CALGARY,
April 24, 2013 /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, 2012 containing the
Corporation's Statement of Reserves Data and Other Oil and Gas
Information as of December 31, 2012
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, 2012 are provided as follows:
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Three months
ended December 31, |
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Year ended
December 31, |
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|
2012 |
|
2011 |
% Change |
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|
2012 |
|
2011 |
% Change |
| Financial ($000's except per share
amounts) |
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| Petroleum and natural gas
sales |
$ |
3,294 |
$ |
3,120 |
6% |
|
$ |
12,030 |
$ |
10,498 |
15% |
| Funds flow from operations
(1) |
|
1,484 |
|
1,311 |
13% |
|
|
5,654 |
|
4,445 |
27% |
| |
Per share |
|
0.04 |
|
0.04 |
-% |
|
|
0.16 |
|
0.16 |
-% |
| Comprehensive income (loss) |
|
(529) |
|
(6,998) |
92% |
|
|
96 |
|
(7,272) |
n/a |
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Per share |
|
(0.02) |
|
(0.25) |
92% |
|
|
0.00 |
|
(0.26) |
n/a |
| Capital expenditures
(2) |
|
2,919 |
|
1,698 |
72% |
|
|
9,221 |
|
11,025 |
(16%) |
| Working capital deficit - excluding
bank |
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debt and commodity contracts, end of period
(3) |
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$ |
3,206 |
$ |
1,140 |
181% |
| Bank debt, end of
period |
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1,700 |
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200 |
750% |
| Total assets, end of
period |
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$ |
30,713 |
|
25,273 |
22% |
| Common Shares outstanding end of
period: |
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Class A Shares |
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34,481 |
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34,481 |
-% |
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Class B Shares |
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|
1,080 |
|
1,080 |
-% |
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Options to acquire Class A
Shares |
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3,540 |
|
2,110 |
68% |
| Operations |
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| Production |
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Crude oil and natural gas liquids
(bbl/d) |
|
558 |
|
399 |
40% |
|
|
482 |
|
371 |
30% |
| |
Natural gas (mcf/d) |
|
205 |
|
215 |
(5%) |
|
|
165 |
|
290 |
(43%) |
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Total (boe/d) |
|
592 |
|
435 |
36% |
|
|
510 |
|
420 |
21% |
| Oil and liquids as percent of
total |
|
94% |
|
92% |
2% |
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|
95% |
|
88% |
7% |
| Average Selling Price |
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Crude oil and ngls (per bbl) |
$ |
62.96 |
$ |
83.25 |
(24%) |
|
$ |
67.27 |
$ |
74.44 |
(10%) |
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Natural gas (per mcf) |
|
3.31 |
|
3.29 |
1% |
|
|
2.52 |
|
3.76 |
(33%) |
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Total (per boe) |
|
60.48 |
|
78.03 |
(23%) |
|
|
64.46 |
|
68.46 |
(6%) |
| Operating netback (per boe at
6:1) (4) |
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Price |
$ |
60.48 |
$ |
78.03 |
(23%) |
|
$ |
64.46 |
$ |
68.46 |
(6%) |
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Royalties |
|
(12.76) |
|
(18.60) |
(31%) |
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|
(13.01) |
|
(13.82) |
(6%) |
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Production expense |
|
(14.94) |
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(19.68) |
(24%) |
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(16.94) |
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(18.75) |
(10%) |
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Transportation expense |
|
(1.53) |
|
(1.92) |
(20%) |
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|
(1.71) |
|
(1.80) |
(5%) |
| Operating netback ($/boe) |
$ |
31.25 |
$ |
37.83 |
(17%) |
|
$ |
32.80 |
$ |
34.09 |
(4%) |
| (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 year ended December 31,
2012 were as follows:
- Increased funds flow from operations by 27% from $4.4 million in 2011 to $5.6 million in 2012;
- Averaged 510 boe/d of production in 2012, a 21% increase over
2011 average production of 420 boe/d, while fourth quarter 2012
production increased 36% to 592 boe/d from 435 boe/d in Q4
2011;
- Increased Q1 2013 production to 630 boe/d, a 45% increase over
Q1 2012 average production of 434 boe/d;
- Achieved net income in 2012 of $0.1
million compared to a net loss of $7.2 million in 2011;
- Reduced operating costs per boe by 10% in 2012 to $16.94 per boe from $18.75 per boe in 2011 and in the fourth quarter
of 2012, operating costs averaged $14.94 per boe, a 24% reduction from $19.68 per boe in Q4 2011;
- Increased the Corporation's revolving credit facility from
$8.5 million to $12 million during 2012; and
- Drilled seventeen (9.2 net) wells in 2012 resulting in fifteen
(7.2 net) oil wells and two (2.0 net) dry and abandoned wells.
