Nighthawk and Running Foxes to extend Jolly Ranch project through Anadarko farm-out deal

Nighthawk Energy (LON:HAWK, OTCQX: NHEGY) and its privately-held associate Running Foxes Petroleum Inc have entered into a farm-out agreement with Anadarko Petroleum (NYSE:APC) in relation to the Jolly Ranch oil shale project in Colorado. The partners have optioned two test wells to be drilled on 1,280 acres held by Anadarko near the John Craig 7-2 wildcat well.
Shares in the company rose nearly 7 percent in early London deals.
Nighthawk and Running Foxes have been carrying out a strategic land acquisition programme throughout the Jolly Ranch project area, and the current acreage totals 416,000 gross acres (323,000 acres net).
The Anadarko deal covers an area totaling 1,280 acres held by Anadarko, including sections located close to the partners' recently drilled John Craig 7-2 wildcat well. At John Craig 7-2, production casing has been run and completion and test operations are underway.
Nighthawk noted that supplemental 3-D seismic has already been shot and interpreted by the partners over the option lands.
Under the terms of the deal, Running Foxes (operator) and Nighthawk have the option, until 1 September 2010, to start drilling a ‘First Option Test Well’ at a location of their choice. Running Foxes will subsequently have a further 120 days to commence a ‘Second Option Test Well’.
If the wells are successful, the partners will each earn a 50% interest in the wells and Anadarko will receive a 20% royalty from production.
Jolly Ranch is located within the Denver Basin which has supported significant hydrocarbon production from Pennsylvanian sandstones and carbonates. Jolly Ranch contains multiple conventional and unconventional oil producing horizons; the primary targets are the Marmaton carbonate and the Cherokee and Atoka shales, which are located above each other in the Pennsylvanian, the Marmaton being above the Cherokee, with the Atoka at the bottom.

The Jolly Ranch project has been growing in stature, both from an operational and corporate perspective, in recent months. Significantly, last week, Nighthawk confirmed that the partners were looking to divest some of their working interests and bring in a new partner to take the burgeoning shale project forward. The companies have hired Houston-based Macquarie Tristone to carry out the marketing programme.
According to a report carried out by Schlumberger, a major oil and gas consultancy, Jolly Ranch most likely contains some 1.5 billion barrels of oil-in-place. Currently, an extensive drilling and testing programme has been taking place at Jolly Ranch, and Schlumberger is currently conducting a second report which will be used as the basis of an independent reserves assessment.
Nighthawk and Running Foxes each hold a 50% working interest in Jolly Ranch, and the partners said that it is likely that they will divest equal stakes, although the amount to be divested will be determined during the marketing process.

http://www.proactiveinvestors.co.uk/companies/news/17706/nighthawk-and-running-foxes-to-extend-jolly-ranch-project-through-anadarko-farm-out-deal-17706.html