CALGARY,
Nov. 26, 2012 /CNW/ - Hawk
Exploration Ltd. ("Hawk" or the "Corporation") announces its
results for the three and nine months ended September 30, 2012. Selected financial and
operational information for the three and nine months ended
September 30, 2012 is provided as
follows:
| |
| |
Three months ended Sept.
30, |
Nine months ended Sept.
30, |
| |
|
2012 |
|
2011 |
% Change |
|
2012 |
|
2011 |
% Change |
| Financial ($000's except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
| Petroleum and natural gas sales |
|
$ 3,046 |
|
$ 2,617 |
16% |
|
$ 8,736 |
|
$ 7,378 |
18% |
| Funds flow from operations
(1) |
|
1,432 |
|
1,090 |
31% |
|
4,170 |
|
3,134 |
33% |
| |
Per share |
|
0.04 |
|
0.03 |
33% |
|
0.12 |
|
0.12 |
0% |
| Comprehensive income (loss) |
|
69 |
|
(301) |
123% |
|
626 |
|
(274) |
328% |
| |
Per share |
|
0.00 |
|
(0.01) |
100% |
|
0.02 |
|
(0.01) |
300% |
| Capital expenditures
(2) |
|
2,852 |
|
3,930 |
(27%) |
|
6,301 |
|
9,326 |
(32%) |
| Working capital deficit - excluding
bank debt and commodity contracts, end of period
(3) |
|
|
|
|
|
|
$ 3,371 |
|
$ 953 |
254% |
| Bank debt, end of period |
|
|
|
|
|
|
100 |
|
- |
- |
| Total assets, end of period |
|
|
|
|
|
|
$ 29,226 |
|
34,936 |
(16%) |
| Common Shares outstanding end of
period: |
|
|
|
|
|
|
|
|
|
|
| |
Class A Shares |
|
|
|
|
|
|
34,481 |
|
34,481 |
0% |
| |
Class B Shares |
|
|
|
|
|
|
1,080 |
|
1,080 |
0% |
| |
Options to acquire Class A Shares |
|
|
|
|
|
|
3,540 |
|
2,110 |
68% |
Operations
Production |
|
|
|
|
|
|
|
|
|
|
| |
Crude oil and natural gas liquids (bbl/d) |
|
505 |
|
403 |
25% |
|
457 |
|
362 |
26% |
| |
Natural gas (mcf/d) |
|
126 |
|
333 |
(62%) |
|
151 |
|
316 |
(52%) |
| |
Total (boe/d) |
|
526 |
|
458 |
15% |
|
482 |
|
415 |
16% |
| Oil and liquids as percent of
total |
|
96% |
|
88% |
8% |
|
95% |
|
87% |
8% |
| Average Selling Price |
|
|
|
|
|
|
|
|
|
|
| |
Crude oil and ngls (per bbl) |
|
$ 64.91 |
|
$ 67.56 |
(4%) |
|
$ 69.03 |
|
$ 71.17 |
(3%) |
| |
Natural gas (per mcf) |
|
2.37 |
|
3.74 |
(37%) |
|
2.15 |
|
3.87 |
(44%) |
| |
Total (per boe) |
|
$ 62.89 |
|
$ 62.10 |
1% |
|
$ 66.10 |
|
$ 65.09 |
2% |
| Operating netback (per boe at 6:1)
(4) |
|
|
|
|
|
|
|
|
|
|
| |
Price |
|
$ 62.89 |
|
$ 62.10 |
1% |
|
$ 66.10 |
|
$ 65.09 |
2% |
| |
Royalties |
|
(11.34) |
|
(12.18) |
(7%) |
|
(13.11) |
|
(12.13) |
8% |
| |
Production expense |
|
(17.58) |
|
(19.69) |
(11%) |
|
(17.76) |
|
(18.43) |
(4%) |
| |
Transportation expense |
|
(1.58) |
|
(1.68) |
(6%) |
|
(1.78) |
|
(1.76) |
1% |
| Operating netback ($/boe) |
|
$ 32.39 |
|
$ 28.55 |
13% |
|
$ 33.45 |
|
$ 32.77 |
2% |
| (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) 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. |
HIGHLIGHTS
Highlights for the three months ended
September 30, 2012 were as
follows:
- Achieved quarterly funds flow from operations of $1.4 million in the third quarter of 2012,
a 31% increase from the $1.1 million
in the third quarter of 2011;
- Averaged 526 boe/d of production for the third quarter of 2012,
a 15% increase over Q3 2011 with oil production increasing by
25%;
- Increased the oil weighting as a percent of total production to
96% in the third quarter of 2012 from 88% for the third quarter of
2011.
