Hyperion Exploration Corp.
TSX VENTURE : HYX

Hyperion Exploration Corp.

April 18, 2011 09:10 ET

Hyperion Exploration Corp. Announces 2010 Year End Reserves and Provides Operations Update

CALGARY, ALBERTA--(Marketwire - April 18, 2011) - Hyperion Exploration Corp. ("Hyperion" or the "Company") (TSX VENTURE:HYX) is pleased to provide information on the Company's 2010 year end reserves. This is the first year of reserve reporting for Hyperion, post completion of the recapitalization of Triple 8 Energy Ltd. in July, 2010. Hyperion's reserves were evaluated by McDaniel & Associates Consultants Ltd. ("McDaniel") effective December 31, 2010, in accordance with National Instrument 51- 101 ("NI 51-101") – Standards for Disclosure for Oil and Gas Activities of the Canadian Securities Administrators (the "McDaniel Report"). 100% of Company reserves were evaluated in the McDaniel Report.

2010 Year End Reserve Highlights

  • Total Company Proved plus Probable ("P+P") reserves of 1,626.9 mboe (41% light oil and natural gas liquids).
  • 89% of P+P reserves are categorized as P+P producing.
  • Reserve net present value before tax 10% (NPV BT10%) of P+P reserves of $28.3 million.
  • Reserve addition metrics:
    • Finding development and acquisition ("FD&A") cost of $24.90/boe on a P+P basis, including future development capital ("FDC").
    • Finding and development ("F&D") cost of $23.77/boe on a P+P basis, including FDC.
  • Based on Q4 2011 corporate average net back of $22.89/boe, Hyperion realized a recycle ratio of 0.92 (FD&A, P+P). Hyperion forecast Q4 2011 netback is expected to be in excess of $40/boe as a result of the Company's focus on light oil development in 2011 and recent light oil and gas commodity pricing.

Summary of Company reserves at December 31, 2010(1),(2),(3),(4),(5)

(Gross)Before Tax Net Present Value Discounted at 10%
Light Oil
(mbbl)
NGL's
(mbbl)
Gas
(mmcf)
($000s)
Proved
Developed Producing211.9187.84,381.9$20,387.7
Undeveloped121.12.377.2$2,494.0
Total Proved332.0190.14,459.1$22,881.7
Probable
Developed Producing59.954.21,275.0$4,426.4
Undeveloped30.30.619.3$964.1
Total Probable90.254.81,294.3$5,390.5
Total Proved & Probable423.2244.85,753.4$28,272.4

The Company will file its Annual Information Form, which will include Hyperion's reserves data and other oil and gas information for the year ended December 31, 2010 as mandated by NI 51-101, on or before April 30, 2011.

Reserves Acquired Subsequent to 2010 Year End

Effective January 1, 2011, the Company completed the acquisition of certain assets (the "Garrington Assets") in the Garrington region of west central Alberta for aggregate consideration of $22.0 million. The reserves associated with the Garrington Assets are not evaluated in the Report and are detailed in this press release for information purposes only. The evaluation of the Garrington Assets was prepared by GLJ Petroleum Consultants ("GLJ") effective December 31, 2010, in accordance with NI 51-101 (the "GLJ Report").

The following table is a summary of the reserves associated with the Garrington Assets effective December 31, 2010(1)(2)(3),(4), (6)

(Gross)Before Tax Net Present Value Discounted at 10%
Light Oil
(mbbl)
NGL's
(mbbl)
Gas
(mmcf)
($000s)
Proved
Developed Producing139.0145.02,537.0$13,175
Undeveloped000$0
Total Proved139.0145.02,537.0$13,175
Probable
Developed Producing47.066.01,165.0$3,799
Undeveloped000$0
Total Probable47.066.01,165.0$3,799
Total Proved & Probable186.0211.03,702.0$16,974

2011 Operational Update

  • At Pembina, Hyperion participated in the drilling of 2 gross (0.8 net) Cardium wells. These wells were booked as undeveloped in the Report and are now on production. Based on initial production from the two wells, the performance capability is consistent with the Company's internal type curve of initial 30 day production (IP30) of 275 boe/day. Hyperion has participated in 4 gross (1.44 net) wells in the Pembina area. All wells meet or exceed the internal type curve IP30 of 275 boe/day. Production from the two new wells may be curtailed until the solution gas is tied in. Hyperion is currently working with the operator to determine timing for the tie-in.

  • In March, 2011 Hyperion closed the Buck Lake and Garrington Asset acquisitions and is currently preparing drilling plans. These assets are comprised of 6.65 net sections of land, are operated with approximately 83% working interest, and are currently producing 320 boe/day net (40% light oil and NGL's). The proven and active lands acquired offer multi-zone light oil opportunities from the Cardium, Glauconitic and Ellerslie formations and liquids rich gas from the Elkton formation.

  • At Paradise, British Columbia, Hyperion drilled 3 gross (3 net) Charlie Lake wells. One well has tested gas from the Charlie Lake. The well was flowed and shut-in for pressure build-up and the test results are being analyzed prior to a tie-in decision being made. The remaining two wells tested light oil from the Charlie Lake and are currently undergoing stimulation and testing operations.

