HAWK ANNOUNCES 2010 ANNUAL RESULTS AND FILING OF RESERVES DATA
April 26 2011 - 7:55PM
PR Newswire (Canada)
CALGARY, April 26 /CNW/ -- CALGARY, April 26 /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,
2010 containing the Corporation's Statement of Reserves Data and
Other Oil and Gas Information as of December 31, 2010 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, 2010 are provided as
follows:
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Three months Year Ended ended December 31, December 31, 2010 2009 %
Change 2010 2009 % Change
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Financial ($000's except per share amounts) Petroleum and natural
gas revenue $ 1,993 2,016 (1%) $ 7,248 2,059 252% Funds flow from
operations(1) 835 1,041 (18%) 3,195 858 272% Per share(1) 0.03 0.04
(25%) 0.10 0.06 67% Net income (loss) (242) 82 (395%) (429) (78)
(450%) Per share (0.01) 0.00 - (0.01) (0.01) - Capital expenditures
5,068 2,061 146% 15,349 4,263 260% Property acquisition - 99 - -
12,621 - Working capital surplus (deficit), end of period $(3,739)
8,165 (146%) Bank debt, end of period 250 - - Total assets, end of
period $29,787 26,625 12% Common Shares outstanding, end of period:
Class A Shares 21,981 21,981 0% Class B Shares 1,080 1,080 0%
Options to acquire Class A Shares 2,110 1,010 109% Weighted average
shares outstanding on combined basis, basic and diluted(2) 32,781
14,633 124%
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Operations Production Crude oil and natural gas liquids (bbl/d) 313
301 4% 285 85 235% Natural gas (mcf/d) 259 425 (39%) 281 117 140%
Total (boe/d) 356 372 (4%) 332 105 216% Average Selling Price Crude
oil and ngls (per bbl) $ 66.18 66.22 0% $ 65.60 66.12 (1%) Natural
gas (per mcf) 3.81 4.66 (18%) 4.14 4.66 (11%) Total (per boe) 60.93
58.93 3% 59.84 59.00 1% Operating netback (per boe at 6:1)(3) $
29.32 35.79 (18%) $ 31.17 35.41 (12%)
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(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 based on the December 31,
2010 closing price for the Class A Shares of $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
During the year ended December 31, 2010, the Corporation
accomplished the following: - Increased annual sales revenue 252
percent from $2.1 million in 2009 to $7.2 million. - Generated cash
flow of $3.2 million, a 272 percent increase from 2009. - Added a
significant core area at Seagram Lake in west central Saskatchewan
through crown land sales and a farm-in agreement encompassing 12 (6
net) sections of land. - Commenced the first commercial production
from the Duperow formation (Leduc formation equivalent) in western
Saskatchewan. - Identified 50 (25 net) additional dual leg
horizontal locations on its existing land base at Seagram Lake
based on geological mapping. - Drilled twenty one (18.9 net) wells
in 2010, of which seventeen (14.9 net) were exploratory locations,
resulting in eleven (8.9 net) oil wells, two (2.0 net) standing
wells and eight (8.0 net) dry holes. - Expanded the Corporation's
net undeveloped land holdings by 171 percent from 12,943 net
undeveloped acres in 2009 to 35,143 net undeveloped acres in 2010.
- Increased the Corporation credit facility to $7.5 million during
the year. - Averaged 332 boe/d per day in 2010, a 216 percent
increase over 2009 average production of 105 boe/d. - Continued to
generate strong operating netbacks which averaged $31.17 per boe in
2010. 2010 Operations Review In 2010, Hawk focused almost entirely
on exploration activities in order to satisfy its $12 million
flow-through spending commitment. Of the twenty one (18.9 net)
wells drilled during 2010, seventeen (14.9 net) of these were
exploratory wells with only four (4.0 net) development wells
drilled in the year. The most significant exploration discovery for
Hawk during the year occurred at Seagram Lake in western
Saskatchewan where the Corporation participated in the drilling of
an exploratory horizontal well in the Duperow formation. Additional
exploration discoveries were also made by Hawk at Hoosier and
Silverdale in western Saskatchewan. At Seagram Lake, Hawk
participated in the drilling of an exploratory horizontal oil well
at a 50% working interest targeting heavy oil in the Duperow
formation (Leduc formation equivalent). The well was drilled and
completed in September 2010 and placed on production in October
2010. As a result of poor initial inflow rates, a foam acid
stimulation was performed which dramatically improved the inflow
into the wellbore. Subsequent to the stimulation, production from
the single leg horizontal well averaged over 80 (40 net) bbl/d of
heavy oil over the first month with an associated water cut of 45%.
The well is currently producing at 45 (22.5 net) bbl/d of heavy oil
with a 60% water cut. Based on Hawk's analysis, this discovery
represents the first commercial production from the Duperow
formation in western Saskatchewan. To date, the Corporation has
assembled twelve (6 net) sections of land in the area through crown
land sales and by way of a farm-in agreement. Based on the
Corporation's geological mapping and acquired seismic data, Hawk
has identified 50 (25 net) additional dual leg horizontal locations
on its existing land base. Hawk has received licenses to drill
three (1.5 net) dual leg horizontal wells which are anticipated to
be drilled in the second quarter following spring breakup.
Financial The Corporation's focus on oil production allowed Hawk to
generate strong operating netbacks for 2010 of $31.17 per boe and
funds flow from operations for 2010 of $3.2 million, a significant
increase from the $0.9 million of funds flow in 2009. Hawk's net
loss for 2010 widened to $0.4 million from $0.1 million in 2009
mainly as a result of higher depletion charges per boe and higher
operating costs per boe in 2010. Hawk exited 2010 with bank debt
and working capital deficit of approximately $4.0 million on our
existing line of credit of $7.5 million and a debt to annualized
quarterly funds flow from operations of 1.2:1. The next review of
the existing line of credit is to be conducted on or before May 31,
2011. Commodity Risk Management The Corporation has established a
commodity risk management policy approved by the Board of
Directors. The purpose of the commodity risk management policy is
to protect planned capital budgets, safeguard the economics of
acquisitions, and provide downside cash flow protection. In April
2011, the Corporation entered into a costless collar contract on a
notional 75 bbl/d of crude oil with a floor price of Cdn $95.00 per
bbl and a ceiling price of Cdn $110.80 per bbl with a term from May
to December 2011. Outlook For 2011, the Corporation plans to focus
on the development of its most successful oil exploration
discoveries and current oil development opportunities. Hawk
believes this focus on development activity will lead to a more
steady and consistent growth of its production base. Hawk's Board
of Directors has approved a capital budget of approximately $9.0
million for 2011 which will facilitate the drilling of six (3 net)
dual leg horizontal oil wells at Seagram Lake and five (4.2 net)
vertical development oil wells in the Edam, Hoosier and Silverdale
areas of western Saskatchewan. Hawk's 2011 capital budget is
expected to be funded by way of funds flow generated from
operations and its existing line of credit. 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; 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. 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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