CALGARY,
March 25, 2014 /CNW/ - Hawk
Exploration Ltd. ("Hawk" or the "Corporation") is pleased to
provide an operations update and a summary of its December 31, 2013 reserve information as
evaluated by GLJ Petroleum Consultants Ltd. ("GLJ").
HIGHLIGHTS
- Increased total proved plus probable oil reserves by 5% from
1,725 thousand barrels of oil equivalent ("MBoe") to 1,814 MBoe
while total proved reserves increased slightly from 1,137 MBoe in
2012 to 1,145 MBoe in 2013;
- Added total proved reserves in 2013 at a finding and
development cost of $34.73 per Boe,
including future development costs, and added total proved plus
probable reserves at a finding and development cost of $24.78 per Boe, including future development
costs;
- Achieved a recycle ratio on a proved basis of 1.0 times and on
a proved plus probable recycle ratio of 1.3 times based on
estimated 2013 operating netback of $32.94 per Boe; and
- Replaced 2013 production on a proved basis by 103% and on a
proved plus probable basis by 138%;
OPERATIONS
During the first quarter of 2014, Hawk drilled
three (3.0 net) wells targeting heavy oil in the Neilburg area of western Saskatchewan and the Lloydminster area of Alberta and one (1.0) vertical well targeting
light oil in the Redwater area of
eastern Alberta. The three (3.0 -
net) heavy oil wells have all been completed and are currently on
production at a combined rate of 105 bbl/d of crude oil. The
Redwater well was completed but
did not produce economic quantities of oil. Hawk's current
production is approximately 775 boe/d and expects first quarter
2014 production to average approximately 715 boe/d.
HEDGING UPDATE
Hawk has established a commodity risk management
program to provide downside cash flow protection and to protect
planned capital budgets. For the remainder of 2014, the Corporation
has approximately 266 bbl/d of crude oil hedged at an average price
of CDN$99.25 per bbl and has also
hedged the differential on Western Canadian select heavy oil at
CDN$21.80 per bbl on 100 bbl/d for
the period from April 1 to December 31,
2014.
RESERVES
GLJ prepared an independent engineering report
in accordance with National Instrument 51-101 ("NI 51-101") with an
effective date of December 31, 2013
(the "GLJ Report"). The tables below are a summary of the oil, NGL
and natural gas reserves attributable to the Corporation and the
net present value of future net revenue attributable to such
reserves as evaluated in the GLJ Report.
The net present value of future net revenue
attributable to reserves is stated without provision for interest
costs and general and administrative costs, but after providing for
estimated royalties, production costs, development costs, other
income, future capital expenditures and well abandonment costs for
only those wells assigned reserves by GLJ. It should
not be assumed that the undiscounted or discounted net present
value of future net revenue attributable to reserves estimated by
GLJ represents the fair market value of those reserves. Other
assumptions and qualifications relating to costs, prices for future
production and other matters are summarized herein. The
recovery and reserve estimates of oil, NGL and natural gas reserves
provided herein are estimates only. Actual reserves may be
greater than or less than the estimates provided herein.
The reserve data provided in this press release
only represents a summary of the disclosure required under NI
51-101. Additional reserves disclosure will be provided in the
Corporation's Annual Information Form to be filed on SEDAR
(www.sedar.com) on or before April 30,
2014. The tables summarize the data contained in the GLJ
Report and as a result may contain slightly different numbers than
such report due to rounding. Also due to rounding, certain
columns may not add exactly.
