25 May 2012

Nighthawk clears the decks

29/03/2011 Robert Tyerman

Nighthawk Energy (HAWK) is focusing on Colorado's Jolly Ranch oil shale project after losing an interim $24 million (£15 million) in disposals and impairments.The AIM-quoted company, steered by chief executive officer Tim Heeley since last autumn's departure of entrepreneurial David Bramhill, has taken a $40.4 million write-down loss on selling another project, Revere, and a combined $23.21 million impairment charge on two others, Cisco Springs in Utah and Cliffs in Illinois.

These moves follow a strategic review undertaken by Heeley and colleagues, which led them to concentrate on Jolly Ranch, an extensive project where oil services giant Schlumberger two years ago estimated potential resources of 1.5 billion barrels. Heeley says Schlumberger has more recently come up with an estimate of 33,000 barrels of oil per acre in one part of the project, which he says could, if replicated throughout Jolly Ranch, imply a potential resource of 13 billion barrels.

According to Heeley, Nighthawk, which is looking for a new head of operations and is recruiting a new finance chief from the City, wants to up its game technically. The company has a £25 million equity draw down facility with Darwin Strategic, part of the Evolution finance and investment group, but he says it would rather tap the market for a modest sum to advance Jolly Ranch.

Any such move would presumably await a new resource evaluation of Jolly Ranch by consultant Gaffney Cline & Associates, due next month. Nighthawk shares have dropped from 29p to 8.56p over the past year and now value the company at £32 million.

If the new resource estimate pleases and the sector remains in vogue, they could repay a brave recovery punt.

Tags: AIM market, Colorado, Oil shale, Schlumberger, Tim Heeley

Sector: Oil & Gas Producers

Companies: Nighthawk Energy

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