Nighthawk hails cost cuts

06/01/2009 Robert Tyerman

US-focused oil minnow Nighthawk Energy suggests break-even costs at Jolly Ranch in Colorado could fall from $25 to $15 a barrel.

The Bristol-based company, steered by entrepreneurial David Bramhill, holds 50 per cent of Jolly Ranch, which is targeting output of 1,000 barrels a day in the first quarter of this year from six wells, with three more still to come into production. Against the background of recent oil price falls, AIM-quoted Nighthawk says cost-cutting measures have already reduced the break-even threshold at Jolly Ranch to $25 a barrel, against today’s near-$50 market price, and asserts ‘further cost reductions could result in the break-even oil price falling to $15 a barrel’.

Bramhill says he is even more enthusiastic about long-term prospects in Kansas at the company’s Buchanan Group projects and a water flood project. Nighthawk recently appointed experienced City analyst Tim Heeley as commercial director (without a board seat).

Floated at 25p in early 2007, Nighthawk shares have swung between 116.25p and 19.25p over the past 12 months and now stand at 35.5p, valuing the company at £81.8 million. They could fare better than several others in the sector.

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