Hawk Announces 2013 Annual Results and Filing of Reserves Data
CALGARY, April 17, 2014 /CNW/ - Hawk Exploration Ltd. ("Hawk" or the "Corporation") announces that it has filed on SEDAR its audited annual financial statements, and related management's discussion and analysis. The Corporation also filed its Annual Information Form for the period ended December 31, 2013 containing the Corporation's Statement of Reserves Data and Other Oil and Gas Information as of December 31, 2013 as mandated by National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities of the Canadian Securities Administrators. Copies of these filings can be found at www.sedar.com or on the Corporation's website at www.hawkexploration.ca under Investor Info - Financial Reports.
Highlights for the year ended December 31, 2013 were as follows:
- Increased annual production by 25% to average 637 boe/d of production in 2013 from 510 boe/d in 2012;
- Increased fourth quarter 2013 oil and liquids production 19% to 665 boe/d from 558 boe/d in Q4 2012;
- Improved cash flow from operations by 10% from $5.6 million in 2012 to $6.2 million in 2013;
- Drilled fourteen (12.3 net) wells in 2013 resulting in twelve (10.6 net) oil wells, one (0.7 net) standing gas well and one (1.0 net) dry and abandoned well; and
- Increased Q1 2014 production to approximately 700 boe/d, a 11% increase over Q1 2013 average production of 630 boe/d;
Selected financial and operational information for the year and three months ended December 31, 2013 are provided as follows:
|Three months ended December 31,||Year ended December 31,|
|2013||2012||% Change||2013||2012||% Change|
|Financial ($000's except per share amounts)|
|Petroleum and natural gas sales||$||3,795||$||3,294||15%||$||15,394||$||12,030||28%|
|Cash flow from operations (1)||1,298||1,484||(13%)||6,221||5,654||10%|
|Comprehensive income (loss)||(1,532)||(529)||190%||(1,292)||96||n/a|
|Capital expenditures (2)||3,105||2,919||6%||8,894||9,221||(4%)|
|Working capital deficit - excluding bank|
|debt and commodity contracts, end of period (3)||$||2,726||$||3,206||(15%)|
|Bank debt, end of period||4,900||1,700||188%|
|Total assets, end of period||$||34,460||$||30,713||12%|
|Common Shares outstanding end of period:|
|Class A Shares||34,605||34,481||-%|
|Class B Shares (4)||1,080||1,080||-%|
|Options to acquire Class A Shares||2,285||2,110||8%|
|Crude oil and natural gas liquids (bbl/d)||665||558||19%||613||482||27%|
|Natural gas (mcf/d)||107||205||(48%)||142||165||(1%)|
|Oil and liquids as percent of total||97%||94%||3%||96%||95%||1%|
|Average Selling Price|
|Crude oil and ngls (per bbl)||$||61.41||$||62.96||(3%)||$||68.00||$||67.27||1%|
|Natural gas (per mcf)||3.58||3.31||8%||3.28||2.52||30%|
|Total (per boe)||60.36||60.48||0%||66.21||64.46||3%|
|Operating netback (per boe at 6:1) (5)|
|Operating netback ($/boe)||$||27.33||$||31.25||(13%)||$||32.94||$||32.80||0%|
|(1) Management uses funds flow from operations and funds flow from operations per share to analyze operating performance, leverage and liquidity. Funds flow from operations and funds flow from operations per share as presented do not have any standardized meaning prescribed under Generally Accepted Accounting Principles ("GAAP") and therefore may not be comparable with the calculation of similar measures by other entities.|
|(2) Capital expenditures include cash exploration and evaluation expenditure plus cash property, plant and equipment net of dispositions and exclude asset retirement obligations and capitalized share-based payments.|
|(3) Working capital is a non-GAAP measure that includes trade and other accounts receivable, prepaid expenses, and trade and other accounts payables.|
|(4) The Class B shares are convertible (at the option of the Corporation) at any time after July 2, 2012 and on or before June 30, 2014 into Class A shares. The number of Class A shares to be issued upon conversion of one Class B share is calculated by dividing $10 by the greater of $1 and the then current market price of the Class A shares at the date of conversion. If conversion has not occurred by the close of business on June 30, 2014, the Class B shares become convertible (at the option of the shareholder) into Class A shares pursuant to the conversion formula described above. Effective at the close of business on July 31, 2014, all remaining Class B shares will be automatically converted into Class A shares pursuant to the conversion formula described above.|
|(5) Management considers operating netbacks as an important measure as it demonstrates profitability relative to current commodity prices. Operating netbacks do not have a standardized meaning prescribed by GAAP and therefore may not be comparable with the calculation of similar measures by other entities.|
Operational Review and Update
In 2013, Hawk drilled fourteen (12.3 net) wells resulting in twelve (10.6 net) oil wells in its core area of western Saskatchewan, one (0.7 net) standing gas well in central Alberta and one (1.0 net) dry and abandoned well in east central Alberta. The drilling program in 2013 was concentrated on vertical development drilling in western Saskatchewan where the Corporation drilled six (4.8 net) successful vertical oil wells in the Silverdale area. Hawk also drilled five (5.0 net) successful vertical oil wells in the Rusk Lake, Lashburn, Dulwich, Eureka and Neilburg areas all in western Saskatchewan.
In the first quarter of 2014, Hawk followed up its successful drilling in the Neilburg area with two (2.0 net) additional successful vertical oil wells at Neilburg as well as a successful vertical well in the Lloydminster area of east Central Alberta, directly offsetting our production in the Silverdale area of western Saskatchewan. Hawk expects production for the first quarter of 2014 to average approximately 700 boe/d based on field estimates.
