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
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:
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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% |
| |
Per share |
|
0.04 |
|
0.04 |
|
-% |
|
0.18 |
|
0.16 |
|
13% |
| Comprehensive income (loss) |
|
(1,532) |
|
(529) |
|
190% |
|
(1,292) |
|
96 |
|
n/a |
| |
Per share |
|
(0.05) |
|
(0.02) |
|
150% |
|
(0.04) |
|
0.00 |
|
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% |
| Operations |
| Production |
| |
Crude oil and natural gas liquids
(bbl/d) |
|
665 |
|
558 |
|
19% |
|
613 |
|
482 |
|
27% |
| |
Natural gas (mcf/d) |
|
107 |
|
205 |
|
(48%) |
|
142 |
|
165 |
|
(1%) |
| |
Total (boe/d) |
|
683 |
|
592 |
|
15% |
|
637 |
|
510 |
|
25% |
| 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) |
| |
Price |
$ |
60.36 |
$ |
60.48 |
|
0% |
$ |
66.21 |
$ |
64.46 |
|
3% |
| |
Royalties |
|
(13.70) |
|
(12.76) |
|
7% |
|
(13.83) |
|
(13.46) |
|
3% |
| |
Production expense |
|
(17.89) |
|
(14.94) |
|
20% |
|
(17.77) |
|
(16.49) |
|
8% |
| |
Transportation expense |
|
(1.44) |
|
(1.53) |
|
(6%) |
|
(1.67) |
|
(1.71) |
|
(2%) |
| 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.
Financial
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.
Outlook
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.