Hyperion Exploration Corp.
TSX VENTURE : HYX

Hyperion Exploration Corp.

April 25, 2012 20:16 ET

Hyperion Exploration Corp. Announces 2011 Highlights, 2012 Operations Update, and Financial and Operating Results for the Year Ended December 31, 2011

CALGARY, ALBERTA--(Marketwire - April 25, 2012) - Hyperion Exploration Corp. ("Hyperion" or the "Corporation") (TSX VENTURE:HYX) is pleased to announce 2011 highlights, 2012 operations update, and financial and operating results for the year ended December 31, 2011. Selected financial and operational information is outlined below and should be read in conjunction with Hyperion's audited financial statements and related management discussion and analysis which will be available for review under Hyperion's SEDAR profile at www.sedar.com. In addition, the Corporation will file its annual information form for the year ended December 31, 2011, which includes the Corporation's reserve data and other oil and gas information as evaluated by McDaniel & Associates Consultants Ltd. in accordance with National Instrument 51- 101 - Standards for Disclosure for Oil and Gas Activities of the Canadian Securities Administrators.

Outlook

Hyperion has achieved significant growth since the recapitalization transaction of Triple 8 Energy Ltd. ("Triple 8") in July 2010. Having closed three equity financings for gross proceeds of approximately $77.1 million together with acquisitions in both the second half of 2010 and the first quarter of 2011, Hyperion continues to be well positioned with a drilling inventory of 53 net unbooked locations (41 or 77.3% targeting light oil).

Hyperion is focused on per share growth through the execution of a repeatable light oil focused drilling program. The 2012 drilling program includes 12 gross (8.34 net) Cardium wells and 2 gross (2 net) Glauconite wells. Within Q1 2012, 6 gross (4.24 net) wells have been drilled and put on production, with 2 gross (1.25 net) Cardium wells and 1 gross (1 net) Glauconite well drilled and awaiting completion / tie-in.

Drilling and other development efforts will continue in the second half of 2012. The remaining 3 gross (2.25 net) wells that were drilled in Q1 2012 will be completed and tied-in in late spring and early summer 2012, weather dependant. Drilling of the balance of the 2012 drilling program, consisting of 5 gross (3.85 net) wells, will occur in the summer and fall of 2012.

Average and exit production for 2012 is respectively forecast between 1,600 and 1,700 boe per day and 1,800 and 2,000 boe per day comprised of approximately 65% light oil/NGL's. Hyperion will continue to pursue growth through the drill bit and execute its strategy of acquiring assets that compliment and grow its repeatable development drilling inventory.

Hyperion continues to acquire strategic land assets in its core areas and takes an opportunistic view for larger corporate and asset acquisitions.

Hyperion's Annual General Meeting will be held at 9:00 AM on June 13, 2012 at the Westin Calgary located at 320 4th Ave S.W., Calgary, Alberta.

2011 Highlights

In 2011 Hyperion executed on its strategy of providing value added growth through acquisitions which lead to lower risk, scalable and repeatable light oil development drilling. The following represents the highlights of Hyperion's first full year of operations since the completion of the recapitalization:

