CALGARY, April 24, 2012 /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, 2011 containing the Corporation's Statement of Reserves Data and Other Oil and Gas Information as of December 31, 2011 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.
Selected financial and operational information for the year and three months ended December 31, 2011 are provided as follows:
|Three months ended December 31,||Year ended December 31,|
|2011||2010||% Change||2011||2010||% Change|
|Financial ($000's except per share amounts)|
|Petroleum and natural gas sales||$ 3,120||$ 1,993||57%||$ 10,498||$ 7,248||45%|
|Funds flow from operations (1)||1,311||835||57%||4,445||3,195||39%|
|Working capital deficit - excluding bank|
|debt and commodity contracts, end of period||$ 1,140||$ 3,739||(70%)|
|Bank debt, end of period||200||250||(20%)|
|Total assets, end of period||$ 25,273||25,936||(1%)|
|Common Shares outstanding end of period:|
|Class A Shares||34,481||21,981||57%|
|Class B Shares||1,080||1,080||0%|
|Options to acquire Class A Shares||2,110||2,077||2%|
|Crude oil and natural gas liquids (bbl/d)||399||313||27%||371||285||30%|
|Natural gas (mcf/d)||215||259||(17%)||290||281||3%|
|Oil and liquids as of percent of total||92%||88%||4%||88%||86%||2%|
|Average Selling Price|
|Crude oil and ngls (per bbl)||$ 83.25||$ 66.18||26%||$ 74.44||$ 65.60||14%|
|Natural gas (per mcf)||3.29||3.81||(14%)||3.76||4.14||(9%)|
|Total (per boe)||78.03||60.93||28%||68.46||59.84||14%|
|Operating netback (per boe at 6:1) (2)|
|Price||$ 78.03||$ 60.93||28%||$ 68.46||$ 59.84||14%|
|Operating netback ($/boe)||$ 37.83||$ 29.32||29%||$ 34.09||$ 31.17||9%|
(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) 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.
Highlights for the year ended December 31, 2011 were as follows:
- Increased funds flow from operations by 39 percent from $3.2 million in 2010 to $4.4 million in 2011 and by 57 percent from $0.8 million in the fourth quarter of 2010 to $1.3 million in the fourth quarter of 2011;
- Improved operating netbacks to $34.09 per boe in 2011 from $31.17 per boe in 2010, a 9 percent increase and improved fourth quarter 2011 netbacks to $37.83 per boe from $29.32 per boe in Q4 2010, a 29 percent increase;
- Averaged 420 boe/d of production in 2011, a 27 percent increase over 2010 average production of 332 boe/d, with all the increase being additional oil production;
- Maintained a strong balance sheet by completing a $10 million bought deal private placement of Class A Shares during 2011;
- Added to the Corporation's financial flexibility by increasing the credit facility from $7.5 million to $11 million during the year; and
- Drilled eleven (7.6 net) wells in 2011 resulting in ten (7.3 net) oil wells and one (0.3 net) dry and abandoned well.
Operational Review and Update
In 2011, Hawk drilled eleven (7.6 net) wells resulting in ten (7.3 net) oil wells in its core area of western Saskatchewan and east central Alberta and one (0.3 net) dry and abandoned well at Rainbow Lake in northwest Alberta. The drilling program in its core area consisted of six (5.3 net) vertical oil wells located at Edam, Silverdale, Hoosier and Chauvin and four (2.0 net) dual-leg horizontal wells at Seagram Lake in Saskatchewan.
At Seagram Lake, the Corporation, as previously announced, experienced mixed results from its 2011 drilling program as three (1.5 net) wells produced only trace amounts of oil at high water cuts. The one (0.5 net) producing oil well averaged 160 (80 - net) bbl/d over its first month of production in August 2011, is currently producing at 30 (15 - net) bbl/d and has cumulative production to March 31, 2012 of approximately 15,000 (7,500 - net) Bbls. Hawk plans to drill one (0.5 net) single leg horizontal well at Seagram Lake in the second quarter of 2012. The Corporation and its operating partner plan to alter the drilling and completion program for the upcoming horizontal well to limit water encroachment and maximize oil production.
Hawk had a successful vertical oil development program in 2011 drilling six (5.3 net) wells during the year with three (3.0 net) wells drilled at Edam and one (0.3 net) at Silverdale which has led to additional infill drilling in 2012. At Silverdale, Hawk submitted a down-spacing application in the fourth quarter of 2011 to reduce well spacing to three wells per legal sub-division ("LSD") and received well licenses for ten (2.8 net) infill wells.
To date in 2012, Hawk has drilled six (1.4 net) vertical oil wells at Silverdale and one (1.0 net) vertical oil well at Edam. All of these wells were placed on production prior to March 31, 2012. As previously announced, Hawk's production for the first quarter of 2012 is expected to average approximately 430 boe/d. With the additional production from the wells drilled to date in 2012, Hawk expects production to average approximately 500 boe/d in the second quarter of 2012.
The Corporation has an active second quarter of 2012 planned and expects to drill four (1.5 net) infill wells at Silverdale after break up once surface conditions permit. Hawk also expects to drill its one (0.5 net) planned single-leg horizontal well at Seagram Lake and is currently interpreting seismic data shot at Dankin, in western Saskatchewan, to chose a horizontal well location to be drilled either late in the second quarter or third quarter of 2012.
Hawk achieved funds flow from operations in 2011 of approximately $4.4 million compared to $3.2 million for 2010. The Corporation generated an operating netback of $34.09 per boe which is 9 percent higher than operating netbacks for 2010 of $31.17 per boe due to mainly to higher realized prices in 2011 offset by slightly higher operating costs.
Revenue for the year increased by 45 percent to $10.5 million in 2011 from $7.2 million in 2010 as a result of increases to both annual production and realized sales prices. Hawk's annual production increased to 420 boe/d with oil and liquids production contributing 371 bbl/d, or 88 percent of total annual production. Due to the strong oil weighting, the Corporation's average realized price increased to $68.46 per boe in 2011, a 14 percent increase over the $59.84 per boe realized price achieved in 2010.
At December 31, 2011, Hawk had $200,000 drawn on its existing credit facilities of $11 million consisting of an $8.5 million revolving line of credit and a $2.5 million acquisition and development line of credit, with the next review date to occur on or before May 31, 2012. The Corporation continues to maintain a solid balance sheet with net debt and working capital deficit of approximately $1.3 million at December 31, 2011 which equates to a net debt to annual funds flow from operations of 0.3:1.
The Corporation has set an $8.5 million capital budget for 2012 that will focus on development opportunities in western Saskatchewan targeting heavy crude oil both through horizontal and vertical drilling. The capital budget includes one (0.5 net) single-leg horizontal well at Seagram Lake, five net vertical wells in the Lloydminster area of western Saskatchewan and two (2.0 net) horizontal wells in western Saskatchewan. Hawk will continue its focus for the remainder of 2012 on oil development opportunities to grow oil production and cash flow and maintains a solid balance sheet with which to execute its capital program.
Annual General Meeting
Hawk's annual general meeting of shareholders will be held on Tuesday, June 12, 2011 at 3:00 pm at the offices of McCarthy Tetrault LLP, Suite 3300, 421-7th Avenue SW, Calgary, AB.
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 2012; the timing of and nature of capital expenditure program for 2012; and the expected sources of funding for the 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.
For further information:
President, CEO and Chairman
Tel: (403) 264-0191 Ext 225
Email: [email protected]
Chief Financial Officer
Tel: (403) 264-0191 Ext 234
Email: [email protected]