HAWK ANNOUNCES SECOND QUARTER RESULTS
26 August 2010 - 10:00PM
PR Newswire (Canada)
CALGARY, Aug. 26 /CNW/ -- CALGARY, Aug. 26 /CNW/ - Hawk Exploration
Ltd. ("Hawk" or the "Corporation") announces its results for the
three and six months ended June 30, 2010. Selected financial
information for the three and six months ended June 30, 2010 is
provided as follows: Three months ended Six months ended June 30,
June 30, 2010 2009 2010 2009
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Financial Petroleum and natural gas revenue $ 1,845,406 $ - $
3,742,133 $ - Funds flow from (used in) operations(1) 745,461
(71,134) 1,621,732 (112,388) Per share(1) 0.02 (0.01) 0.05 (0.02)
Net loss (146,605) (73,475) (137,514) (114,798) Per share (0.00)
(0.01) (0.00) (0.02) Capital expenditures $ 2,546,148 $ 219,792
7,025,541 226,324 Working capital surplus, end of period 2,761,209
11,827,985 Total assets, end of period $ 27,620,104 $ 12,269,514
Common shares outstanding, end of period: Class A Shares 21,980,953
9,600,000 Class B Shares 1,080,000 1,080,000 Options to acquire
Class A Shares 2,076,500 1,010,000 Weighted average shares
outstanding on a combined basis - basic & diluted(2) 32,780,953
7,664,469 32,780,953 5,771,543
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Operations Production Crude oil and natural gas liquids (bbl/d) 305
- 287 - Natural gas (mcf/d) 250 - 320 - Total (boe/d) 346 - 341 -
Average Selling Price Crude oil and ngls (per bbl) $ 63.44 $ - $
67.00 $ - Natural gas (per mcf) $ 3.82 $ - $ 4.49 $ - Total (per
boe) $ 58.57 $ - $ 60.72 $ - Operating netback (per boe at 6:1)(3)
$ 30.14 $ - $ 31.97 $ -
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(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 at $1.00 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 June 30, 2010 were as follows: - Drilled
four (3.1 net) exploratory wells resulting in three (2.5 net)
producing oil wells, and one (0.6 net) standing oil well, -
Increased its undrawn credit facility to $7.5 million from $6
million, - Continued to expand the Corporation's land base by
acquiring 3,720 gross and net acres of undeveloped land at crown
land sales, mainly in west central Saskatchewan, - Completed a 5.9
square km three dimensional ("3D") seismic program in the Legal
area of Alberta, - Earned 600 gross and net acres at Hoosier by way
of farm-in agreement through the drilling of one successful
exploratory well, - Generated funds flow from operations of
$745,461 ($0.02 per share) in the second quarter of 2010, and -
Produced 346 boe/d in the second quarter, a slight increase over
first quarter production of 335 boe/d. Operations Hawk drilled four
exploratory (3.1 net) wells in the second quarter of 2010 resulting
in three (2.5 net) new pool discoveries and one (0.6 net) oil well
which has yet to be completed. At Epping in Saskatchewan, the
Corporation discovered a new Sparky oil pool which is currently on
production at a rate of 20 bbl/d (10 bbl/d - net). Hawk has 3D
seismic over the Epping lands identifying several follow up
locations which will be pursued in 2011. At Hoosier in
Saskatchewan, Hawk discovered a new Mannville pool containing both
oil and natural gas. The well has been completed and tested at
rates of 75 boe/d (75 boe/d -net). As the well will require a tie
in, the Corporation is assessing its pipeline options in the area
so the associated natural gas can be conserved. Hawk has initiated
a 3D seismic program on the Hoosier lands to determine the size of
the discovery and to identify potential follow up locations. Hawk
has also drilled four (3.2 net) wells to date in the third quarter
of 2010, resulting in three (2.2 net) oil wells and one (1.0 net)
dry hole. The Corporation drilled two infill development (2.0 net)
wells at Dolcy resulting in two oil wells that are currently
waiting tie in to Hawk's central battery. The wells are expected to
be tied in and on production by the middle of September. Hawk also
drilled one (1.0) exploratory well at Dolcy targeting a separate
feature to the east of the main producing pool, however no
commercial zone was encountered and the well was abandoned. At
Epping, the Corporation drilled one (0.2 net) exploratory well
resulting in a new Sparky oil discovery. The well is currently on
production at a rate of 50 bbl/d (net - 12 bbl/d). Financial The
Corporation continued to generate strong funds flow and operating
netbacks in the second quarter of 2010. Funds flow from operations
for the second quarter totaled $745,461, which is down from the
first quarter of 2010 as a result of lower realized oil prices in
the second quarter. Hawk's oil prices for the second quarter
averaged $63.44 per bbl compared to the first quarter average oil
price of $71.30 per bbl. Despite the lower realized oil price, the
Corporation was still able to generate strong operating netbacks of
$30.14 per boe in the second quarter. Also during the quarter, the
Corporation added to its financial flexibility by expanding its
credit facility with a Canadian bank from $6 million to $7.5
million, which remains undrawn at June 30, 2010. Outlook The
Corporation has a capital budget of approximately $8.5 million for
the second half of 2010 that includes the drilling of ten (9.5 net)
wells, the majority of which will be exploratory in nature and all
of which will be targeting oil. Hawk remains on track to fulfill
its flow through obligation by December 31, 2010. The drilling
program for the second half of 2010 will be focused in Hawk's core
areas of east central Alberta and west central Saskatchewan and
includes the planned drilling of two (1.5 net) exploratory
horizontal wells in Saskatchewan. The Corporation continues to
maintain a strong financial position with a working capital surplus
of approximately $2.8 million at June 30, 2010 and an undrawn $7.5
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 June 30, 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. Steve Fitzmaurice, President, CEO and Chairman, Tel:
(403) 264-0191 Ext 225, Email: steve@hawkexploration.ca, Dennis
Jamieson; Chief Financial Officer, Tel: (403) 264-0191 Ext 234,
Email: dennis@hawkexploration.ca
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