Summary of Oil and Gas Reserves as of December 31, 2013
|
Reserves Summary |
| |
| |
Oil |
|
Natural Gas |
|
Natural Gas Liquids |
|
Total Oil Equivalent |
| Reserves Category |
Gross
(Mbbl) |
Net
(Mbbl) |
|
Gross
(MMcf) |
Net
(MMcf) |
|
Gross
(Mbbl) |
Net
(Mbbl) |
|
Gross
(Mboe) |
Net
(Mboe) |
| Proved |
|
|
|
|
|
|
|
|
|
|
|
| |
Developed Producing |
838 |
725 |
|
200 |
166 |
|
8 |
6 |
|
879 |
758 |
| |
Developed Non-producing |
77 |
64 |
|
121 |
85 |
|
- |
- |
|
97 |
78 |
| |
Undeveloped |
151 |
130 |
|
79 |
63 |
|
3 |
2 |
|
167 |
143 |
| Total Proved |
1,066 |
918 |
|
400 |
314 |
|
11 |
8 |
|
1,144 |
979 |
| Probable |
494 |
427 |
|
1,023 |
688 |
|
4 |
3 |
|
669 |
546 |
| Total Proved plus Probable |
1,560 |
1,344 |
|
1,423 |
1,002 |
|
15 |
12 |
|
1,813 |
1,525 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Present Value Summary as of December 31, 2013
| |
Net Present Value of Future Net Revenue
Before Income Taxes
Discounted At (%/year) |
|
Unit
Value Before
Income Tax
Discounted
at 10%/year |
| Reserves Category |
0%
M$ |
5%
M$ |
10%
M$ |
15%
M$ |
20%
M$ |
|
$/boe |
| Proved |
|
|
|
|
|
|
|
| |
Developed Producing |
31,276 |
28,242 |
25,803 |
23,803 |
22,133 |
|
34.02 |
| |
Developed Non-producing |
3,005 |
2,278 |
1,766 |
1,398 |
1,127 |
|
22.70 |
| |
Undeveloped |
4,794 |
3,896 |
3,213 |
2,681 |
2,257 |
|
22.53 |
| Total Proved |
39,075 |
34,415 |
30,782 |
27,881 |
25,517 |
|
31.45 |
| Probable |
20,607 |
15,483 |
12,077 |
9,717 |
8,022 |
|
22.13 |
| Total Proved plus Probable |
59,682 |
49,898 |
42,859 |
37,598 |
33,539 |
|
28.11 |
| |
|
|
|
|
|
|
|
|
|
|
Total Future Net Revenue (Undiscounted) as of December 31, 2013
| Reserves Category |
Revenue
M$ |
Royalties
M$ |
Operating
Cost
M$ |
Capital
Development
Costs
M$ |
Abandonment
Costs
M$ |
Future Net
Revenue
Before
Income Tax
M$ |
| |
|
|
|
|
|
|
| Total Proved |
79,783 |
12,562 |
24,731 |
2,164 |
1,251 |
39,075 |
| Total Proved plus Probable |
123,218 |
19,997 |
39,473 |
2,573 |
1,492 |
59,682 |
| |
|
|
|
|
|
|
Summary of Forecast Pricing and Inflation
Assumptions
The GLJ Report used the following prices,
exchange rates, and inflation rate assumptions as of December 31, 2013:
| Year |
WTI Cushing
Oklahoma
($US/bbl) |
Edmonton 40
degree API
Crude Oil
($CAD/bbl) |
WCS Crude Oil
($CAD/bbl) |
AECO - NIT Spot
($CAD/mmbtu) |
Inflation Rate
% |
Exchange Rate
($US/$CAD) |
| 2014 |
97.50 |
92.76 |
75.60 |
4.03 |
2.0 |
0.95 |
| 2015 |
97.50 |
97.37 |
79.36 |
4.26 |
2.0 |
0.95 |
| 2016 |
97.50 |
100.00 |
81.50 |
4.50 |
2.0 |
0.95 |
| 2017 |
97.50 |
100.00 |
81.50 |
4.74 |
2.0 |
0.95 |
| 2018 |
97.50 |
100.00 |
81.50 |
4.97 |
2.0 |
0.95 |
| 2019 |
97.50 |
100.00 |
81.50 |
5.21 |
2.0 |
0.95 |
| 2020 |
98.54 |
100.77 |
82.13 |
5.33 |
2.0 |
0.95 |
| 2021 |
100.51 |
102.78 |
83.76 |
5.44 |
2.0 |
0.95 |
| 2022 |
102.52 |
104.83 |
85.44 |
5.55 |
2.0 |
0.95 |
| 2023 |
104.57 |
106.93 |
87.14 |
5.66 |
2.0 |
0.95 |
| Escalated at 2.0 % per
year thereafter. |
| |
|
|
|
|
|
|
| FINDING AND DEVELOPMENT COSTS ("F&D")
(1) |
|
|
|
|
|
|
|
|
| |
2013 |
|
2012 |
|
Three Year Average |
| |
Proved |
Proved
plus
Probable |
|
Proved |
Proved
plus
Probable |
|
Proved |
Proved
plus
Probable |
| Exploration and development costs (M$)
(2) |
8,899 |
8,899 |
|
9,152 |
9,152 |
|
28,957 |
28,957 |
| |
|
|
|
|
|
|
|
|
| Change in future development cost
(M$) |
|
|
|
|
|
|
|
|
| |
Exploration and development |
(481) |
(876) |
|
1,249 |
838 |
|
808 |
(1,513) |
| Total costs (M$) |
8,418 |
8,023 |
|
10,401 |
9,990 |
|
29,765 |
27,444 |
| |
|
|
|
|
|
|
|
|
| Net reserve additions and revisions
(Mboe) |
242 |
324 |
|
526 |
592 |
|
977 |
1,019 |
| |
|
|
|
|
|
|
|
|
| Finding and
Development - including future development cost ($/boe) |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
Total F&D costs ($/boe) |
34.73 |
24.78 |
|
19.77 |
16.87 |
|
30.48 |
26.94 |
|
