CALGARY, Nov. 27, 2013 /CNW/ – Hawk Exploration Ltd. (“Hawk” or the “Corporation”) is pleased to announce its results for the three and nine months ended September 30, 2013.
HIGHLIGHTS
Highlights for the three months ended September 30, 2013 were as follows:
- Generated record cash flow from operations of $2.1 million in the third quarter, a 47% increase from the $1.4 million of cash flow generated in the third quarter of 2012;
- Achieved an operating netback of $46.90 per boe in the third quarter of 2013, a 45% increase over the third quarter 2012 operating netback of $32.39 per boe ;
- Averaged production of 613 boe/d in the third quarter of 2013, an increase of 17% from 526 boe/d of production in the third quarter of 2012 while production for the nine months ended September 30, 2013 has increased by 29% to 621 boe/d compared to 482 for the same period of 2012;
- Drilled five (4.4 net) wells in the third quarter of 2013 resulting in four (3.7 net) successful heavy oil wells and one (0.7 net) capped gas well; and
- Subsequent to the third quarter, drilled three (3.0 net) successful heavy oil wells in the Lloydminster area of western Saskatchewan.
Selected financial and operational information for the three and nine months ended September 30, 2013 is provided as follows:
| Three months ended Sept. 30, | Nine months ended Sept. 30, | ||||||||
| 2013 | 2012 | % Change | 2013 | 2012 | % Change | ||||
| Financial ($000’s except per share amounts) | |||||||||
| Petroleum and natural gas sales | $ 4,788 | $ 3,046 | 57% | $ | 11,598 | $ 8,736 | 33% | ||
| Cash flow from operations (1) | 2,105 | 1,432 | 47% | 4,922 | 4,170 | 18% | |||
| Per share | 0.06 | 0.04 | 50% | 0.14 | 0.12 | 17% | |||
| Comprehensive income | 67 | 69 | (3%) | 240 | 626 | (62%) | |||
| Per share | 0.00 | 0.00 | n/a | 0.01 | 0.02 | (50%) | |||
| Capital expenditures (2) | 3,342 | 2,852 | 17% | 5,879 | 6,301 | (7%) | |||
| Working capital deficit – excluding bank | |||||||||
| debt and commodity contracts, end of period (1) | $ | 2,613 | $ 3,371 | (22%) | |||||
| Bank debt, end of period | 3,250 | 100 | 3150% | ||||||
| Total assets, end of period | $ | 33,349 | 29,226 | 14% | |||||
| Common Shares outstanding end of period: | |||||||||
| Class A Shares | 34,481 | 34,481 | -% | ||||||
| Class B Shares | 1,080 | 1,080 | -% | ||||||
| Options to acquire Class A Shares | 2,473 | 3,540 | (30%) | ||||||
| Three months ended Sept. 30, | Nine months ended Sept. 30, | ||||||||||||
| 2013 | 2012 | % Change | 2013 | 2012 | % Change | ||||||||
| Operations | |||||||||||||
| Production | |||||||||||||
| Crude oil and natural gas liquids (bbl/d) | 593 | 505 | 17% | 596 | 457 | 30% | |||||||
| Natural gas (mcf/d) | 123 | 126 | (2%) | 153 | 151 | 1% | |||||||
| Total (boe/d) | 613 | 526 | 17% | 621 | 482 | 29% | |||||||
| Oil and liquids as percent of total | 97% | 96% | 1% | 96% | 95% | 1% | |||||||
| Average Selling Price | |||||||||||||
| Crude oil and ngls (per bbl) | $ | 87.38 | $ | 64.91 | 35% | $ | 70.48 | $ | 69.03 | 2% | |||
| Natural gas (per mcf) | 2.51 | 2.37 | 6% | 3.21 | 2.15 | 49% | |||||||
| Total (per boe) | 84.95 | 62.89 | 35% | 68.38 | 66.10 | 3% | |||||||
| Netbacks (per boe at 6:1) (3) | |||||||||||||
| Price | $ | 84.95 | $ | 62.89 | 35% | $ | 68.38 | $ | 66.10 | 3% | |||
| Royalties | (17.54) | (11.34) | 55% | (13.25) | (13.11) | 1% | |||||||
| Production expense | (18.76) | (17.58) | 7% | (18.35) | (17.76) | 3% | |||||||
| Transportation expense | (1.75) | (1.58) | 11% | (1.75) | (1.78) | (2%) | |||||||
| Operating netback ($/boe) | $ | 46.90 | $ | 32.39 | 45% | $ | 35.03 | $ | 33.45 | 5% | |||
| G&A expense | (2.51) | (3.29) | (24%) | (3.14) | (3.25) | (3%) | |||||||
| Net cash interest expense | (0.81) | (0.01) | 80% | (0.77) | (0.01) | 76% | |||||||
