Nighthawk Energy

Summary

Lender Advisor

Denver, CO

Nighthawk Energy was an independent oil and gas exploration and production company operating in the Denver-Julesburg (DJ) Basin of Colorado. The company focused on the development and operation of hydrocarbon assets in the United States.

Carl Marks Advisors (CMA) was engaged by senior lenders to evaluate the financial and operational risks focusing on its forecasted liquidity, business plan, and collateral values in connection with an over-advanced borrowing base facility.

CMA assessed risks related to a planned water flood project, providing detailed analysis, sensitivity scenarios, and strategies for managing the company’s complex capital structure. CMA also advised engaging with junior creditors and capturing cash flow for senior lenders. Following a significant drop in oil prices, CMA outlined a forbearance agreement with performance milestones tied to production, operations, and cash flow.

Key Challenges

Cyclical Downturn

Low Liquidity

Covenant Violations

Engagement Highlights

As part of the assignment, CMA was asked to assess the financial, geologic and operational risk associated with the development of a planned water flood project.
CMA provided analytical support and a detailed report outlining sensitivity outcomes and effects on enterprise value at various stages of plan development.
Company had a cumbersome capital structure with multiple classes of junior debt. CMA provided strategies on dealing with the junior creditors and capturing cash flow for senior lenders.
Company ended up with a 170% over advance of its borrowing base following a precipitous decline in oil prices.
CMA sensitized management’s projections for the planned water flood based on volumetric pore volume analysis and sweep efficiencies.
CMA provided an outline for a forbearance agreement including required performance milestones regarding production response, operational implementations, and cash flow generation for the company and the pilot project.
CMA continues to serve as a monitor for the performance of both the pilot water flood project and the company in general.

Nighthawk Energy

Summary

Lender Advisor

Key Challenges

Engagement Highlights

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