(HAWK) Nighthawk Energy

4 June 2013

NIGHTHAWK ENERGY PLC

("Nighthawk" or "the Company")

Drilling and Development Update

Oil column confirmed in Taos 1-10 well

Arikaree Creek Development to continue with two additional Appraisal Wells

Nighthawk, the US focused oil development and production company (AIM: HAWK and OTCQX: NHEGY), announces an update on the drilling and development of the Arikaree Creek oilfield at its 100% controlled and operated Smoky Hill project in the Denver-Julesburg Basin, Colorado.

Highlights

·     Logging and coring of the Taos 1-10 well has identified an oil column in the Mississippian Spergen formation consistent with discoveries at Steamboat Hansen 8-10 and Big Sky 4-11 wells

·     Testing and completion of the Taos 1-10 well is underway

·     The drilling rig has been retained to immediately drill two further Arikaree Creek appraisal wells, the Silverton 16-10 and the Snowbird 9-15 wells

·     Convertible loan notes to the value of £3.8 million (US$5.8 million) have been issued to fund additional drilling and development costs    

Arikaree Creek Development  

Taos 1-10 Well

The Taos 1-10 well has been drilled to a target depth of 8,315 feet and the well has been cored, logged and cased for production. Data from the coring and logging has identified a minimum of 35 feet of gross pay interval at 8,056 feet in the target formation of the Mississippian Spergen. The pay interval identified appears to be thicker in size and with similar characteristics to the productive intervals in the Steamboat Hansen 8-10 and Big Sky 4-11 wells.

The well is currently undergoing testing and completion. It is located close to the Steamboat Hansen 8-10 topside facilities and work is underway to expand these facilities to accommodate production from the Taos 1-10 well. The Company expects production to commence by mid June 2013.

Logs from the Taos 1-10 well have also confirmed a number of stacked pay opportunities up-hole from the Mississippian.

Additional Drilling and Development

The Steamboat Hansen 8-10, Big Sky 4-11 and Taos 1-10 wells have all been drilled on an uplifted structure, clearly identified from Nighthawk's 3D seismic, and bounded by fault lines to the north-west and south-east. Analysis of the 3D seismic and the comprehensive well data obtained from 2012 and 2013 drilling indicates the strong possibility that the Arikaree Creek oilfield extends beyond the south-east fault into a much larger structure that is also fault-bound and uplifted. The Company believes the potential in this larger structure is considerable but requires additional drilling to prove up that potential.

With the recent successful drilling adding substantially to production and cash-flow, Nighthawk has expanded its immediate drilling plans to include two appraisal wells on this larger structure. Both of these locations are drill-ready, the current drilling rig will be retained, and it has already moved to the first of these locations, the Silverton 16-10 well.

The Silverton 16-10 well is located close to, and due south, of the Steamboat Hansen 8-10 well and the objective is to evaluate the extent of the oil column immediately adjacent to, and on the south side of, the fault line. The second well, the Snowbird 9-15, is located one mile south of the Silverton 16-10 location and will aim to establish the southerly extent of the Arikaree Creek oilfield.

In addition to the drilling of these two appraisal wells, Nighthawk is planning for further development of the Arikaree Creek oilfield during 2013. Existing 3D and 2D seismic is being re-evaluated against well-data and the permitting process for new 3D seismic and additional well locations is underway.          

Convertible Loan Notes  

To finance this next stage in the development of Arikaree Creek, Nighthawk has issued £3.8 million (US$5.8 million) of unsecured convertible loan notes at par. Parties connected to the Company's largest shareholder, Johan Claesson, have agreed to subscribe for up to £2.635 million (US$4.0 million) of the convertible loan notes. 

The principal terms of the convertible loan note are:

·     9% annual coupon payable quarterly in arrear

·     Convertible at the option of the holder at a price of 5.5 pence per ordinary share at any time before the second anniversary of the date of the loan note instrument

·     Redeemable by the Company at any time from six months after the date of the loan note instrumentup to the second anniversary

The subscription for convertible loan notes by parties connected to Johan Claesson is a related party transaction under the AIM Rules. Accordingly, the Nighthawk Board considers, having consulted with Westhouse Securities Limited the Company's Nominated Adviser, that the terms of the transaction are fair and reasonable in so far as the Company's shareholders are concerned.

Stephen Gutteridge, Chairman of Nighthawk, commented:

"This phase of development of the Arikaree Creek oilfield has been very successful. We expect to have three wells producing from the field by mid June and can now follow up that success by establishing the extent of Arikaree Creek to the south. The objective of this relatively small-scale fund-raising is to deliver two more successful wells, which will not only further increase production and cash generation, but will enable us to establish material 1P and 2P reserves in the field, which would open up a wide range of options for the development of Arikaree Creek and further exploitation of our large acreage position."

Chuck Wilson, Chief Operating Officer of Nighthawk, who has over 32 years of experience in the oil and gas industry and meets the criteria of qualified persons under the AIM guidance note for mining and oil and gas companies, has reviewed and approved the technical information contained in this announcement.

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