  • Average 2011 production of 989 boe per day versus guidance of 950 boe per day. This is a 783% increase compared to the 2010 production average of 112 boe per day.
  • In 2011 Hyperion expended total capital, including acquisitions, of $52.7 million, fully $6.6 million or 11% less than budget, while still achieving 2011 production guidance.
  • Excluding acquisitions in 2011, capital spending was $27.3 million compared to guidance of $33.0 million.
  • Hyperion drilled 10 gross (8.4 net) wells targeting light oil in 2011. Of these, 7 gross (5.4 net) wells were drilled horizontally in the Cardium formation.
  • Increased Q4 2011 production by 242% year over year to 1,322 boe per day. Approximately 75% of growth was through development of Hyperion's Cardium horizontal light oil inventory with the remainder associated with the Garrington acquisition.
  • Increased Q4 2011 year over year production by 21% per share.
  • Increased annual 2011 year over year production by 42% per share.
  • Increased year end 2011 Total Proved ("TP") Plus Probable Reserves ("P+P") by 239% to 5,521.3 Mboe, representing a 95% increase in P+P reserves per share.
  • Increased Q4 2011 funds flow by 1,329% year over year to $4.0 million, representing a 404% increase in funds flow per share.
  • Continued to achieve operating efficiencies, reducing operating costs from $14.54 per boe in 2010 to $11.42 per boe in 2011.
  • Positioned the Corporation for future growth with an unbooked reserve drilling inventory of 53 net locations, (41 or 77.3% targeting light oil).
  • Exited 2011 with net debt of $5.7 million leaving significant financial flexibility moving forward into 2012. Bank debt at December 31, 2011, was $2.0 million on Hyperion's credit facilities.
  • In early 2012, credit facility limits were increased from $18.0 million to $30.0 million on the revolving operating facility and from $6.0 million to $10.0 million on the acquisition/development facility. The annual review for these facilities will occur on or before May 31, 2012. Management believes that recognition of Q1 2012 drilling successes will result in an increase to the lending limits at that time.
  • In March, 2011, closed the Garrington asset acquisition, including 350 boe/d of production (56% light oil and NGLs), 14.9 square kilometers of 3D seismic and 2,560 net acres of undeveloped land. Hyperion identified 11 gross (9 net) Cardium light oil development locations, with the secondary development drilling opportunity identified in the Glauconite oil, Ellerslie oil, and Elkton liquids rich formations.
  • In conjunction with the Garrington and Buck Lake acquisitions, Hyperion successfully completed a financing in March 2011, for gross proceeds of $35.0 million. The financing resulted in the issuance of 22.0 million common shares issued at $1.50 per share and 1.1 million common shares issued on a "flow-through" basis at $1.80 per share.

Q1 2012 Operational Update

Confident Hyperion would achieve its guidance objectives for 2011, a conscious decision was made to stop drilling in November and December due to persistent, negative macro-economic events. Prudent use of debt in late 2011 ensured significant financial flexibility in the event of a prolonged downturn in the energy sector. Fortunately, January 2012 brought renewed optimism to junior oil and gas and Hyperion chose to execute on a record level of drilling activity in Q1 2012, which saw the Corporation running three operated and one non-operating drilling rig(s). During Q1 2012, 6 gross (4.24 net) Cardium light oil wells were drilled and placed on production, and 2 gross (1.25 net) Cardium light oil wells and 1 gross (1 net) Glauconite light oil well were drilled and awaiting completion / tie-in post spring break-up. This activity is expected to show substantial growth for Hyperion exiting Q1 2012 and into Q2. Furthermore, despite not tying in any new production in January and February 2012, Hyperion expects to grow average production in Q1 2012 versus Q4 2011 (based on field estimates).

  • At Garrington, Hyperion drilled 5 gross (4.35 net) horizontal light oil wells. Included were 4 gross (3.35 net) wells drilled for Cardium light oil and 1 gross (1 net) horizontal well was drilled for Glauconite light oil. Of these wells drilled, 3 gross (2.6 net) Cardium wells will be completed and on production by April 2012, with the remaining Cardium and Glauconite wells expected to be completed and on stream by June 2012, depending on spring weather conditions. For the wells on production, early production results have exceeded the Corporation's base production profile.
  • At Pembina, Hyperion drilled 3 gross (1.14 net) Cardium horizontal light oil wells. Included were 2 gross (0.64 net) Cardium wells completed and placed on production in March 2012, with the remaining Cardium well expected to be completed and on stream by June 2012, depending on spring weather conditions. For the wells on production the early production results have exceeded the Corporation's base production profile.
  • At Niton, Hyperion drilled 1 gross (1.0 net) Cardium horizontal light oil well. This well was completed in March and is expected to go on production in April 2012.
  • Hyperion has signed a Purchase and Sale Agreement to sell its Paradise assets for total consideration of $3.7 million, net of adjustments. The sale closed on April 16, 2012. The Paradise area was expected to contribute approximately 80 boe/d of net production towards the 2012 average and exit guidance, weighted 50% to light oil/natural gas liquids and 50% to gas. Proceeds of the sale will be directed towards the continued development of the Corporation's core assets in West Central Alberta. Hyperion's lending facilities are not expected to change with the disposition of the Paradise assets.
  • The Corporation is reiterating the 2012 guidance of 1,600 to 1,700 boe per day average and 1,800 to 2,000 boe per day exit.