| Realized gain (loss) on | |||||||||||||
| Commodity contracts | (3.67) | 0.47 | (881%) | (1.24) | 1.37 | (190%) | |||||||
| Cash flow netback ($/boe) | $ | 39.91 | $ | 29.56 | 35% | $ | 29.88 | $ | 31.56 | (5%) | |||
| (1) The terms cash flow from operations, cash flow from operations per share, working capital deficit and net debt to annualized cash flow ratio are additional GAAP financial measures. These measures are further described on page 3 of the Corporation’s MD&A for the three and nine months ended September 30, 2013 under the heading “Additional GAAP and Non-GAAP Financial Measures”. Users are cautioned that additional GAAP financial measures may not be comparable with the calculation of similar measures by other entities. |
| (2) Capital expenditures include cash exploration and evaluation expenditure plus cash property, plant and equipment net of dispositions and exclude asset retirement obligations and capitalized share-based payments. |
| (3) Management uses the terms operating and cash flow netbacks per boe which are non-GAAP measures. These measures are key performance indicators however do not have a standardized meaning as prescribed by GAAP and therefore, may not be comparable with the calculation of similar measures by other entities. Management considers operating and cash flow netbacks to be important measures as they demonstrate profitability relative to current commodity prices. |
Operational Review and Update
During the third quarter of 2013, Hawk drilled four (3.7 net) vertical heavy oil wells in western Saskatchewan, all of which were successful and are currently on production at a combined rate of 145 (130 net) bbl/d. Late in the third quarter of 2013, Hawk also drilled one (0.7 net) vertical well in the Legal area of central Alberta targeting the Viking formation. This well encountered a gas cap, was production tested in the fourth quarter and is currently being evaluated as a potential gas well.
In the fourth quarter of 2013, Hawk has drilled three (3.0 net) successful heavy oil wells in the Lloydminster area of western Saskatchewan. These three (3.0 net) wells have all been cased and are expected to be placed on production within the next two weeks. The Corporation is also currently drilling the final two (2.0 net) wells of its 2013 drilling program. The first of these wells is being drilled in the Chauvin area of east central Alberta and is targeting the McLaren and GP Formations, while the second well is being drilled in the Eureka area of western Saskatchewan and is targeting the Basal Mannville Formation.
Production for the third quarter of 2013 averaged 613 boe/d, a 17% increase from the 526 boe/d produced in the third quarter of 2012. Hawk’s current production is 680 boe/d, based on field estimates. With additional production additions from the wells drilled in the fourth quarter, Hawk expects an exit production rate of approximately 730 boe/d at the end of 2013.
Financial
Hawk achieved record cash flow from operations in the third quarter of 2013 of approximately $2.1 million compared to $1.4 million for the third quarter of 2012 due to increased oil production and increased oil prices in the third quarter of 2013. Average Western Canadian Select (“WCS”) prices for the third quarter of 2013 increased 26% to US$88.35 per bbl compared to US$70.03 per bbl in the third quarter of 2012, while the differential between WCS and West Texas Intermediate crude oil (“Differential”) improved to US$17.48 per bbl in the third quarter of 2013 compared to US$22.24 per bbl for the third quarter of 2012. Differentials, however, have widened again in the fourth quarter of 2013 which will lead to lower realized pricing in the fourth quarter.
Hawk generated a record operating netback of $46.90 per boe forthe third quarter