Hawk announced its results for the three months ended March 31, 2010.
Highlights for the three months ended March 31, 2010 were as follows:
Hawk drilled four (4.0 net) wells in the first quarter of 2010 resulting in three (3.0 net) producing oil wells and one (1.0 net) dry hole. The Corporation drilled its initial horizontal well in the Carruthers area of Saskatchewan and encountered excellent reservoir in the Cummings formation. This well commenced production in the second quarter of 2010 and is currently producing approximately 45 bbl/d of heavy oil. Hawk intends to follow up success at Carruthers with additional development drilling starting in 2011.
At Epping in Saskatchewan, the Corporation drilled a successful exploration well in the first quarter of 2010 which is currently producing approximately 20 bbl/d of heavy oil from the GP formation. Hawk plans to drill an additional two (1.0 net) wells in the Epping area in 2010.
Hawk drilled one well at Red Earth, in northern Alberta, that commenced production in the second quarter of 2010 and is currently approximately 12 bbl/d of light oil from the Keg River formation. The Corporation is re-evaluating its 3D seismic data at Red Earth to determine if additional future drilling will lead to higher initial production rates.
The Corporation's focus on oil production resulted in its second consecutive quarterly profit, reporting net income of $9,091 for the first quarter of 2010 and funds flow from operations of $876,271. However, both net income and funds flow from operations decreased from the fourth quarter of 2009 as a result of lower production and increased production costs. Production was negatively impacted in the first quarter of 2010 as a result of pump changes and weather related production interruptions at its main producing property at Dolcy for January and February 2010. Despite the increased operating costs, Hawk recorded strong operating netbacks of $33.88 per boe in the first quarter.
Hawk has planned an active summer drilling program and intends to drill eleven (9.3 net) wells targeting light, medium and heavy oil zones in its core plains area of Alberta and Saskatchewan. The drilling program is expected to commence prior to the end of May 2010, weather permitting, and includes the anticipated drilling of two (2.0 net) infill development wells at Dolcy and nine (7.3 net) exploratory wells in east central Alberta and west central Saskatchewan.
Production for the second quarter of 2010 is expected to average between 370 and 400 boe/d depending on the stabilized production rates from new production additions at Carruthers and Red Earth. The Corporation continues to maintain a strong financial position with a working capital surplus of approximately $4.6 million at March 31, 2010 and an undrawn $6 million line of credit, which, along with cash flow from operations, will fund Hawk's 2010 capital budget.
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