Operational Review and Update
In 2012, Hawk drilled seventeen (9.2 net) wells resulting in
fifteen (7.2 net) oil wells in its core area of western
Saskatchewan and two (2.0 net) dry
and abandoned wells also in western Saskatchewan. The drilling program in 2012 was
concentrated in the Silverdale
area in western Saskatchewan where
Hawk drilled ten (2.8 net) successful vertical oil wells. At the
end of 2012, Hawk had twelve (3.3 net) producing oil wells in the
Silverdale area and production,
net to Hawk, had increased from 18 bbl/d at the start of 2012 to
approximately 200 bbl/d in December
2012. In the fourth quarter of 2012, Hawk shot 10.5 square
kilometers of three dimensional seismic in the Silverdale area covering Hawk's land and the
land of two industry partners.
To date in 2013, Hawk has drilled three (2.0
net) vertical oil wells at Silverdale and one (1.0 net) vertical oil well
at Dulwich, all in western Saskatchewan. Three (2.0 net) of these wells
drilled in the first quarter of 2013 were on production prior to
March 31, 2013. The other one (1.0
net) well is expected to be placed on production after spring
breakup. Hawk's production for the first quarter of 2013 was
approximately 630 boe/d based on field estimates.
Financial
Hawk achieved record funds flow from operations in 2012 of
approximately $5.6 million compared
to $4.4 million for 2011. The
Corporation generated an operating netback of $32.80 per boe in 2012 which is 4 percent lower
than operating netbacks for 2011 of $34.09 per boe due to lower realized pricing in
2012. Due to the strong production growth at Silverdale during 2012, Hawk was able to
realize a 10 percent reduction in operating costs in 2012 to
$16.94 per boe compared to
$18.75 per boe in 2011.
Revenue for the year increased by 15 percent to
$12 million in 2012 from $10.5 million in 2011 as a result of increased
annual production offset by a 6 percent reduction in average
realized sales price. Hawk's annual production increased to 510
boe/d, with oil and liquids production contributing 482 bbl/d, or
95 percent of total annual production, while the Corporation's
average realized oil price decreased 10 percent in 2012 to average
$67.27 per bbl compared to
$74.44 per bbl in 2011. Hawk's
hedging program, initiated in 2011, contributed realized gains in
2012 of approximately $257,000
compared to $38,000 in 2011.
At December 31,
2012, Hawk had $1.7 million
drawn on its existing $12 million
credit facility, with the next review date to occur on or before
May 31, 2013. The Corporation
continues to maintain a solid balance sheet with net debt and
working capital deficit of approximately $4.9 million at December
31, 2012 which equates to a net debt to annual funds flow
from operations of 0.9:1.
Outlook
The Corporation has set a $10 million
capital budget for 2013 that will focus on development
opportunities in western Saskatchewan and east central Alberta targeting light and heavy crude oil
both through horizontal and vertical drilling. Hawk is expecting a
prolonged spring breakup in 2013 due to the large snowpack in place
in western Saskatchewan and
eastern Alberta. As a result, the
Corporation's drilling program is expected to be delayed until the
end of the second quarter or the start of the third quarter of
2013, depending on weather and surface conditions. Additionally,
the expected spring breakup may impact Hawk's ability to truck oil
from our well sites or access wells in need of repair and servicing
which may have a negative impact on Hawk's production in the second
quarter of 2013. For the remainder of 2013, Hawk expects to drill
six (5.5 net) vertical wells and two (2.0 net) horizontal wells in
its core area of western Saskatchewan and east central Alberta. Hawk's current production is
approximately 650 boe/d, with oil comprising 96 percent of total
production.
Annual General Meeting
Hawk's annual general meeting of shareholders will be held on
Tuesday, June 11, 2013 at
3:00 pm at the offices of McCarthy
Tetrault LLP, Suite 3300, 421-7th Avenue SW, Calgary, AB.
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 2013; the timing of and nature of capital expenditure
program for 2013; the length and severity of 2013 spring breakup
conditions and the impact on second quarter 2013 production and
operating activities; 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.
SOURCE Hawk Exploration Ltd.