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US-focused shale oil development and production company, Nighthawk Energy (LSE:HAWK), revealed earlier today that the well drilled on the northernmost part of its wide acreage in Colorado encountered not only shale oil but conventional oil, a month after it has been drilled to its target depth.
The Steamboat Hansen 8-10 well, the fourth of the company’s five-well drilling programme for 2012, had already reached its target depth of 8,500 feet back in 1st November 2012 and had been logged and cased a month ago but it was not until earlier today that Nighthawk disclosed the said well encountered light oil and has opened up a new oil play in the said region.
In a statement, the company said the well found 38-40 degree API slightly viscous oil with a 75:25 oil-water ratio and estimated the oil initially in place to be between four and eight million barrels, pending full report of an independent assessment commissioned by the company.
According to Nighthawk’s Chairman of the Board, Stephen Gutteridge, the new oil play discovered is of Mississippian age – a very active play found in Western Kansas, North Western Oklahoma, Texas panhandle, and in the eastern Colorado region.
The company’s 410,000-acre project is located in the south east portion of Colorado and is targeted for Cherokee and Marmaton shale formations.
The discovery of conventional oil and new oil play prompted the company to separate the area from the Jolly Ranch Project and designate a new name, Smokey Hill, for the acreage where Steamboat Hansen was drilled. It may have been the driving rationale for drilling the Whistler well – the fifth well in the originally four-well drilling campaign.
Growth in 2013
“Nighthawk now has major opportunities for production growth in 2013 – the further commercial exploitation of our widespread Cherokee shale resource, the development of a new conventional oil-field and the possibility of additional conventional Mississippian discoveries in our northern acreage,” Mr. Gutteridge said.
The announcement sparked heavy trading of Nighthawk stocks on the London Stock Exchange, with nearly 16 million shares swapping ownership for a 5.4% rise from yesterday’s close, to 6.30 pence by 3:PM GMT.
Shares had nearly doubled in September, following commercial production flow rates achieved at the company’s first well, John Craig, which has produced 600 barrels of oil during its initial 24-hour testing.
Nighthawk, which has 100% interest and 80% net interest in the project, however, only averaged 76 barrels of oil per day in the third quarter of 2012 and is still operating at a loss.
