CALGARY, March 27, 2012 /CNW/ - Hawk Exploration Ltd. ("Hawk" or the
"Corporation") is pleased to provide an operations update and a summary
of its December 31, 2011 reserve information as evaluated by GLJ
Petroleum Consultants Ltd. ("GLJ").
HIGHLIGHTS
-
Increased total proved oil reserves by 17% from 635 Mbbls in 2010 to 733
Mbbls in 2011 and increased total proved plus probable oil reserves by
1% from 1,095 Mbbls to 1,108 Mbbls;
-
Increased crude oil and liquids reserves as a percent of total proved
plus probable reserves to 85 percent at the end of 2011 from 81 percent
at the end of 2010;
-
Maintained a proved plus probable reserve life index of 8.9 years based
on year end reserves divided by annualized December 2011 production;
-
Increased undeveloped land holdings to 39,500 net acres mainly in the
plains area of eastern Alberta and western Saskatchewan; and
-
Achieved 100 percent drilling success in the first quarter of 2012 by
drilling seven (2.4 net) oil wells in western Saskatchewan.
OPERATIONS
During the first quarter of 2012, Hawk drilled six (1.4 net) vertical
oil wells in the Silverdale area of western Saskatchewan and one (1.0
net) vertical oil well in the Edam area of western Saskatchewan. All
seven (2.4 net) wells encountered excellent reservoir in the Mannville
Formation and have been cased and equipped for production. Completion
operations commenced on March 20 and all six (1.4 net) wells at
Silverdale are expected to be placed on production prior to March 31,
2012. The well at Edam is also expected to completed and placed on
production prior to March 31, 2012.
Hawk also shot 4.5 square kilometers ("kms") of three-dimensional
seismic at Dankin, Saskatchewan as well as 14.5 kms of two-dimensional
seismic at Prairiedale and Carruthers in western Saskatchewan. Hawk
intends to use this seismic data to delineate drilling locations for
upcoming drilling in 2012. Production for the first quarter of 2012 is
expected to average approximately 430 boe/d, with an oil weighting of
roughly 93 percent.
HEDGING
During the first quarter of 2012, Hawk entered into a costless collar
contract for West Texas Intermediate Crude ("WTI") on a notional 75
Bbl/d from July 1, 2012 to December 31, 2012 with a floor price of
Canadian ("CAD") $95.00 per bbl and a ceiling of CAD $113.38 per bbl.
In addition, Hawk currently has in place a contract to fix the
differential between WTI and Western Canadian Select heavy oil at CAD
$13.96 per bbl on a notional 100 bbls/d to June 30, 2012 and has in
place a costless collar transaction for WTI with a floor price of CAD
$90 per bbl and a ceiling price of CAD $103.10 per bbl on a notional
100 bbls/d to June 30, 2012.
RESERVES
GLJ prepared an independent engineering report in accordance with
National Instrument 51-101 ("NI 51-101") with an effective date of
December 31, 2011 (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, 2011.
Summary of Oil and Gas Reserves as of December 31, 2011
|
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
|
585
|
500
|
|
218
|
183
|
|
10
|
7
|
|
632
|
537
|
|
Developed Non-producing
|
13
|
11
|
|
-
|
-
|
|
-
|
-
|
|
13
|
11
|
|
Undeveloped
|
134
|
110
|
|
83
|
66
|
|
4
|
3
|
|
152
|
124
|
|
Total Proved
|
733
|
621
|
|
301
|
249
|
|
13
|
10
|
|
797
|
672
|
|
Probable
|
374
|
322
|
|
864
|
544
|
|
4
|
3
|
|
523
|
415
|
|
Total Proved plus Probable
|
1,108
|
942
|
|
1,164
|
792
|
|
17
|
13
|
|
1,319
|
1,087
|
Net Present Value Summary as of December 31, 2011
|
|
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$
|
|
$/boe
|
|
Proved
|
|
|
|
|
|
|
|
|
Developed Producing
|
23,324
|
20,715
|
18,658
|
16,999
|
15,636
|
|
34.72
|
|
Developed Non-producing
|
612
|
519
|
447
|
389
|
342
|
|
41.56
|
|
Undeveloped
|
5,183
|
4,216
|
3,499
|
2,950
|
2,520
|
|
28.22
|
|
Total Proved
|
29,119
|
25,451
|
22,604
|
20,338
|
18,498
|
|
33.63
|
|
Probable
|
15,373
|
10,770
|
8,043
|
6,278
|
5,060
|
|
19.37
|
|
Total Proved plus Probable
|
44,492
|
36,221
|
30,647
|
26,616
|
23,558
|
|
28.18
|
Total Future Net Revenue (Undiscounted) as of December 31, 2011
|
Reserves Category
|
Revenue
M$
|
Royalties
M$
|
Operating
Cost
M$
|
Capital
Development
Costs
M$
|
Abandonment
Costs
M$
|
Future Net
Revenue
Before
Income Tax
M$
|
|
|
|
|
|
|
|
|
|
Total Proved
|
59,405
|
10,050
|
18,073
|
1,390
|
773
|
29,119
|
|
Total Proved plus Probable
|
96,450
|
17,180
|
31,158
|
2,678
|
941
|
44,492
|
Summary of Forecast Pricing and Inflation Assumptions
The GLJ Report used the following prices, exchange rates, and inflation
rate assumptions as of December 31, 2011:
|
Year
|
WTI Cushing
Oklahoma
($US/bbl)
|
Edmonton 40
degree API
Crude Oil
($CAD/bbl)
|
Lloyd Blend at
Hardisty
($CAD/bbl)
|
AECO - NIT Spot
($CAD/mmbtu)
|
Inflation Rate
%
|
Exchange Rate
($US/$CAD)
|
|
2012
|
97.00
|
97.96
|
81.31
|
3.29
|
2.0
|
0.98
|
|
2013
|
100.00
|
101.02
|
82.33
|
3.93
|
2.0
|
0.98
|
|
2014
|
100.00
|
101.02
|
82.33
|
4.39
|
2.0
|
0.98
|
|
2015
|
100.00
|
101.02
|
82.33
|
4.84
|
2.0
|
0.98
|
|
2016
|
100.00
|
101.02
|
82.33
|
5.30
|
2.0
|
0.98
|
|
2017
|
100.00
|
101.02
|
82.33
|
5.75
|
2.0
|
0.98
|
|
2018
|
101.35
|
102.40
|
83.45
|
5.99
|
2.0
|
0.98
|
|
2019
|
103.38
|
104.47
|
85.14
|
6.11
|
2.0
|
0.98
|
|
2020
|
105.45
|
106.58
|
86.86
|
6.23
|
2.0
|
0.98
|
|
2021
|
107.56
|
108.73
|
88.62
|
6.36
|
2.0
|
0.98
|
|
Escalated at 2.0 % per year thereafter.