- Generated strong operating netbacks of $32.39 per boe in the third quarter of 2012, a
13% increase compared to the $28.55
per boe operating netback in Q3 2011;
- Drilled three (3.0 net) wells in the third quarter in western
Saskatchewan, which included one
horizontal well in the Carruthers area;
Operational Update
In the fourth quarter of 2012, Hawk has drilled
two (1.5 net) horizontal wells in western Saskatchewan. At Carruthers, the Corporation
drilled its second 100% working interest horizontal well at
192/09-10-46-23W3 directly offsetting the horizontal well drilled
at 191/09-10-46-23W3 in August 2012.
The 192/09-10-46-23W3 well is currently being completed and is
expected to be placed on production in early December 2012.
At Seagram Lake, Hawk participated in the
drilling of one (0.5 net) horizontal well in October 2012 targeting the Leduc (Duperow) Formation. This horizontal
well was recently placed on production and is currently in its post
completion clean up phase. Initial production rates have averaged
30 bopd (15 - net) with a 20 percent water cut.
Hawk expects to drill one (0.9 net) vertical
well targeting the Sparky Formation at Baldwinton, in western
Saskatchewan, in early
December 2012. Also, the Corporation
has recently completed the shooting of a three dimensional ("3D")
seismic program in the Silverdale
are of western Saskatchewan. This
3D program is currently being interpreted to evaluate potential
future drilling locations on Hawk's land at Silverdale.
Hawk's current production, based on field
estimates, is approximately 565 boe/d, comprised 95 percent of
crude oil. Additional production is expected to be brought on
stream prior to December 31, 2012
from the recently drilled horizontal well at Carruthers.
Financial
Hawk achieved quarterly funds flow from
operations in the third quarter of 2012 of approximately
$1.4 million compared to $1.1 million for the third quarter of 2011. The
Corporation continued to generate strong operating netbacks which
averaged $32.39 per boe in the third
quarter of 2012 compared to $28.55
per boe for the third quarter of 2011 despite lower commodity
prices for both crude oil and natural gas. Hawk's average realized
sales price increased one percent to $62.89 in the third quarter compared to
$62.10 in the third quarter of 2011.
Production expenses in the third quarter of 2012 decreased by 11
percent to $17.58 per boe compared to
$19.69 per boe in the third quarter
of 2011 due to the addition of lower operating cost production from
its 2012 drilling program at Silverdale.
At September 30,
2012, Hawk had drawn $0.1
million on an existing revolving credit facility of
$12 million. The Corporation
continues to maintain a solid balance sheet with net debt and
working capital deficit of approximately $3.5 million at September
30, 2012 which equates to a net debt to annual funds flow
from operations of 0.6:1.
Outlook
The Corporation set an $8.5 million capital budget for 2012 which has
led to steady growth in production through the first three quarters
of 2012 and Hawk intends to build upon this success in 2013. Hawk's
board of directors has approved a capital budget for 2013 of
$10 million which will focus on oil
development drilling mainly in Western
Saskatchewan. The 2013 budget is expected to facilitate the
drilling of three (3.0 net) horizontal wells at Carruthers and
Dankin and six (5.9 net) vertical wells all of which are targeting
heavy oil in Western
Saskatchewan.
The 2013 capital budget also anticipates the
drilling of two (2.0 net) vertical wells targeting light oil in
central Alberta and one (0.5 net)
horizontal well targeting light oil in the Viking Formation, also
in Central Alberta, where Hawk has
accumulated approximately 4,000 acres of land at a 100% working
interest adjacent to an existing Viking light oil pool.
Based on the approved capital budget, Hawk
anticipates average annual production of approximately 700 boe/d
with an exit rate of 850 boe/d and net debt and working capital at
the end of 2013 of $8 million. The
2013 capital budget is expected to be funded by way of cash flow
from operations and the Corporation's existing credit facility of
$12 million.
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 2012; the timing of and nature of capital expenditure
program for 2012;expected second quarter 2012 production rates; and
the expected sources of funding for the 2012 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.