Hawk Announces Third Quarter 2011 Results
22 November 2011 - 10:56PM
PR Newswire (Canada)
CALGARY, Nov. 24, 2011 /CNW/ - Hawk Exploration Ltd. ("Hawk" or the
"Corporation") announces its results for the three and nine months
ended September 30, 2011. Selected financial information for the
three and nine months ended September 30, 2011 is provided as
follows and is presented in Canadian dollars, unless otherwise
indicated: Three months Nine months ended September 30, ended
September 30, 2011 2010 % 2011 2010 % Change Change Financial
($000's except per shareamounts) Petroleum and natural gas $ 2,617
$ 1,512 73% $ 7,378 $ 5,254 40% sales Funds flow from operations
(1) 1,090 738 48% 3,134 2,360 33% Per share 0.03 0.03 0% 0.12 0.11
9% Comprehensive (301) (834) (64%) (274) (3,094) (91%) loss Per
share (0.01) (0.04) (75%) (0.01) (0.14) (93%) Capital 3,930 3,256
21% 9,326 10,281 (9%) expenditures Working capital surplus
(deficit) - excluding bank debt and commodity contracts, end of
period $ (953) $ 243 (492%) Bank debt, end - - - of period Total
assets, end of $ 34,936 24,844 40% period Common Shares
outstanding, end of period: Class A 34,481 21,981 57% Shares Class
B 1,080 1,080 0% Shares Options to acquire Class 2,110 2,077 2% A
Shares Operations Production Crude oil and natural gas 403 254 59%
364 275 32% liquids (bbl/d) Natural gas 333 226 47% 316 289 9%
(mcf/d) Total 458 291 57% 415 324 28% (boe/d) Average Selling Price
Crude oil and $ 67.56 $ 61.65 10% $ 71.17 $ 65.37 9% ngls (per bbl)
Natural gas 3.74 3.53 6% 3.87 4.23 (9%) (per mcf) Total (per 62.10
56.49 10% 65.09 59.44 10% boe) Operating netback (per boe at
6:1)(2) Price $ 62.10 $ 56.49 10% $ 65.09 $ 59.44 10% Royalties
(12.18) 15% 2% (10.60) (12.13) (11.87) Production (19.69) (12.57)
57% (18.43) 31% expense (14.03) Transportation (1.68) (1.75) (4%)
(1.76) (1.69) 4% expense Operating $ 28.55 $ 31.57 (10%) $ 32.77 $
31.85 3% netback ($/boe) ((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) )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
September 30, 2011 were as follows: -- Increased third quarter
production by 57% to 458 boe/d compared to 291 boe/d in the third
quarter of 2010 and increased third quarter production by 17% over
the second quarter of 2011, -- Generated record funds flow from
operations of $1.1 million in the quarter, an increase of 48% over
the $0.7 million for the comparable quarter of 2010, -- Grew
petroleum and natural gas sales in the third quarter of 2011 by 73%
to $2.6 million from $1.5 million for the third quarter of 2010, --
Earned strong operating netbacks of $28.55 per boe in the third
quarter of 2011, -- Shot two separate 2D seismic programs at Epping
and Edam in western Saskatchewan to delineate further infill oil
drilling. OPERATION UPDATE Production for the quarter averaged a
record 458 boe/d during the third quarter of 2011 and was comprised
of 403 bbls/d of crude oil and liquids or 88 percent of the total.
For the nine months ended September 30, 2011, production averaged
415 boe/d with crude oil and liquids again comprising 88 percent of
the average production. At Seagram Lake, current production from
the two (1.0 net) producing wells continues to average
approximately 90 (45 - net) bbl/s of oil with a water cut of 65
percent. The Corporation is currently licensing a single leg
horizontal well adjacent to its existing producing wells which is
expected to be drilled in the first half of 2012. Also, Hawk is in
the process of converting the Seagram Lake 16-28-42-24W4 well into
a water disposal well to lower operating expense in the area. Hawk
is currently participating in the drilling of a well in the Rainbow
Lake area of northern Alberta targeting light oil in the Keg River
formation. Hawk is paying 33.75 percent of the drilling and
completion costs to earn a 24.8 percent interest in the well and
two and half sections of land in the area which are covered by 23
square kilometers of three dimensional seismic. In the event the
well is successful, additional follow up locations have been
identified on the seismic data. Commodity Risk Management During
the third quarter of 2011, Hawk entered into a contract to fix the
differential between Edmonton light crude and Western Canadian
Select ("WSC") heavy oil at $13.96 per bbl on a notional 100 bbls/d
for the period from October 1, 2011 to June 30, 2012. Recently, the
Corporation entered into a costless collar transaction for Edmonton
light crude with a floor price of $90 per bbl and a ceiling price
of $103.10 per bbl on a notional 100 bbls/d for the period from
January 1, 2012 to June 30, 2012. These two transactions provide
Hawk with an effective floor price on WCS heavy oil of $76.04 per
bbl on 100 bbl/d for the first half of 2012 and helps protect the
Corporation's funds flow from operations for this period. Financial
Hawk achieved funds flow from operations in the third quarter of
2011 of approximately $1.1 million compared to $0.7 million for the
third quarter of 2010. The Corporation generated an operating
netback of $28.55 per boe which is slightly lower than the
operating netback in the third quarter of 2010 of $31.57 per boe
due to higher operating costs in 2011. Hawk is looking at ways to
reduce its operating costs going forward and has shut in some
marginal producing, higher operating cost wells to ensure the
Corporation continues to generate strong operating netbacks. Hawk
had no outstanding bank debt at September 30, 2011 on existing
credit facilities of $11 million consisting of a $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 February 29, 2012. During the third quarter, the
Corporation received the net proceeds from its offering of
subscriptions receipts in May 2011 of approximately $9.2 million.
The Corporation continues to maintain a solid balance sheet with no
outstanding bank debt and a $1.0 million working capital deficit at
September 30, 2011 which equates to a net debt to annualized
quarterly funds flow from operations of 0.2:1. Outlook Hawk is
currently in the process of determining its capital budget for 2012
and will disclose details of the capital budget when approved by
the Corporation's board of directors which is expected to take
place in mid December. The Corporation will continue to focus its
capital budget on development opportunities in western Saskatchewan
targeting heavy crude oil both through horizontal and vertical
drilling, including at least one (0.5 net) single-leg horizontal
well at Seagram Lake. Furthermore in 2012, Hawk will drill at least
five net vertical wells in the Lloydminster area as well as two
(2.0 - net) horizontal wells in western Saskatchewan targeting the
Basal Mannville Formation. Updated Presentation An updated copy of
Hawk's corporate presentation is available for viewing on the
Corporation's website at www.hawkexploration.ca under Investor Info
- Corporate Presentation. The unaudited financial statements and
management's discussion and analysis for the interim period ended
September 30, 2011 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 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 2011; the timing
of and nature of capital expenditure program for 2012; 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.
Discovered petroleum initially-in-place ("DPIP") is also a
forward-looking statement, and there are numerous uncertainties
inherent in estimating DPIP and no assurance can be given that the
indicated level of DPIP or its recovery will be realized. 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. Hawk Exploration Ltd. CONTACT: Steve Fitzmaurice Dennis
JamiesonPresident, CEO and Chairman Chief Financial OfficerTel:
(403) 264-0191 Ext 225 Tel: (403) 264-0191 Ext 234Email:
steve@hawkexploration.ca Email: dennis@hawkexploration.ca
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