Rationale for buying Nighthawk Energy (HAWK) bought at 36.5p

Nighthawk is an AIM listed Oil exploration and production company, with all their projects in the USA. It’s main asset and the reason why I bought into it is their Jolly Ranch project. This is a 370,000 acre shale oil project in Colorado, in which Jolly Ranch hold a 50% interest. According to a recent Schlumberger report undertaken over 246,000 acres of the project, there is an estimated 1.426billion barrels of gross oil. Schlumberger have also said that they expect that similar resources are expected to be in place across the rest of the acreage. If this were the case then this would equate to roughly 2.19billion barrels of oil. At the moment they are in the process of trying to sell a 75% working interest in this project and they say they have had numerous parties who are showing an interest.


A rough estimate of recent oil shale sales suggests that the company should expect something between $5000 and $12,000 an acre. If we conservatively take the lower estimate then the Jolly stake could be valued at $925million, which is roughly £560million. This compares to the current market capitalisation of approximately £85million. As the company is debt free the potential for a big rise in the share price is therefore enormous although somewhat speculative as Nighthawk do not have the funds to fully develop Jolly Ranch themselves and are therefore depending on a sale.

Nighthawk is not all about Jolly though as they also have other assets which are producing cash flow.

These are;

The Revere project in Kansas is a 40,000 acre project in which Nighthawk hold a 50% stake. The estimated oil in place is 210.51 million barrels. Which the company expect will prove to be bigger once all the outlying acreage is assessed. Revere currently has a gross production of approximately 150 barrels of oil a day, which is set to increase in the future.

Cisco Springs in Utah is mainly a gas play in which Nighthawk have a 50% stake on 24,000 acres. This project contains roughly 121 billion cubic feet of gas and 3.8 million barrels of oil. Due to current low gas prices in the area and the potential of Jolly Ranch and Revere not many resources are being pt into Cisco Springs at this specific time.

Cliffs in Illinois is a shale gas play Nighthawk own 80% of the 15,591 acres and the estimated gas in place is 150 billion cubic feet. I believe the company now see this as a non core asset.



I would conservatively say Revere, Cisco Springs and Cliffs would cover the current market capitalisation of £85million. This would mean that the Jolly Ranch project is thrown in for free. Seeing as a large stake of this has now formally been put up for sale it will hopefully not take too long for the true value in this company to show itself.