line with State requirements.
· Routine maintenance visits to two of the new wells to meet lease requirements and prepare them for potential production
As a result of the work-over program, it is likely that the Knoss 6-21 and Craig 16-32 producing wells will be required to be shut-in for a period in February. Production from the Steamboat Hansen 8-10 well will not be affected by the work-overs.
Stephen Gutteridge, Chairman of Nighthawk, commented:
"When we became operator in Colorado in January last year we inherited a single producing well and 30 bbls/day of oil production. We are now producing at nearly ten times that rate with one well still building up and others to be brought back online once operations resume. This has been a successful first year as operator and provides a solid foundation for further progress in 2013. In particular, we are excited by the prospectivity in the immediate vicinity of the successful Steamboat Hansen 8-10 well and see considerable potential for increased production from that area."
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