North America focused explorer Nighthawk Energy (AIM: HAWK) is completing two vertical wells as producers at the Jolly Ranch project in Colorado after both hit hydrocarbon reserves, with two new rigs added to the site to accelerate completion of previously drilled wells and increase production.
The Craig 12-33 and Craig 4-33 vertical wells have reached total depth and have encountered what the company said were significant hydrocarbons. The Craig 15-32H lateral well was being prepared for sand frac operations after preliminary swabbing has produced 100 barrels of oil per day.
The company now has three rigs on the property, where two 3D seismic acquisition programmes are currently being conducted, one aimed at expanding the existing 3D coverage of the Jolly Ranch acreage, and the other shot in the vicinity of a competitor’s recently discovered oilfield near Nighthawk’s core project area.
“We are very pleased with the current results from the ongoing programme, which we believe will create further significant value across the wider project area. Although early days, we are particularly encouraged by the similarity of these findings to those encountered in the Bakken formation, the only other shale oil play in North America. We believe this progress will continue to delineate Jolly Ranch as a world-class hydrocarbon development,” said chief executive of Nighthawk Energy David Bramhill.
The Jolly Ranch project spans over 370,000 aacres and consists of three areas, Jolly Ranch, Middle Mist and Mustang Creek. Nighthawk holds a 50% stake in the project with operator Running Foxes Petroleum holding the remaining 50%.
The two companies have invested a total US$50 million in the project. An independent evaluation by Schlumberger put the P50 or most likely oil in place over 246,000 project acres at 1.462 billion barrels.
Broker Ambrian Capital previously suggested that an indicative post-frac production rate for the Jolly Ranch lateral well of 80 bopd would be a success, while oil production equivalent of 109 bopd was achieved from the well despite the early stage of completion.
This data, along with the significant hydrocarbons that were encountered by two vertical wells, was interpreted by the broker as encouraging early results that “bode well for the continued development of Jolly Ranch.” Ambrian retained its “buy” recommendation for the stock.