CALGARY, Aug. 26 /CNW/ - Hawk Exploration Ltd. ("Hawk" or the "Corporation") announces its results for the three and six months ended June 30, 2010. Selected financial information for the three and six months ended June 30, 2010 is provided as follows:
Three months ended Six months ended
June 30, June 30,
2010 2009 2010 2009
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Financial
Petroleum and
natural gas
revenue $ 1,845,406 $ - $ 3,742,133 $ -
Funds flow from
(used in)
operations(1) 745,461 (71,134) 1,621,732 (112,388)
Per share(1) 0.02 (0.01) 0.05 (0.02)
Net loss (146,605) (73,475) (137,514) (114,798)
Per share (0.00) (0.01) (0.00) (0.02)
Capital
expenditures $ 2,546,148 $ 219,792 7,025,541 226,324
Working capital
surplus, end of
period 2,761,209 11,827,985
Total assets, end
of period $ 27,620,104 $ 12,269,514
Common shares
outstanding, end
of period:
Class A Shares 21,980,953 9,600,000
Class B Shares 1,080,000 1,080,000
Options to acquire
Class A Shares 2,076,500 1,010,000
Weighted average
shares outstanding
on a combined
basis - basic &
diluted(2) 32,780,953 7,664,469 32,780,953 5,771,543
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Operations
Production
Crude oil and
natural gas
liquids (bbl/d) 305 - 287 -
Natural gas (mcf/d) 250 - 320 -
Total (boe/d) 346 - 341 -
Average Selling
Price
Crude oil and
ngls (per bbl) $ 63.44 $ - $ 67.00 $ -
Natural gas
(per mcf) $ 3.82 $ - $ 4.49 $ -
Total (per boe) $ 58.57 $ - $ 60.72 $ -
Operating netback
(per boe at
6:1)(3) $ 30.14 $ - $ 31.97 $ -
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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 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 June 30, 2010 were as follows:
- Drilled four (3.1 net) exploratory wells resulting in three (2.5 net)
producing oil wells, and one (0.6 net) standing oil well,
- Increased its undrawn credit facility to $7.5 million from
$6 million,
- Continued to expand the Corporation's land base by acquiring 3,720
gross and net acres of undeveloped land at crown land sales, mainly
in west central Saskatchewan,
- Completed a 5.9 square km three dimensional ("3D") seismic program in
the Legal area of Alberta,
- Earned 600 gross and net acres at Hoosier by way of farm-in agreement
through the drilling of one successful exploratory well,
- Generated funds flow from operations of $745,461 ($0.02 per share) in
the second quarter of 2010, and
- Produced 346 boe/d in the second quarter, a slight increase over
first quarter production of 335 boe/d.
Operations
Hawk drilled four exploratory (3.1 net) wells in the second quarter of 2010 resulting in three (2.5 net) new pool discoveries and one (0.6 net) oil well which has yet to be completed.
At Epping in Saskatchewan, the Corporation discovered a new Sparky oil pool which is currently on production at a rate of 20 bbl/d (10 bbl/d - net). Hawk has 3D seismic over the Epping lands identifying several follow up locations which will be pursued in 2011.
At Hoosier in Saskatchewan, Hawk discovered a new Mannville pool containing both oil and natural gas. The well has been completed and tested at rates of 75 boe/d (75 boe/d -net). As the well will require a tie in, the Corporation is assessing its pipeline options in the area so the associated natural gas can be conserved. Hawk has initiated a 3D seismic program on the Hoosier lands to determine the size of the discovery and to identify potential follow up locations.
Hawk has also drilled four (3.2 net) wells to date in the third quarter of 2010, resulting in three (2.2 net) oil wells and one (1.0 net) dry hole. The Corporation drilled two infill development (2.0 net) wells at Dolcy resulting in two oil wells that are currently waiting tie in to Hawk's central battery. The wells are expected to be tied in and on production by the middle of September. Hawk also drilled one (1.0) exploratory well at Dolcy targeting a separate feature to the east of the main producing pool, however no commercial zone was encountered and the well was abandoned. At Epping, the Corporation drilled one (0.2 net) exploratory well resulting in a new Sparky oil discovery. The well is currently on production at a rate of 50 bbl/d (net - 12 bbl/d).
Financial
The Corporation continued to generate strong funds flow and operating netbacks in the second quarter of 2010. Funds flow from operations for the second quarter totaled $745,461, which is down from the first quarter of 2010 as a result of lower realized oil prices in the second quarter. Hawk's oil prices for the second quarter averaged $63.44 per bbl compared to the first quarter average oil price of $71.30 per bbl. Despite the lower realized oil price, the Corporation was still able to generate strong operating netbacks of $30.14 per boe in the second quarter. Also during the quarter, the Corporation added to its financial flexibility by expanding its credit facility with a Canadian bank from $6 million to $7.5 million, which remains undrawn at June 30, 2010.
Outlook
The Corporation has a capital budget of approximately $8.5 million for the second half of 2010 that includes the drilling of ten (9.5 net) wells, the majority of which will be exploratory in nature and all of which will be targeting oil. Hawk remains on track to fulfill its flow through obligation by December 31, 2010. The drilling program for the second half of 2010 will be focused in Hawk's core areas of east central Alberta and west central Saskatchewan and includes the planned drilling of two (1.5 net) exploratory horizontal wells in Saskatchewan.
The Corporation continues to maintain a strong financial position with a working capital surplus of approximately $2.8 million at June 30, 2010 and an undrawn $7.5 million line of credit, which, along with cash flow from operations, will fund Hawk's 2010 capital budget.
The unaudited financial statements and management's discussion and analysis for the interim period ended June 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 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.
For further information: Steve Fitzmaurice, President, CEO and Chairman, Tel: (403) 264-0191 Ext 225, Email: [email protected], Dennis Jamieson; Chief Financial Officer, Tel: (403) 264-0191 Ext 234, Email: [email protected]
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