Nighthawk Energy : Chapter 11 update

16 May 2018

Nighthawk Energy plc ('Nighthawk' or 'the Company')

Notice of Chapter 11

Nighthawk, the US focused oil development and production company (AIM: HAWK and OTCQX: NHEGY), announces that, on 15 May 2018, its U.S. operating subsidiary, Nighthawk Production LLC ('Production'), and subsidiary OilQuest LLC ('OilQuest'), have filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code (the 'Bankruptcy Code') in the United States Bankruptcy Court for the District of Delaware (the 'Bankruptcy Court'). With those petitions, Production and OilQuest join the Company and its direct subsidiary, Nighthawk Royalties LLC ('Royalties'), both of which filed similar petitions in the Bankruptcy Court on April 30, 2018.

Under US bankruptcy law the commencement of a Chapter 11 case creates an estate comprised of all the interests in property of the debtor. In contrast with other insolvency regimes under US law or the law of other nations, the commencement of a Chapter 11 case does not automatically cause the appointment of a trustee or liquidator over this estate. A company in Chapter 11, referred to as a 'debtor,' continues to operate under the management of its pre-bankruptcy directors and officers, which remains in possession of the Chapter 11 estate and is its legal representative authorized to operate the business of the company as a 'debtor-in-possession'. The debtor-in-possession exercises substantially all the rights and powers afforded by Chapter 11 and the US Bankruptcy Code.

Along with the voluntary petitions, Production and OilQuest have asked the Bankruptcy Court to enter their cases into joint administration with the previously filed cases for the Company and Royalties, and to approve a proposed sale of all or substantially all of the operating business assets of Production pursuant to section 363 of the Bankruptcy Code. Among other things, this provision authorizes a debtor-in-possession to sell a debtor's assets outside the ordinary course of business, upon notice to parties in interest and approval of the Bankruptcy Court based upon a showing of a sound business justification for the sale.

The section 363 sale is proposed to be conducted as a public auction, as the continuation of a process commenced months ago by the Company's investment banker retained in January of 2018, SSG Capital Advisors, LLC. Under the terms of a Sale and Purchase Agreement ('Polaris SPA') negotiated with Polaris Production Partners LLC, an affiliate of Morse Energy Capital Partners, and filed with the Bankruptcy Court on 15 May 2018, the Company will solicit competing offers in order to present the offer deemed 'highest and best' to the Bankruptcy Court for approval at a final hearing to be scheduled in the Chapter 11 cases. The Polaris SPA that is proposed to the Bankruptcy Court as the 'stalking horse bid' provides for an all-cash purchase price for the acquired assets of $18 million and assumes an effective date of 1 July 2018.

The Company remains open to discussions with its major stakeholders regarding a possible alternative proposal for a restructuring and a recapitalization of the Company, but this must now be handled in conjunction with the Bankruptcy Court.

The assets to be sold comprise substantially all of the assets of the Company and its subsidiaries, and include all oil and gas wellbores, saltwater disposal wells, injection wells, leases and equipment. Once the Bankruptcy Court has approved the sale to the purchaser that provides the highest and best offer, Nighthawk will work expeditiously to finalize the sale and transition the business to the new owner. The net proceeds of a sale are to be applied first in reduction of the CBA loan and in payment of allowed expenses of administration incurred in the course of the Chapter 11 cases. Absent a substantially higher and better offer than that received from that set forth in the Polaris SPA the sale would yield no residual value for shareholders, whose interests are subordinated by U.S. bankruptcy law to the claims of creditors and expenses of administration.

Further announcements will be made in due course.

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This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.