Nighthawk Energy with its 100% controlled and operated Smoky Hill and Jolly Ranch projects in the Denver-Julesburg Basin, Colorado, announced details of its recent drilling results and planned water flood project.
As previously announced in August 2015, Nighthawk has initiated a five well drilling program for late 2015. Drilling commenced with the Crested Butte 2-14 well located in the very eastern side of the Arikaree Creek field. The well was spudded on 10 September and was drilled to a total depth of 8360ft and within budget. Based on the company's 3D seismic interpretation of the location, it was initially thought to be west of the eastern bounding fault. Instead, we drilled east of the fault and were below the fault. The Spergen formation contained mainly water but the well had oil shows in both the St Louis zone, a zone the company found previously in the Big Sky 14-11 well, and in two of the Marmaton zones. The company has completed the well and based upon test production, expects production in the 100 b/d range once a pumping unit and production facilities are installed.
On 22 September, drilling commenced on the Monarch 10-15 and was drilled to a total depth of 8640ft location in the monarch joint development area (JDA). This well was drilled under budget. The Monarch 10-15 location sits on the highest structure in the JDA and Nighthawk expected to find oil in the Spergen formation. Unlike the Crested Butte 2-14 well, the Spergen formation in the Monarch 10-15 well indicated that the oil had at one time been present. This suggests that either the oil has migrated up hole to higher zones or off the structure to the East. During drilling, the company encountered oil in the lower Atoka zone, a zone that we have never produced from, as well as shows in the upper Marmaton and Cherokee zones. The company has performed completion work in the Atoka zone and are beginning to test production levels. Nighthawk also has plans to go up hole and test the Marmaton and Cherokee zones and an announcement will be made in due course about the results.
The potential significance of the discovery of the Atoka zone is both the quality of the oil that we have found there and the fact that the zone is gas charged, potentially increasing production levels.
Because of the lack of Spergen production in the Monarch well, the drilling plan was adjusted to move to a different part of the JDA to test another structure at the Kicking Horse location. This well was spudded on October 10 and reached a total depth of 8541ft. Based upon the results of the well logs and drilling, the company has decided to plug and abandon this well. The total cost of this well was approximately $US550,000.
Nighthawk is conferring with their JDA partner and spending time analyzing these results and anticipate drilling the remaining planned wells prior to 31 December, 2015.
Arikaree Creek Water Flood Project
Nighthawk has made a filing seeking approval of its planned Arikaree Water Flood Project with the Colorado Oil and Gas Conservation Commission (COGCC), the state oil and gas regulatory body. The company filed the application for development of the project, including the location of the project and how it will impact mineral owners. The projected financial feasibility of the project along with project economics will be submitted in early November. The final hearing with the COGCC is in early December 2015.
Nighthawk anticipates the project will both increase the ultimate recovery of oil from the field as well as accelerate the year by year production volumes.
The original estimated oil in place (OIP) for this field was approximately 16 million bbl, primarily in the Spergen zone, with estimated ultimate recovery rates for booking of reserves at approximately 17%.
Based upon further analysis of the project and the completion of flow models, Nighthawk estimates that the OIP to potentially be up to 16.6 million bbl with estimated ultimate recovery expected to increase from 17% to between 30-40% with the water flood.
The potential increase over existing PDP reserves is 41%-105%. The company continues to refine the flow model results to determine the optimum number and placement of water injection wells in the field.
The company has already seen an uptick in production in the field over levels booked in their reserve reports due to the natural water drive that exists in this area. As a result, these incremental reserves are expected to be added as probable reserves for their year-end reserve report. Once the project is operational, and they begin to see increased production in the field, the company expects to transfer these reserves to the proved developed producing category as the performance of the project warrants.
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