|
FINDING, DEVELOPMENT AND ACQUISITION COSTS (1)
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
2010
|
|
Three Year Average
|
|
|
Proved
|
Proved plus
Probable
|
|
Proved
|
Proved plus
Probable
|
|
Proved
|
Proved plus
Probable
|
|
Exploration and development costs (M$) (2) |
10,907
|
10,907
|
|
15,280
|
15,280
|
|
30,349
|
30,349
|
|
Acquisitions (M$) (2) |
-
|
-
|
|
-
|
-
|
|
12,621
|
12,621
|
|
Change in future development cost (M$)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration and development
|
40
|
(1,475)
|
|
936
|
3,211
|
|
1,390
|
2,574
|
|
|
Acquisitions
|
-
|
-
|
|
-
|
-
|
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Net reserve additions and revisions (Mboe)
|
|
|
|
|
|
|
|
|
|
|
Exploration and development
|
208
|
103
|
|
268
|
573
|
|
553
|
803
|
|
|
Acquisitions
|
-
|
-
|
|
-
|
-
|
|
553
|
826
|
|
|
208
|
103
|
|
268
|
573
|
|
1,106
|
1,629
|
|
|
|
|
|
|
|
|
|
|
|
Finding, Development and Acquisition costs - including future development cost ($/boe)
|
|
|
Exploration and development
|
52.55
|
91.57
|
|
60.50
|
32.27
|
|
57.37
|
40.99
|
|
|
Acquisitions
|
-
|
-
|
|
-
|
-
|
|
22.83
|
15.29
|
|
|
Total FD&A costs ($/boe)
|
52.55
|
91.57
|
|
60.50
|
32.27
|
|
40.10
|
27.96
|
|
(1) |
The aggregate of the exploration and development costs incurred in the
most recent financial year and the change during that year in estimated
future development costs generally will not reflect total finding and
development costs related to reserve additions for that year.
|
|
(2) |
The Corporation's annual audit of the 2011 financial statements has not
been completed and accordingly all financial amounts are management's
best estimates which are unaudited and subject to change.
|
NET ASSET VALUE
|
|
|
|
|
M$, except per share amounts
|
|
December 31, 2011
|
|
|
|
|
|
Proved plus probable reserves discounted at 10% (before taxes)
|
|
30,647
|
|
Undeveloped land (1) |
|
4,941
|
|
Net debt and working capital deficit (2)
|
|
(1,340)
|
|
Proceeds from dilutive options
|
|
380
|
|
Net asset value
|
|
34,628
|
|
Fully diluted Class A shares outstanding (000's) (3) |
|
35,524
|
|
Net asset value per fully diluted Class A share
|
|
$0.97
|
|
Fully diluted Class A and Class B shares outstanding (000's) (4) |
|
46,324
|
|
Net asset value per fully diluted Class A and Class B shares
|
|
$0.75
|
|
(1) |
Undeveloped land is based on management's internal estimate at December
31, 2011. Hawk had a total of 39,530 net acres of land at December 31,
2011 assessed at an average value of $125 per net acre.
|
|
(2) |
The Corporation's annual audit of the 2011 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, 2011 of 34,480,953
plus dilutive options of 1,043,000.
|
|
(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, 2011 were converted into 10,800,000 Class A
shares.
|
LAND HOLDINGS
|
|
|
|
|
|
|
|
|
|
|
|
Developed
|
|
Undeveloped
|
|
Total
|
|
Acres
|
Gross
|
Net
|
|
Gross
|
Net
|
|
Gross
|
Net
|
|
Alberta
|
1,680
|
1,676
|
|
23,796
|
23,028
|
|
25,476
|
24,704
|
|
Saskatchewan
|
1,974
|
1,555
|
|
21,006
|
15,782
|
|
22,980
|
17,337
|
|
Manitoba (1) |
-
|
-
|
|
720
|
720
|
|
720
|
720
|
|
Total
|
3,654
|
3,231
|
|
45,522
|
39,530
|
|
49,176
|
42,761
|
|
(1) |
The Corporation disposed of all of its undeveloped acreage in Manitoba
in the first quarter of 2012 for cash proceeds of $300,000.
|
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; 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.