Nighthawk Energy’s (LON:HAWK, OTC:NHEGY) David Bramhill gave an upbeat assessment of the size and quality of would-be bidders for a stake in the explorer’s Jolly Ranch shale oil project in Colorado.
"We have a lot of very big companies interested," the managing director told Proactiveinvestors.
Yesterday the group revealed that no fewer than seven interested parties have been short-listed by consultants Macquarie Tristone, which is conducting the auction process.
They will now be allowed access to the data room to assess the quality of Jolly Ranch before tabling definitive offers for a stake in the acreage, which is jointly owned by operator Running Foxes.
"We will not sell out completely," Bramhill said. "We will partner up. This is what this whole sale is about.
"It may be 10 per cent, it may be 75 per cent. But we have no intention of completely selling out. It is lucrative project, and what it needs is capital investment.
"We have a lot of very big companies interested. It is significant. In order to make the best of this project you need someone with extremely deep pockets. The fact is the people coming into our data room are of the highest quality."
In the meantime, the remainder of the year promises to be a busy period for Nighthawk, with Schlumberger preparing a £250,000 report assessing the quantity of oil that might be economically extracted from Jolly Ranch.
In July 2009 the P50, or most likely estimate of the oil-in-place in the Marmaton, Cherokee and Atoka areas of Jolly Ranch were assessed at 1.462 billion barrels gross.
The latest work by Schlumberger, due for official publication at some point in the fourth quarter, will give proved and probable reserves on which investors can make an objective valuation of Nighthawk as its assets.
"I’m not expecting anything nasty," said Bramhill, who says Schlumberger did its own due diligence on Jolly Ranch before embarking on such a comprehensive and expensive piece of analysis.
"They thought we had a viable project. If they didn’t then they would not have embarked on a report of this scale."
Nighthawk Energy acquired a 50 per cent interest in some 40,000 acres at Jolly Ranch in June 2007.
The position has subsequently been substantially increased and now covers approximately 370,000 gross acres in the Lincoln, Elbert and Washington Counties of Colorado.
This asset is located within the Denver Basin which has supported significant hydrocarbon production from Pennsylvanian sandstones and carbonates. Jolly Ranch contains multiple conventional and unconventional oil producing horizons.
The primary targets are the Marmaton carbonate and the Cherokee and Atoka shales, which are located above each other in the Pennsylvanian, the Marmaton being above the Cherokee, with the Atoka at the bottom.
The sedimentary layers below the city of Denver are 15,000 feet thick and the Pennsylvanian formations are between 6,100 and 7,800 feet below surface.
The sources of the hydrocarbons are the black shales which are laterally continuous throughout the area studied by Schlumberger when compiling the 2009 report.
These are rich in the ancient organic material from which the oil forms.