Nighthawk reported details of a Farmout Option agreement and the acquisition of additional acreage at the Jolly Ranch project.
Nighthawk holds a 50% working interest with Running Foxes, the operator, which holds the remaining 50% interest.
The Jolly Ranch Project is located in Lincoln, Elbert, Washington, Crowley and Kiowa Counties in the southeast part of the Denver Basin and hosts both conventional and non-conventional oil producing horizons targeting primarily Pennsylvanian age formations, namely the Marmaton (conventional) and the Cherokee and Atoka shales (non-conventional).
Anadarko Farmout Option Agreement
Running Foxes, as operator, has entered into a Farmout Option agreement with Anadarko E&P Company LP and Anadarko Land. Nighthawk will participate in the Agreement through the terms of its joint operating agreement with Running Foxes.
The Agreement includes Township 9 South, Range 56 West, Section 35 and Township 10 South, Range 56 West, Section 3 covering an area of 1,280 acres held by Anadarko. These sections are located close to the John Craig 7-2 wildcat well, recently drilled by Running Foxes and Nighthawk, on which production casing has been run and completion and test operations are underway.
Under the terms of the Agreement, Running Foxes and Nighthawk have the option, prior to 1 September 2010, to commence drilling a First Option Test Well at a location of their choice on the land subject to the Agreement. Following completion or abandonment of the First Option Test Well, Running Foxes will have an option of 120 days from the date of the release of the drilling rig from the First Option Test Well to commence drilling the Second Option Test Well.
Supplemental 3-D seismic has been shot and interpreted by Running Foxes and Nighthawk over these option lands. This operation was conducted during the Limon 3-D seismic program as announced on 2 June 2010.
Running Foxes will be operator of the well(s) if the option is exercised. Should the well(s) be successfully completed, Anadarko will receive a 20% royalty from production. Subject to that royalty, Nighthawk and Running Foxes will each retain a 50% interest in the well(s).
Jolly Ranch Land Acquisition
The strategic land acquisition program throughout the Jolly Ranch project area has been ongoing and the current acreage totals 416,000 gross acres (approximately 323,000 acres on a net basis).
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