8/6/2019 Nighthawk Flash

1/1

1 | Edison Investment Research | Flash note | | 18 May 2011

18 May 2011

Nighthawks 18 May operations update appears disappointing at first glance.Production fell between Q410 and Q111, while the drilling programme scheduled forQ2 has been delayed. However, the disappointments reflect influences outsideNighthawks control and are short term. We believe the Jolly Ranch developmentprogramme is soundly based technically but commercialising what is a complex shaleoil project is likely to be a long haul.Net production in Q111 came in at 2,062 barrels, against 3,086 and 4,092 barrels in

Q4 and Q310 respectively. Previously the company had suggested that Q1 production

would be broadly unchanged. Production was hit in the latest quarter by a combination

of natural well decline and adverse weather in Colorado, which depressed operational

activity. In Q2, however, the production trend should strengthen markedly given benign

seasonal influences and an increase in wells on test since January by five to 12. The

initial four-well Jolly Ranch drilling programme scheduled to start early in Q2 has been

delayed due to tight rig availability. Interestingly, this reflects extended rig options by

other operators in the Mid-Continent and is an indication of the current enthusiasm for

US shale projects. Significant rival development activity is currently being undertaken in

the immediate vicinity of Jolly Ranch. Operationally the focus at Jolly Ranch is on an

extended well completion/recompletion programme.

Flash notePrice 5.91pMarket Cap 22mShare price graph

Share detailsCode HAWK

Listing AIM

Sector Oil & Gas

Shares in issue 378.1m

Price52 week High Low

27.0p 5.3p

BusinessNighthawk Energy is a UK registered oiland gas junior. Following a divestmentprogramme in November 2010 it is nowfocused on the Jolly Ranch project ineastern Colorado.

AnalystsPeter J Dupont +44 (0)20 3077 5700

Ian McLelland +44 (0)20 3077 5756

oilandgas@edisoninvestmentresearch.co.uk

Nighthawk EnergyYearEnd Revenue($m) EBITDA*($m) PBT*($m) EPS*(c) DPS(c) P/E(x)06/08 0.1 (2.4) (1.5) (0.8) 0.0 N/A

06/09 0.5 (2.5) (2.1) (0.7) 0.0 N/A

06/10 2.1 (1.6) (1.4) (0.4) 0.0 N/A

06/11e 1.7 (1.4) (1.4) (0.4) 0.0 N/A

Note: *Normalised, excluding amortisation of acquired intangible assets, exceptional items andshare based payment charges but after charging content amortisation.

Investment summary: Short-term issues

Edison Investment ResearchLincoln House, 296-302 High Holborn, London, WC1V 7JH tel: +44 (0)20 3077 5700 fax: +44 (0)20 3077 5750 www.edisoninvestmentresearch.co.ukRegistered in England, number 4794244. Edison Investment Research is authorised and regulated by the Financial Services Authority.

EDISON INVESTMENT RESEARCH LIMITEDEdison is Europes leading investment research company. It has won industry recognition, with awards in both the UK and internationally. The team of more than 65 includes over 35analysts supported by a department of supervisory analysts, editors and assistants. Edison writes on more than 280 companies across every sector and works directly withcorporates, investment banks, brokers and fund managers. Edisons research is read by major institutional investors in the UK and abroad, as well as by the p rivate client broker andinternational investor communities. Edison was founded in 2003 and is authorised and regulated by the Financial Services Authority(www.fsa.gov.uk/register/firmBasicDetails.do?sid=181584).DISCLAIMERCopyright 2011 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Nighthawk Energy and prepared and issued by Edison InvestmentResearch Limited for publication in the United Kingdom. All information used in the publication of this report has been compiled from publicly available sources that are believed to bereliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of EdisonInvestment Research Limited at the time of publication. The research in this document is intended for professional advisers in the United Kingdom for use in their roles as advisers. Itis not intended for retail investors. This is not a soli citation or inducement to buy, sell, subscribe, or underwrite securities or units. This document is provided for information purposesonly and should not be construed as an offer or solicitation for investment. A marketing communication under FSA Rules, this document has not been prepared in accordance withthe legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investmentresearch. Edison Investment Research Limited has a restrictive policy relating to personal dealing. Edison Investment Research Limited is authorised and regulated by the FinancialServices Authority for the conduct of investment business. The company does not hold any positions in the securities mentioned in this report. However, its directors, officers,employees and contractors may have a position in any or related securities mentioned in this report. Edison Investment Research Limited or its affiliates may perform services orsolicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and suddenswings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not

necessarily a guide to future performance. This communication is intended for professional clients as defined in the FSAs Conduct of Business rules (COBs 3.5).