For Investors Only: Nighthawk Energy In The D-J; At Market Cap, 250,000 Net Acres At $860/Acre

Seeking Alpha is reporting:

Nighthawk has focused on Colorado's Eastern Plains which has good and low-cost infrastructure. The company's interest is localized in particular sweet spots of the Mississippian play, based on the traditional exploration. Nighthawk's Mississippian play is analogous to the Mississippi Lime play of Oklahoma that SandRidge Energy kicked off with a few horizontal wells in 2009. The Mississippi lime has been very attractive to operators because of the relatively shallow targets and smallish completion jobs that keeps well costs down and profits up.

Nighthawk has been trying to do the leasing as quietly as possible for competitive reasons, and has amassed about 250,000 net mineral acres (100% controlling interest) of mineral rights in eastern Colorado, primarily in Lincoln County.

In Nighthawk's area:

Here are some important facts about the area surrounding Nighthawk's core properties:

1) In July 2011, ConocoPhillips bought 46,000 acres of mineral rights in Adams, Arapahoe, Douglas and Elbert counties which are neighboring Nighthawk's Lincoln county. In 2012, ConocoPhillips also signed a $137 million deal with the Colorado State Land Board to lease state-owned mineral rights (21,048 acres) under the old Lowry bombing range in eastern Arapahoe County.

According to Matthew Meagher, whose firm specializes in selling oil and gas properties nationwide: "It was the toughest oil and gas lease I've ever seen in my life, and ConocoPhillips accepted it." In addition to the upfront $137 million payment, the land board also required ConocoPhillips to pay a 20% royalty payment, as its share of the value of the oil and natural gas produced from the range. This is obviously high by industry standards and underscores the company's strong interest in this oil-bearing area.

2) In May 2013, a new oil gusher was reported in Nighthawk's core area. According to the Denver-based Rocky Mountain Oil Journal, a horizontal well in Cheyenne county, the Pronghorn State #16-15-48-1H, owned by Chama Oil & Minerals LLC has reportedly tested up to 2,000 bopd. Yes, you read that right. This was a gusher with 100% light oil.

By comparison, the Jake well drilled in 2009 in northern Colorado by EOG Resources  initially produced about 1,558 bopd. That was the well that kicked off Colorado's booming Niobrara play. Noble Energy's Gemini well in central Weld County initially yielded 1,100 bopd.

3) Nighthawk's Lincoln County experienced an oil boom during 2013 with an unusually high number of new drilling permits being issued. According to John Dewitt, Lincoln County Land Use Administrator, his office saw a surge in applications for well permits last year that it had not seen previously.

Mr. Dewitt said:"Lincoln County issued 107 drilling permits during 2013. At the start of last year, we had a little more than a hundred active or producing wells, so that more than doubles the number of oil wells we have."

As of the first week of January 2014, there are a total of 182 oil wells in Lincoln County. "That's 182 wells that are active, producing or capable of producing oil," DeWitt said.

Market cap: $215 million/250,000 net acres = $860/acre.