CALGARY, Nov. 25 /CNW/ -- CALGARY, Nov. 25 /CNW/ - Hawk Exploration
Ltd. ("Hawk" or the "Corporation") announces its results for the
three and nine months ended September 30, 2010. Selected financial
and operational information for the three and nine months ended
September 30, 2010 is provided as follows: Three months ended Nine
months ended September 30, September 30, 2010 2009 2010 2009
Financial Petroleum and $ natural gas 1,512,288 $ 42,677 $
5,254,421 $ 42,677 revenue Funds flow from (used in) 737,811
(69,899) 2,359,543 (182,287) operations ( (1)) Per share ( 0.02
(0.00) 0.07 (0.02) (1)) Net loss (49,177) (44,623) (186,691)
(159,421) Per share (0.00) (0.00) (0.01) (0.02) Capital $ 3,255,709
$ 1,975,781 10,263,340 2,206,106 expenditures Property - 12,522,658
17,910 12,522,658 acquisition Working capital 243,310 9,286,211
surplus, end of period Total assets, $ 27,669,669 $ 25,751,301 end
of period Common shares outstanding, end of period: Class A
21,980,953 21,980,953 Shares Class B 1,080,000 1,080,000 Shares
Options to acquire Class 2,076,500 1,010,000 A Shares Weighted
average shares outstanding on a combined basis - basic &
diluted((2)) 32,780,953 15,906,004 32,780,953 9,472,130 Operations
Production Crude oil and natural gas 254 8 275 2 liquids (bbl/d)
Natural gas 226 - 289 - (mcf/d) Total (boe/d) 291 8 324 2 Average
Selling Price Crude oil and ngls (per $ 61.75 $ 62.13 $ 65.37 $
62.13 bbl) Natural gas $ 3.53 $ - $ 4.23 $ - (per mcf) Total (per $
56.49 $ 62.13 $ 59.44 $ 62.13 boe) Operating netback (per boe at
6:1) ( (3)) $ 31.57 $ 16.24 $ 31.85 $ 16.24 ((1) )Management uses
funds flow from operations to analyze operating performance,
leverage and liquidity. Funds flow from operations as presented
does not have any standardized meaning prescribed by Canadian GAAP
and, therefore, may not be comparable with the calculation of
similar measures by other entities. ((2) )Class B Shares were
converted to Class A Shares at $1.00 per share. ((3) )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
Canadian GAAP and therefore may not be comparable with the
calculation of similar measures by other entities. Highlights for
the three months ended September 30, 2010 were as follows: --
Drilled five (3.7 net) wells resulting in four (2.7 net) producing
oil wells, and one (1.0 net) dry hole, -- Shot or acquired
approximately 40 kilometers of two dimensional seismic data in
Hawk's core areas of east central Alberta and west central
Saskatchewan, -- Reduced production costs to $12.57 per boe from
$15.04 per boe in the second quarter of 2010, -- Reported funds
flow from operations of $737,811 ($0.02 per share) in the third
quarter of 2010, and -- Generated a strong operating netback of
$31.57 per boe in the third quarter of 2010, despite lower realized
commodity prices in the quarter. Operations During the third
quarter of 2010, Hawk drilled five (3.7 net) wells resulting in
four (2.7 net) oil wells and one (1.0 net) dry hole. At Dolcy in
Alberta, the Corporation drilled two (2.0 net) infill development
wells which were tied into Hawk's central battery during the fourth
quarter which are producing at a combined rate of 30 bbl/d. Hawk
also drilled one (1.0 net) exploration well at Dolcy, targeting a
separate geological feature to the east of the main producing pool,
which did not encounter economic quantities of oil and was
subsequently abandoned. At Epping in Saskatchewan, the Corporation
drilled one (0.2 net) exploratory well resulting in a new Sparky
oil discovery. The well was placed on production in August and has
produced at an average rate of 40 (9.2 net) bbl/d. Hawk plans to
follow up this discovery with additional development wells in 2011.
Hawk also drilled one (0.5 net) horizontal exploration well which,
subsequent to the end of the third quarter, was completed as an oil
well. Hawk is encouraged by the initial production rates to date
and is actively adding to its substantial land base in the area.
Production for the third quarter of 2010 averaged 291 boe/d a
decrease from second quarter average production of 346 boe/d.
During the drilling of the two infill development wells at Dolcy in
the third quarter, production in the surrounding wells was shut in
for approximately 10 days which negatively impacted production in
the third quarter. Additionally, wet weather through much of the
third quarter delayed field activities and production from new
wells at Dolcy until the fourth quarter of 2010. Financial Despite
lower production and lower commodity prices in the third quarter,
Hawk was able to generate funds flow from operations of $737,811,
only slightly lower than the $745,461 of funds flow generated in
the second quarter of 2010. Hawk's production costs for the third
quarter of 2010 averaged 12.57 per boe, a 16 percent decrease from
the $15.04 per boe production costs experienced in the second
quarter of 2010. These lower production costs, along with lower
royalties, led to an operating netback of $31.57 per boe in the
third quarter, a slight improvement over the second quarter
operating netback of $30.14 per boe. Hawk had a $7.5 million credit
facility with a Canadian bank that was undrawn at September 30,
2010. The credit facility was renewed at $7.5 million subsequent to
the end of the third quarter with the next review to be conducted
on or before May 31, 2011. Outlook The Corporation remains on track
to incur qualified expenditures to meet its flow through obligation
by December 31, 2010. Once Hawk's flow through commitment has been
incurred, the Corporation plans to focus on the development of its
most successful exploration discoveries and current development
opportunities. Hawk believes this focus on development activity
will lead to a more steady and consistent growth of its production
base. Current production, based on field estimates, is
approximately 400 boe/d. The Corporation plans to tie in one
additional well prior to year end and expects its exit production
rate to be approximately 450 boe/d, comprised mainly of crude oil.
Hawk is currently preparing its 2011 capital and operating budget.
Details on the 2011 capital and operating for 2011 will be released
at a later date, but Hawk intends to focus its capital budget on
oil development opportunities. The Corporation continues to
maintain a strong financial position with a working capital surplus
of approximately $0.2 million at September 30, 2010 and an undrawn
$7.5 million line of credit. The unaudited financial statements and
management's discussion and analysis for the interim period ended
September 30, 2010 have been filed on SEDAR and are available for
viewing at www.sedar.com or on the Corporation's website at
www.hawkexploration.ca. 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 performance characteristics of Hawk's oil and natural gas
properties; business strategies and plans; projections of
production rates; supply and demand for oil and natural gas;
planned development of the Corporation's oil and natural gas
properties; capital expenditure programs; 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. p/p table border="0" valign="top"trtdbSteve
Fitzmaurice /bbr/ President, CEO and Chairman br/ Tel:
(403) 264-0191 Ext 225 br/ Email: a
href="mailto:steve@hawkexploration.ca"steve@hawkexploration.ca/a /td
td /td td /td td /td td /td td /td
td /td td /td td /td td /td tdbDennis
Jamieson/bbr/ Chief Financial Officerbr/ Tel: (403) 264-0191 Ext
234br/ Email: a
href="mailto:dennis@hawkexploration.ca"dennis@hawkexploration.ca/a/td/tr/table
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