FINANCIAL HIGHLIGHTS

3 Months Ended
December 31
12 Months Ended
December 31
2011 2010 Change 2011 2010 Change
Financial ($000's except per share amounts)
Oil sales 6,130 875 601 % 14,521 1,086 1,237 %
NGL sales 677 151 348 % 2,300 161 1,329 %
Natural gas sales 995 536 86 % 3,957 576 587 %
Total Oil, NGL, & Natural gas 7,802 1,562 399 % 20,778 1,823 1,040 %
Funds inflow (outflow) from operations1 4,000 280 1,329 % 9,453 (388 ) nm
Per common share basic & FD ($) 0.07 0.01 404 % 0.20 (0.05 ) nm
Net earnings (loss)1 (593 ) (848 ) (30 %) (4,173 ) (1,839 ) 127 %
Per common share basic & FD ($) (0.01 ) (0.04 ) (75 %) (0.09 ) (0.24 ) (63 %)
Capital expenditures including deposits1 9,018 30,507 (70 %) 52,720 35,353 49 %
Working capital (deficit) exit1 (5,732 ) 5,131 nm (5,732 ) 5,131 nm
Unused credit facilities as at December 31 22,000 13,000 69 % 22,000 13,000 69 %
Production
Oil (bbls per day) 687 121 468 % 427 39 995 %
NGL (bbl per day) 115 30 283 % 98 8 1,125 %
Natural gas (mcf per day) 3,123 1,409 122 % 2,785 392 610 %
Total (boe per day) (6:1) 1,322 386 242 % 989 112 783 %
Per 1 million common share basic & FD (boe per day)3 24.396 20.185 21 % 20.951 14.712 42 %
Average realized price ($'s - production weighted)
Oil ($ per bbl) 97.00 78.60 23 % 93.20 76.21 22 %
NGL ($ per bbl) 64.25 54.57 18 % 64.29 54.88 17 %
Natural gas ($ per mcf) 3.46 4.13 (16 %) 3.89 4.03 (3 %)
Average ($ per boe) 64.14 43.97 46 % 57.56 44.46 29 %
Netback ($'s per boe)
Oil, natural gas and NGL sales 64.14 43.97 46 % 57.56 44.46 29 %
Royalties (11.67 ) (6.72 ) 74 % (9.97 ) (6.15 ) 62 %
Operating and transportation expenses (14.41 ) (12.91 ) 12 % (13.08 ) (16.16 ) (19 %)
Operating netback 38.06 24.34 56 % 34.51 22.15 56 %
Common Shares (000's)(pre-consol./post-split3)
Basic and fully diluted common shares o/s, end of period4 54,190 31,064 74 % 54,190 31,064 74 %
Weighted average basic and fully diluted common shares o/s4 54,190 19,124 183 % 47,205 7,614 520 %

(1) Results from 2010 adjusted for changes due to transition from Canadian GAAP to IFRS.

(2) On February 23, 2010, the Corporation completed a 1 for 3 share split. On November 24, 2010, the Corporation completed a 20 for 1 share consolidation. The December 31, 2010 and December 31, 2009 share amounts are shown with the effect of the split and consolidation.

(3) Weighted average basic and fully diluted common share count used in calculation. Figures not adjusted for year end 2011 working capital deficit of $6.5 million including debt of $2.0 million.

(4) Basic and fully diluted common shares outstanding are considered equivalent as all dilutive instruments are considered anti-dilutive under IFRS.

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 Corporation, 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 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. 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 Corporation's oil and natural gas properties;
  • oil and natural gas production levels;
  • capital expenditure programs;
  • the quantity of the Corporation'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 Corporation's most recent management's discussion and analysis included in the material available on this press release.

The Corporation'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.

Estimated values contained in this press release do not represent fair market value.

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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