Hawk achieved record cash flow from operations in 2013 of approximately $6.2 million compared to $5.6 million for 2012. The Corporation generated an operating netback of $32.94 per boe in 2013 which is comparable to the 2012 operating netback of $32.80 as increased pricing in 2013 was offset by a slight increase in production expenses.
Revenue for the year increased by 28 percent to $15.4 million in 2013 from $12.0 million in 2012 as a result of increased annual production and slightly improved pricing in 2013. Hawk's annual production increased 28 percent to 637 boe/d, with oil and liquids production contributing 613 bbl/d, or 96 percent of total annual production, while the Corporation's average realized oil price increased 1 percent in 2013 to average $68.00 per bbl compared to $67.27 per bbl in 2012.
At December 31, 2013, Hawk had $4.9 million drawn on its existing $12 million credit facility. The Corporation continues to maintain a solid balance sheet with net debt and working capital deficit of approximately $7.6 million at December 31, 2013 which equates to a net debt to annual cash flow from operations of 1.2:1.
The Corporation has set a $10 million capital budget for 2014 that will focus on development opportunities in western Saskatchewan and east central Alberta targeting heavy crude oil. Hawk plans to drill four (3.7 net) vertical wells targeting heavy oil mainly in western Saskatchewan in the second quarter of 2014 after spring break-up and once surface conditions allow access, which we expect to be in June 2014. In addition, the Corporation expects to drill one (1.0 net) vertical well targeting heavy oil in the Eureka area of western Saskatchewan which is a follow up to a well drilled by Hawk in the fourth quarter of 2013.
Western Canadian Select ("WCS") pricing for heavy oil, to date in 2014, has improved and has been less volatile than in the first quarter of 2013. For the first quarter of 2014, the WCS differential to West Texas Intermediate ("WTI") averaged US$23.13 per bbl compared to US$31.96 per bbl for the first quarter of 2013 and US$32.20 per bbl in the fourth quarter of 2013. Additionally, a weaker Canadian dollar relative to the US dollar has increased the Canadian dollar oil price that Hawk has received to date in 2014. Although the WCS differential has improved to date in 2014, the Corporation expects this differential to remain volatile. Hawk has entered into both WTI commodity contracts and WCS differential contracts for the remainder of 2014 to provide downside oil price protection to ensure the $10 million capital budget for 2014 can be funded mainly through cash flow from operations with a limited increase to the Corporation's credit facility.
Annual General Meeting
Hawk's annual general meeting of shareholders will be held on Tuesday, June 10, 2014 at 3:00 pm at the offices of McCarthy Tetrault LLP, Suite 4000, 421-7th Avenue SW, Calgary, AB.
Updated Corporate Presentation
An updated corporate presentation is available for viewing on the Corporation's website at www.hawkexploration.ca under Investor Info - Presentation.
Hawk is an emerging exploration company engaged in the exploration, development and production of conventional crude oil and natural gas in western Canada and is based in Calgary, Alberta. The Class A Shares and Class B Shares of Hawk trade on the TSX Venture Exchange under the trading symbols of HWK.A and HWK.B, respectively.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as the term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Certain statements contained in this press release constitute forward-looking statements. All forward-looking statements are based on the Corporation's beliefs and assumptions based on information available at the time the assumption was made. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Hawk believes the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct. Such forward-looking statements included in this press release should not be unduly relied upon. These statements speak only as of the date of this press release.
In particular, but without limiting the forgoing, this press release contains forward-looking statements pertaining to the following: the performance characteristics of Hawk's oil and natural gas properties; business strategies and plans; projections of market prices and cost; supply and demand for oil and natural gas; planned development of the Corporation's oil and natural gas properties; capital expenditure programs for the remainder of 2014; the timing of and nature of capital expenditure program for 2014;expected first quarter 2014 average production; and the expected sources of funding for the 2014 capital expenditure program.
The material factors and assumptions used to develop these forward looking statements include, but are not limited to: the ability of the Corporation to engage drilling contractors, to obtain and transport equipment, services, supplies and personnel in a timely manner and at an acceptable cost to carry out its activities and plans; the ability of the Corporation to market its oil and natural gas and to transport its oil and natural gas to market; the timely receipt of regulatory approvals and the terms and conditions of such approval; the ability of the Corporation to obtain drilling success consistent with expectations; and the ability of the Corporation to obtain capital to finance its exploration, development and operations.
Actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors including, without limitation: volatility in market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; uncertainties associated with estimating oil and natural gas reserves; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions and exploration and development programs; geological, technical, drilling and processing problems; changes in tax laws and incentive programs relating to the oil and natural gas industry; failure to realize the anticipated benefits of acquisitions; general business and market conditions; and certain other risks detailed from time to time in Hawk's public disclosure documents (including, without limitation, the other factors discussed under "Risk Factors" in the Corporation's most recently filed Annual Information Form).
Statements relating to "reserves" or "resources" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources and reserves described can be profitably produced in the future. Readers are cautioned that the foregoing lists of factors are not exhaustive. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement. Except as required under applicable securities laws, Hawk does not undertake any obligation to publicly update or revise any forward-looking statements.
Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet (mcf) of natural gas to one barrel (bbl) of oil is based on an energy conversion method primarily applicable at the burner tip and is not intended to represent a value equivalency at the wellhead. All boe conversions in this press release are derived by converting natural gas to oil in the ratio of six thousand cubic feet of natural gas to one barrel of oil. Certain financial amounts are presented on a per boe basis, such measurements may not be consistent with those used by other companies.
SOURCE Hawk Exploration Ltd.For further information:
President, CEO and Chairman
Tel: (403) 264-0191 Ext 225
Chief Financial Officer
Tel: (403) 264-0191 Ext 234