Hawk announces year end reserves and operational update

CALGARY, March 17 /CNW/ - Hawk Exploration Ltd. ("Hawk" or the "Corporation") is pleased to provide a summary of its December 31, 2009 reserve information as evaluated by GLJ Petroleum Consultants Ltd. ("GLJ") and an operational update.

    
    HIGHLIGHTS

    -   Proved plus probable reserves totaled 918,400 barrels of oil
        equivalent ("boe"), 90% of which were crude oil and NGL's.
    -   Proved plus probable finding, development and acquisition ("FD&A")
        costs, including future developments costs, of $18.43 per boe.
    -   Based on an estimated fourth quarter field netback of $35.00 per boe,
        achieved a proved plus probable recycle ratio of 1.9 times.
    

RESERVES

GLJ prepared an independent engineering report in accordance with National Instrument 51-101 ("NI 51-101") with an effective date of December 31, 2009 (the "GLJ Report"). The tables below are a summary of the oil, NGL and natural gas reserves attributable to the Corporation and the net present value of future net revenue attributable to such reserves as evaluated in the GLJ Report.

The net present value of future net revenue attributable to reserves is stated without provision for interest costs and general and administrative costs, but after providing for estimated royalties, production costs, development costs, other income, future capital expenditures and well abandonment costs for only those wells assigned reserves by GLJ. It should not be assumed that the undiscounted or discounted net present value of future net revenue attributable to reserves estimated by GLJ represents the fair market value of those reserves. Other assumptions and qualifications relating to costs, prices for future production and other matters are summarized herein. The recovery and reserve estimates of oil, NGL and natural gas reserves provided herein are estimates only. Actual reserves may be greater than or less than the estimates provided herein.

The reserve data provided in this press release only represents a summary of the disclosure required under NI 51-101. Additional reserves disclosure will be provided in the Corporation's Annual Information Form to be filed on SEDAR (www.sedar.com) on or before April 30, 2010.

    
           Summary of Oil and Gas Reserves as of December 31, 2009

                               Reserves Summary
    -------------------------------------------------------------------------
                                                Natural Gas      Total Oil
                    Oil         Natural Gas        Liquids       Equivalent
              --------------- --------------- --------------- ---------------
    Reserves    Gross    Net    Gross    Net    Gross    Net    Gross    Net
    Category   (Mbbl)  (Mbbl)  (MMcf)  (MMcf)  (Mbbl)  (Mbbl)  (Mboe)  (Mboe)
    -------------------------------------------------------------------------
    Proved
      Developed
       Producing  422     354     265     221       9       7     475     398
      Undeveloped 105      84      77      62       3       2     121      96
    -------------------------------------------------------------------------
    Total Proved  527     438     343     283      12       9     595     494
    Probable      286     233     185     151       6       5     323     263
    -------------------------------------------------------------------------
    Total Proved
     plus
     Probable     813     671     528     434      18      14     918     758
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


              Net Present Value Summary as of December 31, 2009

                                                                  Unit Value
                             Net Present Value of Future Net    Before Income
                               Revenue Before Income Taxes     Tax Discounted
                                  Discounted At (%/year)         at 10%/year
                       --------------------------------------- --------------
    Reserves               0%      5%     10%     15%     20%
    Category               M$      M$      M$      M$      M$       $/boe
    -------------------------------------------------------------------------
    Proved
      Developed
       Producing       18,058  15,867  14,162  12,807  11,707       29.81
      Undeveloped       4,582   3,824   3,261   2,833   2,496       26.95
    -------------------------------------------------------------------------
    Total Proved       22,641  19,691  17,424  15,639  14,203       29.28
    Probable           12,630   9,348   7,212   5,755   4,719       22.33
    -------------------------------------------------------------------------
    Total Proved
     plus Probable     35,270  29,038  24,636  21,394  18,922       26.84
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


       Total Future Net Revenue (Undiscounted) as of December 31, 2009

                                                                       Future
                                                                          Net
                                                      Capital         Revenue
                                              Operat- Develo-  Aband-  Before
                                       Royal-     ing   pment  onment  Income
    Reserves                  Revenue    ties    Cost   Costs   Costs     Tax
    Category                       M$      M$      M$      M$      M$      M$
    -------------------------------------------------------------------------
    Total Proved               40,952   7,464   9,998     414     435  22,641
    Total Proved plus Probable 65,027  12,237  16,141     838     541  35,270
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


            Summary of Forecast Pricing and Inflation Assumptions

    The GLJ Report used the following prices, exchange rates, and inflation
rate assumptions as of December 31, 2009:

                        Edmonton
                  WTI  40 degree      Lloyd
              Cushing        API   Blend at      AECO -             Exchange
             Oklahoma  Crude Oil   Hardisty    NIT Spot Inflation       Rate
    Year     ($US/bbl) ($Cdn/bbl) ($Cdn/bbl)($Cdn/mmbtu)   Rate %  ($US/$Cdn)
    -------------------------------------------------------------------------
    2010        80.00      83.26      70.36       5.96        2.0       0.95
    2011        83.00      86.42      71.30       6.79        2.0       0.95
    2012        86.00      89.58      72.11       6.89        2.0       0.95
    2013        89.00      92.74      72.80       6.95        2.0       0.95
    2014        92.00      95.90      75.28       7.05        2.0       0.95
    2015        93.84      97.84      76.80       7.16        2.0       0.95
    2016        95.72      99.81      78.35       7.42        2.0       0.95
    2017        97.64     101.83      79.93       7.95        2.0       0.95
    2018        99.59     103.88      81.55       8.52        2.0       0.95
    2019       101.58     105.98      89.19       8.69        2.0       0.95

    Escalated at 2.0 % per year thereafter.

