Nighthawk Energy Sells 50% Stake in Centurion Project
Nighthawk Energy has announced the sale of the Company's 50% interest in the Centurion project to Osceola Hydrocarbons Limited ("Osceola") for a total consideration of US$5 million in cash ("the Sale"). In addition, Nighthawk will be paid an annual royalty equal to 5% of the gross oil and gas revenues from the Centurion project received by Osceola.
The Centurion project is located in Sumner County, Kansas and covers approximately 15,000 acres.
Development at Centurion has been relatively restrained due to Nighthawk's focus being directed at Jolly Ranch and the Waterflood projects.
Three wells have been drilled and reported upon.
The Franklin 13-6 well reached a total depth of 3,904 feet into the Arbuckle formation and encountered excellent live oil shows. The well has subsequently been on controlled oil production for six months and product is being sold.
The Atoka-Nighthawk 13-11 and 12-29 wells have both been completed as future gas producers. A four well drilling program is scheduled for the near future.
The Company commissioned independent consultants Oilfield Production Consultants Limited ("OPC") to provide a fair value opinion on the Sale. OPC's opinion is as follows:
"The proposed purchase of Nighthawk's 50% in the project by Osceola for US $5 million (with Nighthawk retaining a 5% royalty on Centurion) is reasonable given the money that has already been capitalised on the project. The proposed price is fair given the potential reserves in the project but takes into account the limited development and appraisal work undertaken to date."
Related Party Transaction
Each of the directors of Nighthawk has a shareholding in Osceola as follows:
- Michael Thomsen 0.68%
- David Bramhill 1.91%
- Joe O'Farrell 2.10%
- Geoffrey Metzger 0.35%
David Bramhill, Managing Director of Nighthawk, commented, "We are pleased to have executed the sale of our interest in Centurion, a non-core project. As the evaluation and development of Jolly Ranch and the Waterflood projects continue, we are confident that these core projects will enable the Company to achieve the internal goals that have been set in terms of reserves and production potential. Independent reviews in respect of Jolly Ranch and the Waterflood projects are ongoing and will be completed during Q3 2009. The directors look forward to the results of these reports and the verification of Nighthawk's sub-surface assets, which we believe will be substantial and in respect of Jolly Ranch will uphold the board's view that Nighthawk holds a major interest in a world class hydrocarbon development project."