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.

 

 

 

 

 

 

 

For further information:

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