CALGARY, May 25 /CNW/ - Hawk Exploration Ltd. ("Hawk" or the "Corporation") announces its results for the three months ended March 31, 2010. Selected financial information for the three months ended March 31, 2010 is provided as follows:
Period from
Three months ended February 2, 2009
March 31, 2010 to March 31, 2009
-------------------------------------------------------------------------
Financial
Petroleum and natural gas revenue $ 1,896,727 $ -
Funds flow from (used in) operations(1) 876,271 (41,254)
Per share(1) 0.03 (0.01)
Net income (loss) 9,091 (41,323)
Per share 0.00 (0.01)
Capital expenditures 4,463,976 6,532
Property acquisition 15,417 12,621,314
Working capital surplus, end of period 4,561,896 1,152,214
Total assets, end of period $ 28,899,175 $ 1,188,663
Common Shares outstanding, end of period:
Class A Shares 21,980,953 4,800,000
Class B Shares 1,080,000 -
Options to acquire Class A Shares 1,010,000 -
Weighted average shares outstanding
on combined basis, basic and diluted(2) 31,799,135 2,778,989
-------------------------------------------------------------------------
Operations
Production
Crude oil and natural
gas liquids (bbl/d) 270 -
Natural gas (mcf/d) 391 -
Total (boe/d) 335 -
Average Selling Price
Crude oil and ngls (per bbl) $ 71.06 $ -
Natural gas (per mcf) $ 4.92 $ -
Total (per boe) $ 62.97 $ -
Operating netback (per boe at 6:1)(3) $ 33.88 $ -
-------------------------------------------------------------------------
(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
March 31, 2010 closing price for the Class A Shares of $1.10 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 March 31, 2010 were as follows:
- Drilled four (4.0 net) wells resulting in three (3.0 net) crude oil
wells, and one (1.0 net) dry hole,
- Acquired 8,696 gross and net acres of undeveloped land at crown land
sales, mainly in east central Alberta,
- Shot 17 square kilometers of three dimensional seismic data and shot
and acquired 26.8 kilometers of two dimensional seismic data,
- Generated funds flow from operations of $876,271 ($0.03 per share)
and net income of $9,091 ($0.00 per share) for the first quarter of
2010, and
- Averaged 335 boe/d of production in the first quarter, of which 81%
was crude oil, with an operating netback of $33.88 per boe.
Operations
Hawk drilled four (4.0 net) wells in the first quarter of 2010 resulting in three (3.0 net) producing oil wells and one (1.0 net) dry hole. The Corporation drilled its initial horizontal well in the Carruthers area of Saskatchewan and encountered excellent reservoir in the Cummings formation. This well commenced production in the second quarter of 2010 and is currently producing approximately 45 bbl/d of heavy oil. Hawk intends to follow up success at Carruthers with additional development drilling starting in 2011.
At Epping in Saskatchewan, the Corporation drilled a successful exploration well in the first quarter of 2010 which is currently producing approximately 20 bbl/d of heavy oil from the GP formation. Hawk plans to drill an additional two (1.0 net) wells in the Epping area in 2010.
Hawk drilled one well at Red Earth, in northern Alberta, that commenced production in the second quarter of 2010 and is currently approximately 12 bbl/d of light oil from the Keg River formation. The Corporation is re-evaluating its 3D seismic data at Red Earth to determine if additional future drilling will lead to higher initial production rates.
Financial
The Corporation's focus on oil production resulted in its second consecutive quarterly profit, reporting net income of $9,091 for the first quarter of 2010 and funds flow from operations of $876,271. However, both net income and funds flow from operations decreased from the fourth quarter of 2009 as a result of lower production and increased production costs. Production was negatively impacted in the first quarter of 2010 as a result of pump changes and weather related production interruptions at its main producing property at Dolcy for January and February 2010. Despite the increased operating costs, Hawk recorded strong operating netbacks of $33.88 per boe in the first quarter.
Outlook
Hawk has planned an active summer drilling program and intends to drill eleven (9.3 net) wells targeting light, medium and heavy oil zones in its core plains area of Alberta and Saskatchewan. The drilling program is expected to commence prior to the end of May 2010, weather permitting, and includes the anticipated drilling of two (2.0 net) infill development wells at Dolcy and nine (7.3 net) exploratory wells in east central Alberta and west central Saskatchewan.
Production for the second quarter of 2010 is expected to average between 370 and 400 boe/d depending on the stabilized production rates from new production additions at Carruthers and Red Earth. The Corporation continues to maintain a strong financial position with a working capital surplus of approximately $4.6 million at March 31, 2010 and an undrawn $6 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 March 31, 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]
Share this article