(1) |
The aggregate of the exploration and
development costs incurred in the most recent financial year and
the change during that year in estimated future development costs
generally will not reflect total finding and development costs
related to reserve additions for that year. |
| (2) |
The Corporation's annual audit of the
2013 financial statements has not been completed and accordingly
all financial amounts are management's best estimates which are
unaudited and subject to change. |
| |
|
| NET ASSET VALUE |
|
|
|
| M$, except per share amounts |
|
|
December 31, 2013 |
| |
|
|
| Proved plus probable
reserves discounted at 10% (before taxes) |
|
42,859 |
| Undeveloped land and seismic
(1) |
|
6,769 |
| Net debt and working capital deficit
(2) |
|
|
(7,626) |
| Proceeds from dilutive options |
|
|
657 |
| Net asset value |
|
|
42,659 |
| Fully diluted Class A shares
outstanding (000's) (3) |
|
36,891 |
| Net asset value per fully diluted
Class A share |
|
$1.16 |
| Fully diluted Class A and Class B
shares outstanding (000's) (4) |
|
47,691 |
| Net asset value per fully diluted
Class A and Class B shares |
|
$0.89 |
|
(1) |
Undeveloped land is based on management's internal estimate at
December 31, 2013. Hawk had a total of 40,635 net acres of land at
December 31, 2013 assessed at an average value of $125 per net
acre. The value of seismic data is based on management's internal
estimate at December 31, 2013 using a percentage of costs incurred
in shooting the seismic data. |
|
(2) |
The Corporation's annual audit of the 2013 financial statements
has not been completed and accordingly all financial amounts are
management's best estimates which are unaudited and subject to
change. |
|
(3) |
Includes Class A shares outstanding at December 31, 2013 of
34,605,953 plus dilutive options of 2,285,000. |
|
(4) |
For purposes of this calculation, Class B shares were converted
to Class A shares at $1.00 per share such that the 1,080,000 Class
B shares outstanding at December 31, 2013 were converted into
10,800,000 Class A shares. The Class B common shares are
convertible (at the option of the Corporation) at any time after
July 2, 2012 and on or before June 30, 2014 into Class A shares.
The number of Class A shares to be issued upon conversion of one
Class B share is calculated by dividing $10 by the greater of $1
and the then current market price of the Class A shares at the date
of conversion. If conversion has not occurred by the close of
business on June 30, 2014, the Class B shares become convertible
(at the option of the shareholder) into Class A shares pursuant to
the conversion formula described above. Effective at the close of
business on July 31, 2014, all remaining Class B shares will be
automatically converted into Class A shares pursuant to the
conversion formula described above. |
| |
|
| LAND HOLDINGS |
|
|
|
|
|
|
|
|
| |
Developed |
|
Undeveloped |
|
Total |
| Acres |
Gross |
Net |
|
Gross |
Net |
|
Gross |
Net |
| Alberta |
2,640 |
2,413 |
|
27,085 |
26,461 |
|
29,725 |
28,874 |
| Saskatchewan |
2,510 |
2,041 |
|
18,444 |
14,174 |
|
20,954 |
16,215 |
| Total |
5,150 |
4,454 |
|
45,529 |
40,635 |
|
50,679 |
45,089 |
| |
|
|
|
|
|
|
|
|
Hawk is an emerging 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 volumes and estimated value of the
Corporation's oil and gas reserves; future oil and natural gas
prices; future costs, expenses, royalty rates and the exchange rate
between the $US and $CAD; supply and demand for oil and natural
gas; planned development of the Corporation's oil and natural gas
properties; the timing of production additions from the first
quarter 2014 drilling program; expected first quarter 2014
production; and future capital expenditure programs.
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.
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.