Nighthawk announced an update on strategy and current activities.
The strengthening of the Nighthawk management team and, in particular, the recruitment of Chuck Wilson as Chief Operating Officer has created an operating capability within the Company that the new team intends to utilize to improve production at Jolly Ranch. As a result the Company has recently engaged in discussions with Running Foxes Petroleum Inc. ("Running Foxes"), the operator and 50% working interest partner of the Jolly Ranch project, in relation to the potential acquisition of both its working interest and the operatorship of the project.
In seeking to move ahead with the potential acquisition, the Company has undertaken a significant number of meetings with institutional investors to evaluate the potential funding available for the transaction and for a new work program at Jolly Ranch involving workovers of existing wells and new wells. Investor feedback on the Company's strategy has been largely positive, but the current overall market conditions have determined that the acquisition cannot be executed.
The Company is proposing to push ahead with the first steps in the new work program undertaking improvements to existing wells and drilling a number of new wells, commencing in early 2012. The Directors plan that this program will demonstrate the new operational capabilities of the Company, increase production and establish additional value in the Cherokee shales. The Company is in discussions with Running Foxes over this program, which may involve Nighthawk taking on increased responsibility for the work program and providing the funding.
In order to execute the proposed work program, as well as support recent and ongoing costs, which have increased as a result of recent recruitment and the potential acquisition, the Directors are planning an equity fund raising, which is expected to comprise a placing and a preemptive open offer to qualifying shareholders. The Directors anticipate that the open offer, which will be conducted at the same price as the placing, will comprise a maximum of €5 million and will provide shareholders with the opportunity to apply for shares in excess of their pro rata entitlement.
A further announcement will be made in due course.
Steve Gutteridge, Chairman, said, "The new team at Nighthawk continues to see significant potential in Jolly Ranch and is determined to push ahead with our plans to begin unlocking that value in the coming months."
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