Hyperion Exploration Corp.
TSX VENTURE : HYX

Hyperion Exploration Corp.

February 01, 2012 07:30 ET

Hyperion Exploration Corp. Announces $43 Million 2012 Capital Expenditure Program, Light Oil and NGL's Weighted Production Increase of Between 68% to 79%, and an Operations Update

CALGARY, ALBERTA--(Marketwire - Feb. 1, 2012) - Hyperion Exploration Corp. ("Hyperion" or the "Company") (TSX VENTURE:HYX) is pleased to announce its $43 million 2012 capital expenditure program, a light oil and NGL's weighted production increase of between 68% to 79%, and an operations update.

OUTLOOK

Despite continued economic uncertainty in early 2012, we have observed positive momentum in North American financial markets especially in the small cap junior oil and gas sector. The management team at Hyperion believes that companies that can provide above average growth on a per share basis will excel in 2012 and as a result, Hyperion has chosen to put its enviable light oil and NGL's weighted drilling inventory and financial position to work.

In 2011, Hyperion achieved significant year over year growth, and intends to be increasingly active in 2012. Hyperion has initiated an aggressive development program on an existing drilling inventory of 63 net locations (51 targeting light oil). The 2012 drilling program includes a total of 14 gross (9.94 net) wells, of which 12 gross (7.94 net) are targeting Cardium light oil and 2 gross (2 net) are targeting Glauconite light oil. Total capital to complete this program will be approximately $43 million. Hyperion has budgeted to drill 9 gross (5.75 net) wells in Q1, 2012, which will generate record production increases into Q2 2012. This aggressive field activity will be executed through the use of four drilling rigs, three operated and one non-operated.

Hyperion will continue to deliver on production, reserves and cash flow per share growth throughout 2012 while adding to the drilling inventory from operating activities and through acquisitions which provide low risk, scalable and repeatable development projects.

2012 CAPITAL EXPENDITURE PROGRAM AND GUIDANCE

Hyperion's Board of Directors has approved the fiscal 2012 capital budget which is expected to generate significant year over year growth. Highlights are as follows:

  • $43 million in capital spending, including $37 million for the drilling, completing and tie-in of new wells;
  • Average production guidance in 2012 of 1,600 to 1,700 boe/day compared to 950 boe/d in 2011, representing an increase of between 68% and 79%;
  • Production comprised of >65% light oil/NGLs;
  • Exit 2012 production of 1,800 - 2,000 boe/day >65% light oil/NGLs;
  • Operating costs of $12.00/boe including transportation;
  • Maintaining financial flexibility with a December 2012 pro forma debt to annualized cash flow of 1.2x (1);
  • Funding of 2012 capital expenditures through a combination of cashflow, working capital, and bank debt with additional contemplated lending limits.
  1. Using 2012 Oil/NGLs pricing at January 24, 2012 of US$92.50 WTI, 0.96 CAD/USD exchange rate, $2.50/mcf AECO natural gas price.

Hyperion expects an increase in the Company's lending facility to be finalized during the second week of February and will provide further details on the increased facility at that time.

OPERATIONS UPDATE

Given the market volatility in Q4 2011 and the outperformance in the Garrington program, the Company decided to defer drilling 1 gross (0.60 net) well until Q1 2012. The deferral of this well did not affect the Company achieving 2011 guidance of 950 boe/day average and a peak of 1,500 boe/day in December 2011. Hyperion finished 2011 by bringing on production 2 gross (2 net) Cardium horizontal light oil wells at Pembina in early December. These successful wells had an average IP30 production rate of 140 boe/d (90% oil) each, which achieves Hyperion's base Cardium type curve.

2012 Drilling activity will be concentrated on areas with previous success, specifically Garrington, Pembina and Buck Lake. In addition, the Company will expand the drilling scope with locations in the Cardium light oil formation in Niton and the Glauconite light oil formation in Garrington. A summary of Hyperion's drilling plans by area is as follows:

  • Total 2012 drilling plan - 14 gross (9.94 net) wells including:
    • Garrington - 5 gross (4.20 net) Cardium light oil wells and 2 gross (2 net) Glauconite light oil wells;
    • Pembina - 4 gross (1.64 net) Cardium light oil wells;
    • Buck Lake - 2 gross (1.10 net) Cardium light oil wells; and,
    • Niton - 1 gross (1.00 net) Cardium light oil well.

The following provides a more detailed description of the 2012 drilling program detailed above:

Garrington

Hyperion will follow up its success in Garrington in 2011 with 5 gross (4.20 net) Cardium light oil wells and 2 gross (2 net) Glauconite light oil wells in 2012. Hyperion successfully drilled the 2-28 (0.75 net) Cardium light oil well in January 2012 and recently spud its second Cardium well, 2-4 (0.85 net), in early February. Hyperion's third Cardium well, 4-26 (1 net), is currently being drilled and is expected to reach total depth in mid-February. All of these Cardium wells are expected to be stimulated with 20 stage, 20 tonnes per stage, fracture stimulations, in February and March of 2012.

In addition to the Cardium activity in Garrington, Hyperion is drilling the first Glauconite horizontal oil well, 16-27 (1 net). Based on offset vertical production, Hyperion has identified a horizontal Glauconite oil development to be evaluated in 2012.

Pembina

Hyperion plans to drill 4 gross (1.64 net) Cardium light oil wells at Pembina in 2012. Drilling commenced on January 4, 2012 on 1 gross (0.50 net) wells at Pembina (5-26). This well was successfully drilled and is awaiting a 20 stage, 20 tonne per stage, slick water fracture stimulation in early February. A second rig, operated by Hyperion's partner Petrobakken, is also drilling 2 gross (0.64 net) Cardium light oil wells for Hyperion in January and February.

Buck Lake

Hyperion has plans to drill 2 gross (1.1 net) Cardium light oil wells in Buck Lake in Q1 2012 after its success in the area in late 2011. The first well is expected to be drilled in March 2012.

Niton

Hyperion is excited to drill 1 gross (1 net) Cardium light oil well at Niton in 2012. Confidence was enhanced around this location by the seismic program in 2011 and extensive geological modelling efforts. With success of this operation management expects the area to merit significant drilling activity in the future.

Hyperion is a light oil and NGL's focused energy production company with operations in central Alberta and north east BC. Hyperion's common share trade on the TSX Venture Exchange under the symbol HYX and has 54.2 million common shares outstanding at the date of this press release.

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.

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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