CALGARY,
Aug. 28, 2013 /CNW/ - Hawk
Exploration Ltd. ("Hawk" or the "Corporation") is pleased to
announce its results for the three and six months ended
June 30, 2013.
HIGHLIGHTS
Highlights for the three months ended June
30, 2013 were as follows:
- Generated record funds flow from operations of $1.6 million in the second quarter, a 26%
increase from the $1.3 million in
funds flow in the second quarter of 2012;
- Averaged a record 628 boe/d of production in the second quarter
of 2013, a 29% increase over the 486 boe/d average production in
the same period of 2012;
- Earned comprehensive income of $0.3
million in the second quarter of 2013, a 601% increase over
the second quarter of 2012;
- Recorded its fifth consecutive quarter of increased production,
with a slight increase in production over the first quarter of
2013; and
- Subsequent to the second quarter, drilled four (3.7 net)
successful oil wells in western Saskatchewan.
Selected financial and operational information
for the three and six months ended June 30,
2013 is provided as follows:
| |
|
|
| |
Three months ended June 30, |
|
Six months ended June 30, |
| |
2013 |
2012 |
% Change |
|
2013 |
2012 |
% Change |
| Financial ($000's
except per share amounts) |
|
|
|
|
|
|
|
|
|
| Petroleum and natural
gas sales |
$ 3,893 |
$ 2,800 |
39% |
|
$ |
6,810 |
$ |
5,689 |
20% |
| Funds flow from
operations (1) |
1,613 |
1,277 |
26% |
|
|
2,817 |
|
2,739 |
3% |
| |
Per share |
0.05 |
0.04 |
25% |
|
|
0.08 |
|
0.08 |
0% |
| Comprehensive income
(loss) |
332 |
47 |
601% |
|
|
173 |
|
557 |
(69%) |
| |
Per share |
0.01 |
0.00 |
n/a |
|
|
0.01 |
|
0.01 |
0% |
| Capital expenditures
(2) |
419 |
1,471 |
(72%) |
|
|
2,537 |
|
3,449 |
(26%) |
| Working capital
deficit - excluding bank |
|
|
|
|
|
|
|
|
|
| |
debt and commodity contracts, end
of period (3) |
|
|
|
|
$ |
876 |
$ |
2,051 |
(58%) |
| Bank debt, end of
period |
|
|
|
|
|
3,750 |
|
- |
n/a |
| Total assets, end of
period |
|
|
|
|
$ |
31,227 |
|
28,746 |
9% |
| |
|
|
|
|
|
|
|
|
|
|
| Common Shares
outstanding end of period: |
|
|
|
|
|
|
|
|
|
| |
Class A
Shares |
|
|
|
|
|
34,481 |
|
34,481 |
-% |
| |
Class B
Shares |
|
|
|
|
|
1,080 |
|
1,080 |
-% |
| |
Options to acquire Class A
Shares |
|
|
|
|
|
2,473 |
|
3,540 |
(30%) |
|
| |
Three months ended June 30, |
|
Six months ended June 30, |
| |
2013 |
2012 |
% Change |
|
2013 |
2012 |
% Change |
| Operations |
|
|
|
|
|
|
|
|
|
|
|
| Production |
|
|
|
|
|
|
|
|
|
|
|
| |
Crude oil and natural gas liquids
(bbl/d) |
|
598 |
|
463 |
29% |
|
|
598 |
|
432 |
38% |
| |
Natural gas
(mcf/d) |
|
178 |
|
139 |
28% |
|
|
168 |
|
164 |
2% |
| |
Total (boe/d) |
|
628 |
|
486 |
29% |
|
|
626 |
|
460 |
36% |
| Oil and liquids as percent of
total |
|
95% |
|
95% |
0% |
|
|
96% |
|
94% |
2% |
| Average Selling
Price |
|
|
|
|
|
|
|
|
|
|
|
| |
Crude oil and ngls (per
bbl) |
$ |
70.44 |
$ |
65.87 |
7% |
|
$ |
61.97 |
$ |
71.47 |
(13%) |
| |
Natural gas (per mcf) |
|
3.61 |
|
1.90 |
90% |
|
|
3.47 |
|
2.07 |
68% |
| |
Total (per boe) |
|
68.13 |
|
63.27 |
8% |
|
|
60.13 |
|
67.96 |
(12%) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Operating netback
(per boe at 6:1) (4) |
|
|
|
|
|
|
|
|
|
|
|
| |
Price |
$ |
68.13 |
$ |
63.27 |
8% |
|
$ |
60.13 |
$ |
67.96 |
(12%) |
| |
Royalties |
|
(14.18) |
|
(12.96) |
9% |
|
|
(11.11) |
|
(14.14) |
(21%) |
| |
Production
expense |
|
(18.69) |
|
(18.21) |
3% |
|
|
(18.14) |
|
(17.86) |
2% |
| |
Transportation
expense |
|
(1.99) |
|
(1.68) |
18% |
|
|
(1.75) |
|
(1.89) |
(7%) |
| Operating netback
($/boe) |
$ |
33.27 |
$ |
30.42 |
9% |
|
$ |
29.13 |
$ |
34.07 |
(15%) |
| (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. |
