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Nighthawk update on borrowing base and hedging

By BFN News | 08:01 AM | Wednesday 04 November, 2015

Nighthawk Energy closed the quarterly borrowing base redetermination with Commonwealth Bank of Australia on 2 November based on reserves at 30 September. The redetermined borrowing base reflects the significant price drop seen by the market in the July-August period. Consistent with many other operators' reserve based loans in a declining oil price environment, the company's borrowing base available to be drawn was reduced from $32.0 million to $27.0 million. The existing loan agreement was amended which provides additional flexibility in the current market environment. The new amendments establish a minimum liquidity of $5 million and a waiver of the previous $5 million holdback by the bank. In accordance with the credit agreement, to conform with the new borrowing base, the Company will make three payments of $1,000,000, due in early December, January and February. Based upon the results of the Company's' November 30, 2015 reserve review, the January and February payments may be avoided if additional reserve value is added. Additional reserve value may be realized from the current drilling program, upward adjustments to existing well recoverability and/or increases in the forward strip price of crude oil. As of October 31, the Company had approximately $11 million, on hand. Based on current projections, the Company has adequate cash on hand to meet the above debt payment obligations, maintain its necessary liquidity as well as meet projected expenditures, including on the remaining wells of its current drilling programme. The Company's discussions with CBA continue regarding the Company's existing 2P reserves, drilling results and plans for increasing the borrowing base. Further announcements will be made at the appropriate time. As of 1 November, the company had 54,000 barrels of production hedged at a weighted average price of $70.13 per barrel for the remainder of 2015. As these hedges settle in November and December, Nighthawk will realise approximately $1,350,000 in cash flows above the current market prices. Gross average price realized for September production volumes was approximately $53.00 versus the average WTI price of $45.47 per barrel. For 2016, currently 167,000 bbls are hedged at a weighted average price of $63.63. Having hedges in place allows the company to manage the commodity risk around oil prices. Additional volumes for 2016 and 2017 are expected to be hedged as prices recover. At 8:01am: (LON:HAWK) Nighthawk Energy PLC share price was +0.1p at 2.33p Story provided by

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