Why Nighthawk Energy Plc Is Surging Today

oilUS-focused oil development and production company Nighthawk Energy (LSE: HAWK) is surging today after the company issued an impressive set of first-half results. 

For the six months ended 30 June 2014, revenue more than tripled to $25.4m, while normalised operating profit rose to $14.1m, more than the profit of $12.9m reported for the whole of full-year 2013.

What’s more, during the first half of the year the company’s total oil production hit 342,382 barrels, compared to production of 83,428 as reported for the first half of 2013. 

Commenting on today’s results, chairman of Nighthawk Stephen Gutteridge said:

“Nighthawk has delivered an exceptionally strong set of financial results for the first six months of 2014 with performance on most measures close to equaling the twelve months results for 2013…Nighthawk now has a firm foundation for further growth and the challenge will be to exploit the considerable opportunity across Nighthawk’s acreage to deliver the next step up in production…”

Important few months 

Today’s results cap an important few months for Nighthawk. Indeed, since the beginning of June Nighthawk has announced a record level of production, appointed a new, highly experienced executive chairman and restructured the company’s debt.

The terms of this debt restructuring were actually announced today, with the company announcing that it had secured a $100m debt facility with the Commonwealth Bank of Australia, at highly competitive interest rates. Additionally, as part of the debt restructuring Nighthawk has repaid $10m of short-term unsecured debt and deferred a number of other debt payments that were due in the near future.

Alongside this debt restructuring, Nighthawk has also appointed a new executive chairman within the past week. Richard W. McCullough takes the role, and he brings 30 years of experience to the company’s board along with an impressive track record. 

Mr McCullough has been named CEO of the year for US mid-cap companies, as well as leading a strategic turnaround resulting in an almost four-fold increase in share price at mid-cap PDC Energy Inc. With this heavyweight on the board, Nighthawk’s future looks bright.

Rising production 

As well as management changes and refinancing, Nighthawk has been working hard to increase production, hitting the key 2,000 barrels of oil per day production level during June. 

Unfortunately, production fell slightly to only 1,694 bbl/d during August, although this was due to planned routine maintenance work at several key wells. When this maintenance work is complete, Nighthawk’s production should begin to rise once again.

Further, the company is still drilling wells and has brought several new wells online since August’s production update. So, it’s likely that production will have moved towards the 3,000 bbl/d level by the end of the year.

Still, even though Nighthawk has many attractive qualities, the company is still in its early stages of development. As a result, there are plenty of things that could go wrong and I would strongly suggest that you do your own research before making any trading decision. 

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Rupert Hargreaves owns shares in Nighthawk Energy Plc. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.