Executive Q&A – Independent Oil & Gas Focus
Executive Q&A with Tim Heeley, Chairman, Nighthawk Production By Drake Lawhead
Tim, Nighthawk is a closely-watch stock on the AIM, but for our international audience, explain to us in a few sentences what your company is about.
Nighthawk Energy is now the 75% working interest owner and operator of 410,000 gross acres we are engaged in developing an early stage but proven and producing shale oil play in the South Eastern DJ basin in Colorado. We are targeting the Cherokee Shales, these are Pennsylvanian age (Upper Carboniferous) formations around 6,500 – 7,000 ft in depth and have shown to produce not only on our acreage but on other licenses around us. We have established a number of key facts about the play to date and we now need to close the gap between our current valuation and the valuation seen in many transactions in the space currently.
What kind of upside do you see the Jolly Ranch prospect possessing? Would its success have implications for other emerging shale oil plays?
The upside in the project is very exciting and unlocking the potential is a process of demonstrating consistency and repeatability in the production from the existing wells plus drilling new ones to prove up the core area and the wider acreage. Undertaking this should close the value gap between us and other shale oil transactions that frequently are in the multiple thousand dollars per acre. New shale plays, especially oil, continue to be discovered in the United States, there is a mix in transactions at the minute of large major’s acquiring proven and producing plays but also recently we are also seeing these large companies committing to largely undrilled unproven plays like the Tuscaloosa and Utica shale plays. All this serves to enhance the value of shale plays in general but increasingly oil and liquids rich plays.
2011 was a difficult one for the Jolly Ranch prospect, but you’ve managed to wrest operatorship of the asset from your partners – what’s the game plan now?
We had a very clear game plan to acquire the operatorship and drive the development of the project, we had to appoint to certain key positions such as CFO and COO and we got excellent seasoned professionals for both in 2011. However the markets were the real issue and whilst we had a clear strategy the timing was not ideal. That being said we start 2012 as the operator and 75% working interest holder in the project and this means we can control the pace but also the development strategy. With a focused team being built in Denver we will have a tremendous amount of experienced field operations and scientific skills to call upon to turn around the perception and performance of the asset. In the first instance we are going to focus on what has been drilled already namely maximise the knowledge, and more importantly, the production from the existing wells. We will in parallel undertake new seismic reinterpretation and look to build some geological models to assist well placement and wider understanding of the Cherokee shale play. Off the back of this work later in the year we will commence the drilling of new wells; four vertical and one lateral step out.
Where do you see Nighthawk in 3-5 years’ time? Will Jolly Ranch be enough to digest or do you have half an eye on other prospects?
The key thing about the Jolly Ranch project is that there has been a huge amount of leasing around our land position in the last 12 months; Devon, Chesapeake and Newfield, amongst others, all have varying land positions. This has led to the take up of most of the available land and thus almost impossible for new entrants to replicate large, contiguous land packages.
Drillers and Dealers :::
::: February 2012 Edition
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