Nighthawk to Drill Two Smoky Hill Wells in Denver-Julesburg Basin

Nighthawk, the U.S. focused shale oil development and production company, announced development plans and an independent reserve report for its 100-percent controlled and operated Smoky Hill project in the Denver-Julesburg Basin, Colorado.

Highlights

• Steamboat Hansen 8-10 discovery to be further developed with two new wells scheduled to be drilled early in the second quarter 2013
• Production data for the Steamboat Hansen 8-10 well over the period from late November 2012 to 28 February 2013 shows:
  • Cumulative gross production has exceeded 22,000 barrels of oil (average rate of 239 barrels of oil per day (bopd))
  • Gross average daily production rate has increased to over 250 bopd
  • The payback period on drilling and equipment cost was under 3 months
• Independent Competent Person's Report ("CPR") on Steamboat Hansen discovery identifies gross Stock Tank barrels of Oil initially-in-Place ("STOIIP") of up to 4.89 million barrels and gross recoverable reserves of up to 755,000 barrels
• Based on analysis of the immediately surrounding structures, Nighthawk estimates potential for STOIIP to increase to 14.5 million barrels
• 2Q drilling program anticipated to be fully funded from existing resources and new short-term borrowing facility

Smoky Hill Development

The Steamboat Hansen 8-10 well, drilled by Nighthawk in October 2012 discovered a Mississippian age oil reservoir at a depth of just over 8,000 feet. This was the first well drilled in this area of Colorado for over 25 years and is some 50 miles from the nearest Mississippian discovery. The discovery opens up significant new oil potential in the region. The well was successfully completed and brought into production in late November 2012.

In the period to Feb. 28, the well has produced over 22,000 barrels of oil (average 239 bopd), with almost no water, minimal downtime and an increasing daily production rate, generating a gross sales value in excess of $1.75 million, in which Nighthawk has an 80 percent net revenue interest. The payback period on the well's drilling and equipment cost was under three months.

Following the success of the Steamboat Hanson 8-10 well Nighthawk commissioned the Denver office of MHA Petroleum Consultants LLC ("MHA") to produce a CPR including an independent evaluation of the reserves within the Steamboat Hansen discovery and the immediate area. The CPR has been prepared in accordance with the AIM Note for Mining and Oil & Gas Companies June 2009 and subject to the carve out of certain commercially confidential information, a summary of the report will shortly be available on the Company's website.

The Company now plans to commence the next development stage with the drilling of two further wells on the Smoky Hill project. Negotiations are underway to contract for a drilling rig for this next phase and, subject to rig availability and final permitting, it is anticipated that drilling could commence as early as April 2013. This development phase is primarily targeted at increasing production as quickly as possible to generate free cash for further investment in the second half of 2013.

It is anticipated that the two well drilling program will be funded from existing resources and new short-term borrowing facilities, as detailed below.

The Company believes that there is significant upside opportunity beyond the proposed two well program and has taken steps in recent weeks to secure lease positions in the area and commence the permitting process for further new wells.

Funding

Nighthawk has secured an offer of a short-term borrowing facility of $5 million (the "Loan Facility") which can be drawn down prior to May 31 to fund drilling, work-over and leasing programs. Current production levels are generating sufficient cash to cover operating costs and overheads and the Board believes that existing cash reserves and the borrowing facility are sufficient to fund the Company's immediate development and leasing plans.

The Loan Facility will be provided by a party connected to the Company's largest shareholder, Johan Claesson. The principal terms of the Loan Facility offer are:

• 15 percent annual coupon payable quarterly
• 10 percent profit-share after lease operating expenses in Nighthawk's net revenue interest in up to four new producing wells on the Smoky Hill project excluding the existing Steamboat Hansen 8-10 well
• Repayable in full no later than May 31, 2014
• Secured on a single lease held by production

Entering into the Loan Facility will be a related party transaction under the AIM Rules. Accordingly, the Nighthawk Board considers, having consulted with Westhouse Securities Limited the Company's Nominated Adviser, that the terms of the Loan Facility are fair and reasonable in so far as the Company's shareholders are concerned.

Stephen Gutteridge, Chairman of Nighthawk, commented:

"The CPR of MHA Petroleum Consultants is the first step in confirming the significant potential which we identified in the unexplored Smoky Hill acreage, and independently supports the case for further drilling in the area. Whilst we will continue our work to prove up the commerciality of the Cherokee shale opportunity, our short-term focus is on driving up production from the solid base of the Steamboat Hansen 8-10 well by drilling two more production wells.

"The CPR was able to draw on data from just three wells and our existing 3D seismic that covers less than 10 percent of the Smoky Hill area. Given the identified potential in this small area, we are particularly interested in the prospects within the much larger unexplored Smoky Hill acreage and will be drawing up plans for exploration of this area later this year.

"With the $5 million additional funding available, we will be able to move quickly to commence drilling, extend the current work-over program to add incremental production, add to our existing seismic bank and invest in our land position."

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