Operational Review and Update
During the second quarter of 2013, Hawk prepared leases for its
drilling program in western Saskatchewan. Early in the third quarter of
2013, Hawk drilled two (1.8 net) vertical oil wells at Silverdale, one (1.0 net) vertical oil well at
Aberfeldy and one (1.0 net) vertical oil well at Neilburg. All wells were successfully
cased and completed and are now on production. The new
Silverdale wells are currently
producing a combined 100 (86 net) barrels of oil per day ("bopd"),
while the Neilburg well is
currently producing 35 bopd (35 net) and the Aberfeldy well is
producing 10 bopd (10 net). Hawk plans to follow up with
additional drilling on both the Silverdale and Neilburg discoveries. During the second
quarter the Corporation also shot five separate 2D seismic programs
in the Coleville, Lashburn, Rush
Lake and Onward areas of western Saskatchewan. These seismic programs are
currently being interpreted and will be used to define future
drilling locations.
Financial
Hawk achieved record funds flow from operations in the second
quarter of 2013 of approximately $1.6
million compared to $1.3
million for the second quarter of 2012 due to both increased
oil production and oil prices in the second quarter of 2013.
Average Western Canadian Select ("WCS") prices for the second
quarter of 2013 increased 5% to $75.06 per bbl compared to $71.30 per bbl in the second quarter of 2012,
while the differential between WCS and West Texas Intermediate
crude oil ("Differential") narrowed to $19.16 per bbl in the second quarter of 2013
compared to $22.18 per bbl for the
second quarter of 2012. Compared to the first quarter of 2013, WCS
prices for Q2 2013 increased 19% from $62.95 per bbl while the Differential decreased
substantially from $31.40 per bbl in
Q1 2013 to $19.16 per bbl in the
second quarter of 2013.
Hawk generated an operating netback of
$33.27 per boe for the second quarter
of 2013 which is a 9 percent increase from the operating netback
for the second quarter of 2012 of $30.42 per boe due to increased oil prices in Q2
2013. Production expenses increased slightly in Q2 2013 to average
$18.69 per boe compared to
$18.21 per boe in the second quarter
of 2012 due to increased work-over costs in the second quarter of
2013 as well as increased road maintenance and snow removal costs
associated with spring breakup and the melting of the large snow
pack from the winter of 2013.
At June 30, 2013,
Hawk had $3.75 million drawn on its
existing $12 million credit facility,
with the next review date to occur on or before October 1, 2013. The Corporation continues to
maintain a solid balance sheet with net debt and working capital
deficit of approximately $4.6 million
at June 30, 2013 which equates to a
net debt to annualized funds flow from operations of 0.8:1 where
annualized funds flow from operations is based on funds flow for
the six months ended June 30, 2013 of
$2,817,000.
Outlook
The Corporation has a capital budget for the second half of 2013 of
approximately $7 million that will
focus on development opportunities in western Saskatchewan and east central Alberta targeting light and heavy crude oil.
For the remainder of 2013, Hawk expects to one (0.7 net) vertical
well in the Legal area of central Alberta targeting light oil in the Viking
formation and expects to drill six (6.0 net) vertical wells
targeting heavy oil in its core area of western Saskatchewan and east central Alberta. Hawk's current production is
approximately 700 boe/d, based on field estimates.
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; 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.