    FD&A COSTS(1)
    -------------------------------------------------------------------------
                                           Finding &
                                         Development Acquisition        FD&A
    -------------------------------------------------------------------------
    Capital expenditures ($ unaudited)(2)  4,163,000  12,521,000  16,684,000
    Change in future development cost ($)
      Total Proved                                 -     414,000     414,000
      Total Proved plus Probable              23,000     815,000     838,000
    Total Costs ($)
      Total Proved                         4,163,000  12,935,000  17,098,000
      Total Proved plus Probable           4,186,000  13,336,000  17,522,000

    Net reserve additions (Mboe)
      Total Proved                            74,800     552,900     627,700
      Total Proved plus Probable             125,300     825,600     950,900
    FD&A costs ($/boe)
      Total Proved                             55.65       23.40       27.24
      Total Proved plus Probable               33.41       16.15       18.43
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) The aggregate of the exploration and development costs incurred in
        the most recent financial year and the change during that year in
        estimated future development costs generally will not reflect total
        finding and development costs related to reserve additions for that
        year.
    (2) The Corporation's annual audit of our financial statements has not
        been completed and accordingly all financial amounts are management's
        best estimates which are unaudited and subject to change.
    

A substantial portion of the Corporation's reserve additions came by way of the Dolcy property acquisition that were added at attractive acquisition costs estimated to be $23.40 per total proved boe and $16.15 per total proved plus probable boe. Capital expenditures for finding and development costs included all of the Corporation's land, geological and geophysical, drilling, completion, well equipment and capitalized overhead costs estimated to have been incurred in 2009. Land and geological and geophysical costs were estimated to be $1,550,000 in 2009, which represents approximately 37% of Hawk's capital expenditures. Most of the land and geological and geophysical costs would be considered undeveloped at year end and helped contributed to the Corporation's high finding and development costs for the year. In total, the FD&A cost on total proved plus probable reserves was $18.43 per boe, and, based on the Corporation's estimated field netback of $35.00 per boe for the fourth quarter of 2009, resulted in a recycle ratio of 1.9 times.

OPERATIONAL UPDATE

The Corporation recently drilled the final well in a seven (7.0 net) well exploration focused winter drilling program resulting in four (4.0 net) oil wells, two (2.0 net) suspended wells and one (1.0 net) dry hole.

In east central Alberta, the Corporation drilled two (2.0 net) wells targeting medium gravity oil zones. At Dolcy, Hawk's main producing property, the Corporation drilled one (1.0 net) targeting the Cummings formation. This exploratory well was drilled on crown land acquired in June 2009 and would have extended the main pool significantly, however the well did not encounter economic quantities of oil and was suspended. The Corporation has submitted a down-spacing application to increase the well density in the main part of the Dolcy pool and expects to drill three (3.0 net) wells at Dolcy this summer. At Chauvin, Hawk drilled one (1.0 net) oil well that was placed on production in January 2010. The well is producing from the Sparky formation and has been producing at an average rate of 22 bbl/d of medium gravity crude oil. Hawk acquired an additional 353 (353 net) acres of crown land in the Chauvin area and plans to drill two (2.0 net) additional wells in the area in 2010.

In west central Saskatchewan, Hawk drilled three wells (3.0 net) targeting multiple heavy oil formations. At Epping, Hawk drilled a new General Petroleum accumulation which was completed and is currently producing at a rate of 40 bbl/d of crude oil. Hawk also drilled its first horizontal well extending the northern boundary of the Carruthers Cummings field. This well is currently being completed and is expected to be on production by the end of the first quarter. The Corporation drilled one exploratory well in the Freemont area which was completed. The well produced oil with a high water cut and was subsequently suspended. Hawk has recently entered into a farm-in agreement on 600 net acres of land in west central Saskatchewan and plans to license a well on the farm-in lands prior to March 31, 2010, and expects to drill one (1.0 net) well on these lands prior to June 30, 2010.

In northern Alberta, Hawk drilled two (2.0 net) exploration wells targeting light oil. At Legal, the Corporation drilled one well resulting in a dry hole. A second well at Red Earth, that tested oil, is currently being completed and is expected to be on production by the end of the first quarter.

In southern Manitoba, Hawk has entered into a seismic option agreement ("Option Agreement") with a private oil and gas company on 3,392 (3,392 net) acres of land ("Option Lands") prospective for light oil. Under the terms of the Option Agreement, Hawk has elected to and is currently in the process of shooting a five square kilometre ("KM(2)") 3D seismic program on the Option Lands. Upon completion of the 3D seismic program, Hawk has 45 days to elect to drill a well on the Option Lands or the Option Agreement is terminated. If the Corporation elects to drill a well, Hawk will have a 60 day rolling option to elect to drill further locations.

Since October 1, 2009, Hawk has also acquired 9,360 net acres of crown land and has shot or is currently shooting 11.2 kilometres of 2D seismic data and 18.7 KM(2) of 3D seismic data preparing the Corporation for its summer and fall drilling program. Hawk's current production, based on field estimates, is approximately 400 boe/d. Additional production is expected in the short term when the Carruthers and Red Earth oil wells commence production.

Hawk is a newly formed 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 volumes and estimated value of the Corporation's oil and gas reserves; future oil and natural gas prices; future costs, expenses, royalty rates and the exchange rate between the $US and $CAD; supply and demand for oil and natural gas; planned development of the Corporation's oil and natural gas properties; and future capital expenditure programs.

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.

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: For further information: Steve Fitzmaurice, President, CEO and Chairman, Tel: (403) 264-0191 Ext 225, Email: steve@hawkexploration.ca; Dennis Jamieson, Chief Financial Officer, Tel: (403) 264-0191 Ext 234, Email: dennis@hawkexploration.ca

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