HWK.A

CALGARY, June 29, 2011 /CNW/ -- CALGARY, June 29, 2011 /CNW/ - Hawk Exploration Ltd. ("Hawk" or the "Corporation") announces its results for the three months ended March 31, 2011. Selected financial information for the three months ended March 31, 2011 is provided as follows: Three months ended March 31, 2011 2010 % Change Financial ($000's except per share amounts) Petroleum and natural gas sales $ 2,242 1,897 18% Funds flow from operations (()(1)) 863 876 (1%) Per share ((1, 2)) 0.03 0.03 0% Comprehensive loss (133) (633) 79% Per share ((2)) (0.01) (0.03) 67% Capital expenditures 643 4,479 (86%) Working capital deficit (surplus), end of period $ 1,218 (4,562) (127%) Bank debt, end of period 2,550 - - Total assets, end of period $ 25,803 28,116 (8%) Common Shares outstanding, end of period: Class A Shares 21,981 21,981 0% Class B Shares 1,080 1,080 0% Options to acquire Class A Shares 2,110 1,010 109% Operations Production Crude oil and natural gas liquids (bbl/d) 348 270 29% Natural gas (mcf/d) 388 391 0% Total (boe/d) 413 335 23% Average Selling Price Crude oil and ngls (per bbl) $ 67.15 71.06 (6%) Natural gas (per mcf) 3.96 4.92 (20%) Total (per boe) 60.35 62.97 (4%) Operating netback (per boe at 6:1) ((3)) $ 29.27 33.88 (14%) ((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 by International Financial Reporting Standards ("IFRS") and therefore may not be comparable with the calculation of similar measures by other entities. ((2) )Weighted average diluted shares outstanding for the periods exclude both the impact of the conversion of the Class B shares and the effect of options as they would have been anti-dilutive. ((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 IFRS and therefore may not be comparable with the calculation of similar measures by other entities. HIGHLIGHTS Highlights for the three months ended March 31, 2011 were as follows: -- Increased production 23 percent to 413 boe/d in the first quarter of 2011 compared to 335 boe/d in the first quarter of 2010, -- Increased petroleum and natural gas revenue by 18% in the first quarter of 2011 compared to 2010, despite lower realized commodity prices, -- Drilled one (1.0 net) oil well in the first quarter of 2011, -- On May 18, 2011, the Corporation closed a bought deal private placement of subscription receipts for gross proceeds of $10 million, -- Added to the Corporation's land position by entering into a farm-in agreement in the Seagram Lake area on May 5, 2011, and -- Subsequent to quarter end, increased the Corporation credit facility from $7.5 million to $11 million, comprised of an $8.5 million revolving line of credit and a $2.5 million dollar development line. Financial Hawk achieved record average production of 413 boe/d in the first quarter of 2011 and generated strong operating netbacks of $29.27 per boe. The Corporation's operating netback of $29.27 declined 14 percent compared to the first quarter of 2010 as a result of lower realized commodity prices and an increase in production expenses. Hawk had bank debt and working capital deficit of approximately $3.8 million at March 31, 2011 on an existing line of credit of $7.5 million and a debt to annualized quarterly funds flow from operations of 1.1:1. In May 2011, the Corporation expanded its credit facility to $11 million, comprised of an $8.5 million revolving line of credit and a $2.5 million acquisition and development line of credit, with the next review date to occur on or before September 30, 2011. Outlook The Corporation plans to focus on the development of its most successful oil exploration discoveries and current oil development opportunities. Hawk believes this focus on development activity will lead to more steady and consistent growth of its production base. Hawk's Board of Directors has approved a capital budget of approximately $9.5 million for 2011 which will facilitate the drilling of six (3 net) dual leg horizontal oil wells at Seagram Lake and five (4.2 net) vertical development oil wells in the Edam, Hoosier and Silverdale areas of western Saskatchewan. Hawk's 2011 capital budget is expected to be funded by way of funds flow generated from operations and its recently expanded line of credit. 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; 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.   To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/June2011/29/c2226.html table valign="top" border="0" tr td bSteve Fitzmaurice /bbr/ President, CEO and Chairman br/ Tel: (403) 264-0191 Ext 225 br/ Email: a href="mailto:steve@hawkexploration.ca"steve@hawkexploration.ca/a  /td td br/ br/ br/ /td td br/ br/ br/ /td td bDennis Jamieson/bbr/ Chief Financial Officerbr/ Tel: (403) 264-0191 Ext 234br/ Email: a href="mailto:dennis@hawkexploration.ca"d/aa href="mailto:dennis@hawkexploration.ca"ennis@hawkexploration.ca/a /td /tr /table

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