Hyperion Exploration Corp.
TSX VENTURE : HYX

Hyperion Exploration Corp.

June 27, 2011 16:37 ET

Hyperion Exploration Corp. Announces Financial and Operating Results for the Three Months Ended March 31, 2011

CALGARY, ALBERTA--(Marketwire - June 27, 2011) - Hyperion Exploration Corp. ("Hyperion" or the "Company") (TSX VENTURE:HYX) is pleased to announce its financial and operating results for the three months ended March 31, 2011. Selected financial and operational information is outlined below and should be read in conjunction with Hyperion's interim financial statements and related management discussion and analysis for the period ended March 31, 2011, which will be available for review under Hyperion's SEDAR profile at www.sedar.com.

Hyperion commenced operations in July 2010 with the recapitalization of Triple 8 Energy Ltd ("Triple 8"). Hyperion has completed four acquisitions since the recapitalization, adding production, reserves, and significant future upside to the corporate portfolio. The acquired assets provide the platform to execute Hyperion's strategy of providing high growth through acquisitions which lead to lower risk, scalable and repeatable light oil development drilling.

OUTLOOK

Hyperion is focused on per share growth through the execution of a repeatable light oil focused drilling program. Hyperion is well positioned with a drilling inventory of 63 net locations (51 targeting light oil).

  • For the balance of 2011, Hyperion is planning to drill 6 gross (5.2 net) Cardium horizontal light oil wells in the Pembina, Buck Lake and Garrington areas. These wells are operated by Hyperion and will offset Company or industry wells that meet or exceed the Company's internal type curve for the area.
  • Eighteen locations are now surveyed to maximize execution and operational flexibility, 6 locations are currently licensed.
  • Hyperion had originally planned to operate one drilling rig starting in mid-June to drill wells in the Pembina and Buck Lake areas. Due to the persistent wet weather, the Company has added a second rig to drill at least two wells and is preparing several drilling locations in the Garrington area to increase operational flexibility and maintain its development objectives.
  • Hyperion is positioned to meet or exceed its 2011 operating guidance of:
    • Average production of 950 boe/day (52% light oil and liquids)
    • Exit production of 1,500 boe/day (67% light oil and liquids)
    • Average operating cost of $12.20/boe

Q1 2011 HIGHLIGHTS

  • Increased average daily production to 633 boe/day (44% light oil and liquids) compared with 386 boe/day (39% light oil and liquids) for the fourth quarter of 2010.
  • Reduced operating and transportation costs to $9.37/boe compared to $39.20 for the fourth quarter of 2010.
  • Hyperion drilled or participated in 5 gross (3.8 net) wells resulting in 2 gross (0.8 net) Cardium light oil wells, 2 gross (2 net) Charlie Lake light oil wells and 1 gross (1 net) Charlie Lake gas well.
  • Hyperion completed the Buck Lake and Garrington acquisitions in March, 2011. Total consideration paid was $26.25 million consisting of approximately 350 boe/day (56% light oil and liquids), 14.9 square kilometers of 3D seismic, 4,224 net acres of undeveloped land with identified upside of 30.6 net drilling locations (Cardium focused). See Hyperion's March 7, 2011 and March 24, 2011 news releases for further details.
  • Hyperion successfully completed its third financing in March, 2011 for gross proceeds of $35 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. Proceeds were used to acquire the Garrington and Buck Lake assets and fund the 2011 development program.

2011 OPERATIONS UPDATE

  • Increased average daily production to 633 boe/day (44% light oil and liquids) compared with 386 boe/day (39% light oil and liquids) for the fourth quarter of 2010. The increase in production is the result of closing the Garrington asset acquisition on March 27th and new production from two gross (0.8 net) Cardium horizontal light oil wells at Pembina.
  • Reduced operating and transportation costs to $9.37/boe compared to $39.20 for the fourth quarter of 2010 due to addition of lower operating cost properties, increased production from new wells and initiatives to reduce operating costs.
  • Participated in 2 gross (0.8 net) Cardium horizontal light oil wells, drilled in the Pembina area, that were placed on production at the end of Q1 2011. The wells have been on production for approximately 3 months and based on production and pressure information Hyperion expects both wells to meet its area type curve profile with an initial 30 day production rate ("IP30") of 275 boe/day with reserves of 215 mboe. Hyperion expects and has forecast that light oil production from these well may be restricted until the solution gas is tied in. Our operating partner has indicated that the solution gas may be tied in as early as Q3 2011, should surface conditions allow.
  • Hyperion drilled 3 gross (3 net) Charlie Lake light oil wells at Paradise B.C. All three wells encountered the Charlie Lake reservoir, two of which encountered light oil and the third discovered natural gas. Hyperion fracture stimulated one of the oil wells prior to spring breakup with encouraging test rates after all frac oil was recovered. The Company has equipped this well for long term production evaluation and expects to start producing the well in late June. Based on the results of the production test, Hyperion will incorporate additional future development activity at Paradise into its 2012 capital budget.

FINANCIAL HIGHLIGHTS

3 Months Ended March 313 Months Ended December 31
20112010% Change2010
Financial ($000's except per share amounts)
Oil and NGL sales2,020248,317%1,026
Natural gas sales782419,450%535
Total oil, NG, & oil2,802289,907%1,561
Funds inflow (outflow) from operations818(56)nm277
Per common share basic ($)0.03(0.04)nm0.02
Net earnings (loss)(1,057)(63)1,577%(611)
Per common share basic ($)(0.03)(0.08)63%(0.02)
Capital expenditures including deposits30,408-nm30,645
Working capital exit8,2081,481454%5,131
Unused credit facilities13,000-nm13,000
Production
Oil & NGL (bbls per day)27746,825%151
Natural gas (mcf per day)2,1331217,675%1,409
Total (boe per day) (6:1)633610,450%386
Average realized price ($'s - production weighted)
Oil & NGL ($ per bbl)80.9265.5124%73.79
Natural gas ($ per mcf)4.074.92(17)%4.13
Average ($ per boe)49.2054.58(10)%43.98
Netback ($'s per boe)
Oil, natural gas and NGL sales49.2054.58(10)%43.98
Royalties(5.63)(8.59)(34)%(6.72)
Operating and transportation expenses(9.37)(39.20)(76)%(12.91)
Operating netback34.206.79404%24.35
Common Shares (pre-consol./post-split(1))
Common shares o/s, end of period32,190,3591,586,7981,929%31,064,209
Weighted average basic common shares o/s31,240,7221,454,5752,048%19,123,912
Fully diluted common shares o/s, end of period70,873,4952,742,2332,485%47,412,345

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

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.

Contact Information