Nighthawk Energy provides an operational update in respect of the Jolly Ranch Group project, located in Lincoln, Elbert and Washington Counties, Colorado. Nighthawk holds a 50% working interest in the project and the operator, Running Foxes Petroleum Inc. holds the remaining interest.

Highlights

Craig 7-34 well encountered numerous productive formations including the Morrow Sandstone, the Warsaw, St Louis and Spergen Carbonates and the prolific Atoka and Cherokee Shales.

Craig 15-32 well has been completed in the Cherokee Shales and will be the first Jolly Ranch well to test this formation. Jolly 4-13 well has been perforated in the Lower Atoka Shales with 100 per cent. oil and gas recovered from swab runs. High calorific value mixture of Natural Gas Liquids indicated during test from several wells. Natural gas pipeline to be constructed and cryogenic processing plant to be installed on site. Project acreage increased to 369,938 gross acres (280,584 acres on a net basis). Following the drilling of the Craig 7-34 and Craig 15-32 wells at the Jolly Ranch Group project, Running Foxes and Nighthawk consider that the results of these wells, combined with those of the five previously drilled successful development wells, establish Jolly Ranch as a significant new oil and natural gas field, particularly in the Atoka Shales of Pennsylvanian age in south east Colorado.

The Atoka Shale play was discovered following extensive regional subsurface, geological, geochemical and petrophysical evaluation studies by the operator, Running Foxes. The Running Foxes and Nighthawk partnership has now increased the total lease area of the Jolly Ranch Group project, incorporating Jolly Ranch, Middle Mist and Mustang Creek, to 369,938 gross acres (280,584 acres on a net basis). The project area is located immediately west of the prolific Pennsylvanian production along the Las Animas Arch on the flank of the Denver Basin and south of the Cretaceous production in the centre of the Denver Basin respectively.

Craig 7-34

The Craig 7-34 well has been drilled to a total depth of 7,584 feet. Log and sample hydrocarbon shows were encountered in the Warsaw from 7,524 to 7,527 feet, the Spergen from 7,391 to 7,398 feet and the St Louis Carbonates from 7,332 to 7,337 feet respectively.

Estimated oil in place for the net 18 feet of pay evaluated in respect of the Warsaw, Spergen and St Louis is 397,599 barrels on 40 acre spacing. These reservoirs tend to be fractured and log analysis typically underestimates hydrocarbons in place.

The Morrow Sandstone was also encountered with 11 feet of net pay present at depths of between 7,085 to 7,250 feet. Estimated oil in place in respect of the Morrow Sandstone is 193,210 barrels on 40 acre spacing. The Morrow Sandstone will be evaluated at a later date.

The Marmaton formation was encountered at 6,377 to 6,382 feet. Estimated oil in place is 209,029 barrels on 40 acre spacing.

In addition, the whole suite of Cherokee and Atoka Shales found in all the previously drilled wells have been encountered in the Craig 7-34 well. No estimates of oil in place are being given in respect the shales at this stage of the project development.

Craig 15-32

The Craig 15-32 well has been completed in the Cherokee carbonaceous shales, specifically the Excello, V and Tebo zones from 6,548 to 6,660 feet. A total of 30 net feet has been perforated and acidised with similar results to three previous wells perforated in the Lower Atoka Shales. Fraccing will take place in the near future.

The Cherokee Shales are one of the three shale zones over the acreage block and show excellent potential for hydrocarbon production similar to or greater than the Atoka Shales. The carbonaceous shales of the Upper Atoka, Lower Atoka and the Cherokee cover the entire Jolly Ranch Group project area with a net thickness of 55 to 75 feet.

Jolly 4-13

The Jolly 4-13 well has been perforated in the Lower Atoka Shales and acidised. Initial swabbing has indicated 100 per cent. oil and gas on individual swab runs. The well will be fracced within the next seven days.

To date, the operator has chosen to use minor slick water fracs to determine optimal fraccing size. Commencing with the Jolly 4-13 and Craig 7-34 wells, the frac size will be doubled, the results of which should significantly increase the rate of production.

Craig 15-34

The Craig 15-34 well has reached target depth and casing has been run.

The Patterson-UTI Energy rig has been moved to drill the Jolly 7-1.

As reported in previous releases in respect of the Jolly Ranch Group project, the Jolly 16-1 well was completed in the Lower Atoka Shales and flowed 446 barrels of oil per day ("BOPD") and over 1 million cubic feet of gas per day ("MMCFGPD") on test. The Craig 8-1 well was also completed in the Lower Atoka Shales and achieved flow rates of over 300 BOPD and significant gas on test. The Jolly 2-1 was completed in the conventional Marmaton formation and is currently producing between 20-30 BOPD of sweet crude with an API of 38. As demonstrated during test production, in addition to the high oil flow rates obtained, significant amounts of commercial gas has also been encountered in several wells. Running Foxes is now seeking to optimize a distribution method for this gas.

A gas pipeline will be constructed from Jolly Ranch and tapped into one of the regional trunk lines crossing south east Colorado.

The natural gas from the wellstream is predominantly methane in a mixture of other hydrocarbons, including ethane, propane and butane, together termed Natural Gas Liquids or NGLs. The NGLs encountered at Jolly Ranch have a very high calorific value per unit volume. Typical natural gas has a calorific value of approximately 1,030 BTU ("British Thermal Units") per cubic foot, which is slightly higher than pure methane at 1,000 BTU. The separated gas at Jolly Ranch is particularly rich in high value NGLs. The calorific values recorded in independent laboratory tests from samples from the Jolly 16-1, Jolly 2-1 and Craig 8-1 wells range from 1,598 to 2,000 BTU.

Economic analysis has determined that an onsite cryogenic processing plant, separating the NGLs will realize significant additional value and improve the overall already robust economics at Jolly Ranch. The operator plans to install a cryogenic plant during the first quarter of 2009.

Cryogenic processing reduces the temperature of the produced gas until all components except methane are in a liquid form. The methane can then be metered and distributed commercially via the regional pipeline to be sold on the spot market and the remaining high value NGLs can be fractionated into individual components for separate sale.

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