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AIM quoted Nighthawk Energy plc (AIM:HAWK) is a dynamic UK registered energy company with a focus on the development of, and production from, hydrocarbon projects in the USA, a country with low political risk and a major shortfall in domestic oil and gas production.
Nighthawk Energy takes control of Jolly Ranch in US$12.5 million deal
Nighthawk Energy (LON:HAWK) plans to acquire a further 25 per cent of the Jolly Ranch project from partner Running Foxes for US$12.5 million.
When completed, the deal will give Nighthawk a 75 per cent stake and operatorship of the Colorado shale oil play.
A total of US$8.5 million will be paid in cash, while Running Foxes will receive US$4 million-worth of shares.
Nighthawk is raising £18.15 million which will fund the acquisition as well as next year’s work programme. This is being financed by the issue of debt and equity.
"This acquisition will propel Nighthawk to a position of majority partner and operator of a potentially major early stage US shale oil play, with funding available to press ahead with further development,” said chairman Steve Gutteridge.
“We enter the New Year as a fundamentally different company with transformed prospects and a clear break with the past."
It was also revealed that Running Foxes has entered exclusive discussions to sell its remaining 25 per cent stake in Jolly Ranch to a “third party”.
Nighthawk’s operatorship of the project will allow it to control the speed and method of development at Jolly Ranch going forward.
It says a number of lessons have been learnt from the progress to date “which will be applied in seeking to improve the performance of the asset from existing and new well bores”.
By controlling the development, the company said it will be able to deliver greater value to shareholders by focusing on a number of key “development factors”.
These include well design and drilling operations, logging and well completion design and the increased use of horizontal wells.
Once the deal is completed, Tim Heeley will step down as chief executive and as a director.
However he will work with the existing Denver team to “set up and manage the operational and commercial structure and execution required to deliver sustainable, profitable production from the Jolly Ranch Project”.
The terms of deal outlined today value Jolly Ranch at less than the valuation in last full-year accounts.
So it is likely the company will impair the value of the project when it publishes the interim results.
“This does not detract from the directors' opinion that the value of the Jolly Ranch Project will only be enhanced by Nighthawk gaining operatorship of the asset and implementing a program of workovers, scientific work and new wells,” the company said.