Corporate Highlights:

  • Consolidated December 31, 2010, NPV BT10% of P+P reserves for Hyperion, including the Garrington Asset, of $45.3 million (as detailed above).
  • Hyperion has identified 63 net unbooked drilling locations (including 37 targeting Cardium light oil) which, subject to drilling success, favourable commodity prices and other factors, are estimated to have a combined NPV BT10% of $165 million (82% light oil focussed).
  • At the end of March 2011, Hyperion had a positive working capital balance of approximately $7 million and an unutilized credit facilities of $13 million with a major Canadian chartered bank. Hyperion's credit facilities are currently being reviewed for potential increase as a result of the acquisition of the Garrington and Buck Lake assets.
  • Hyperion has in excess of 42,000 net acres of land of which approximately 30,000 net acres are undeveloped.
  • Hyperion estimates its current tax pools to be in excess of $55 million.
  • Hyperion currently has approximately 54 square kilometres (21 square miles) of proprietary 3D seismic.

Hyperion is a publically traded, high growth junior light oil and gas company resulting from the recapitalization of Triple 8 Energy Ltd. in July 2010. Hyperion's business strategy is to grow through acquisitions which lead to lower risk, scalable and repeatable development drilling projects. Currently Hyperion has 32,190,359 common shares outstanding, with an additional 22,000,000 common shares to be issued upon the deemed exercise of subscription receipts (anticipated to occur before April 23, 2011). The common shares of the Company trade on the TSX Venture Exchange under the trading symbol "HYX".

Notes:

(1) The tables above are a summary of the oil, NGL and natural gas reserves of the Company and the net present value of future net revenue attributable to such reserves as evaluated in the McDaniel Report and the GLJ Report, respectively, based on forecast price and cost assumptions. The tables summarize the information from the McDaniel Report and the GLJ Report, respectively, and may differ slightly than the original report due to rounding.

(2) Gross reserves means the total working interest (operating or non‐operating) share of remaining recoverable reserves owned by Hyperion before deductions of royalties payable to others and without including any royalty interests owned by Hyperion.

(3) Based on McDaniel / GLJ December 31, 2010 escalated price forecast, as applicable.

(4) The net present value of future net revenue attributable to the Company's 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 McDaniel / GLJ, as applicable.

(5) Commodity pricing was prepared by McDaniel and was used, subject to quality and transportation adjustments , in the evaluation of Hyperion's reserves effective as at December 31, 2010.

(6) Commodity pricing was prepared by GLJ and was used, subject to quality and transportation cost adjustments, in the evaluation of the Garrington Assets effective as at December 31, 2010.

Forward Looking and Cautionary Statements

This press release contains certain forward-looking statements (forecasts) under applicable securities laws relating to future events or future performance. Forward-looking statements are necessarily based upon assumptions and judgements with respect to the future including, but not limited to, the outlook for commodity markets and capital markets, the performance of producing wells and reservoirs, well development and operating performance, general economic and business conditions, weather, the regulatory and legal environment and other risks associated with oil and gas operations. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "projects", "plans", "anticipates" and similar expressions. These statements represent management's expectations or beliefs concerning, among other things, future operating results and various components thereof affecting the economic performance of Hyperion. Undue reliance should not be placed on these forward-looking statements which are based upon management's assumptions and are subject to known and unknown risks and uncertainties, including the business risks discussed above, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted.

In the interest of providing Hyperion shareholders and potential investors with information regarding the Company, including management's assessment of Hyperion's future plans and operation, certain statements throughout this press release constitute forward looking statements. All forward-looking statements are based on the Company'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. By its nature, such forward-looking information involves 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. Hyperion 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 and such forward looking statements contained throughout this press release should not be unduly relied upon. These statements speak only as of the date specified in the statements.

In particular, this press release may contain forward looking statements pertaining to the following:

  • the performance characteristics of the Company's oil and natural gas properties;
  • oil and natural gas production levels;
  • capital expenditure programs;
  • the quantity of the Company's oil and natural gas reserves and anticipated future cash flows from such reserves;
  • projections of commodity prices and costs;
  • supply and demand for oil and natural gas;
  • expectations regarding the ability to raise capital and to continually add to reserves through acquisitions and development; and
  • treatment under governmental regulatory regimes.

The material assumptions in making these forward-looking statements include certain assumptions disclosed in the Company's most recent management's discussion and analysis included in the material available on this press release.

The Company's actual results could differ materially from those anticipated in the forward looking statements contained throughout this press release as a result of the material risk factors set forth below, and elsewhere in this press release:

  • 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;
  • fluctuations in foreign exchange or interest rates and stock market volatility;
  • failure to realize the anticipated benefits of acquisitions;
  • general business and market conditions; and
  • changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry.

These factors should not be construed as exhaustive. Unless required by law, Hyperion does not undertake any obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

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.

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.

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