Westhouse sees more upside in Nighthawk’s Xenia oil and gas project after independent evaluation

Westhouse Securities positively responded to a recent statement from North America focused explorer Nighthawk Energy (LON:HAWK, OTC:NHEGY), in which it announced the results of a full and independent gas reserve report of the Xenia project, a part of the largest Revere project in Kansas, by Oilfield Production Consultants Limited (OPC).

The acreage of Nighthawk’s 50% owned Xenia project has increased to more than 15,000 acres, while the gas reserve evaluation by OPC calculated gross 3P (proved, probable and possible) reserves over 6,000 acres at 15.26 bcf (billion cubic feet), or 4.88 net to Nighthawk. The reserves comprise 1.54 bcf (0.49 bcf net to Nighthawk) in the 1P (proved) category and 4.4 bcf (1.4 bcf net to Nighthawk) in the 2P (proved and probable) category.

The acreage is set to increase by another 3,000 acres with the acquisition of the Green Valley project.
The average production from the Xenia field - operated by Runnng Foxes Petroleum - has been at 600,000 scf (standard cubic feet) of gas per day since October 2009. Eleven additional wells, awaiting completion and hook-up to the Xenia pipeline, are expected to add a further 600,000scf of gas (gross) per day of production.

Westhouse said that the calculation confirmed Xenia’s importance to Revere from a production and reserve prospective.

“Not only is gas production at Xenia expected to double in the near term but the potential to increase reserve quality is outstanding, given the substantial probable and possible reserves...while gross figures should benefit from the additional acreage,” said Westhouse in the note.

The broker said that Xenia’s P50 oil in place figure of “just” 6.85 million barrels over 3,700 acres suggested that the project’s oil potential was now much higher as well. Westhouse expressed confidence that the project’s resource would grow further upon independent evaluation.