Hyperion Exploration Corp.
TSX VENTURE : HYX

Hyperion Exploration Corp.

November 30, 2010 07:00 ET

Hyperion Exploration Corp. Announces Financial and Operating Results for the Three and Nine Months Ended September 30, 2010

CALGARY, ALBERTA--(Marketwire - Nov. 30, 2010) - Hyperion Exploration Corp. ("Hyperion" or the "Company") (TSX VENTURE:HYX) is pleased to report its financial and operating results for the three and nine months ended September 30, 2010. Selected financial and operational information is outlined below and should be read in conjunction with Hyperion's interim financial statements and the related management discussion and analysis which are available for review at www.sedar.com.

THIRD QUARTER 2010 HIGHLIGHTS

  • Closed the recapitalization of Triple 8 Energy Ltd. on June 25, 2010 and the associated non-brokered private placement of $9.8 million at a price of $0.06 per unit ("Unit") and $0.06 per common share ("Common Share") of Hyperion. Each Unit is comprised of one Common Share and one Common Share purchase warrant entitling the holder to purchase one Common Share at a price of $0.10 for a period of five years upon the occurrence of certain vesting thresholds. This transaction provided a public vehicle for the new management team to pursue its growth strategy.
  • On July 28, 2010, the Company closed its Charlie Lake light oil focused, Paradise British Columbia, asset acquisition for total consideration of $4.3 million. The asset is located within the Company's Peace River Arch focus area and provides approximately 68 boe/d of production (50% oil) and 8,019 acres of undeveloped land.
  • On September 28, 2010, the Company announced a Cardium focused asset acquisition located in the Pembina/Niton area of west central Alberta for total consideration of $30.0 million. The acquisition provides 530 boe/d of production (35% light oil) and multi-year, Cardium light oil horizontal development on 18,674 net acres of land.
  • On September 28, 2010, the Company announced a bought deal financing of subscription receipts ("Subscription Receipts") and Common Shares to be issued on a "flow-through" basis for aggregate gross proceeds of $28.0 million, with an option granted to the underwriters to increase the size of the financing by an additional $3.75 million of Subscription Receipts (the "Offering"). The option was fully exercised and, as a result, $28.75 million of the total Offering was raised at $0.075 per Subscription Receipt, each Subscription Receipt being exercisable for one Common Share and one-half of one Common Share purchase warrant exercisable for a period of 30 months following the closing of the Offering at $0.10 per Common Share, and the remaining $3.0 million was raised on a "flow-through" basis at $0.085 per Common Share.
  • On September 28, 2010, the Company announced that, in conjunction with qualifying the distribution of the Common Shares and Common Share purchase warrants underlying the Subscription Receipts issued pursuant to the Offering by way of a short form prospectus, the name of the Company will be changed from Triple 8 Energy Ltd. to Hyperion Exploration Corp. and that the Common Shares would be consolidated on a 20:1 basis. 

SUBSEQUENT EVENTS

Subsequent to the end of the third quarter:

  • On October 13, 2010, the Company closed the Offering, providing over $6.0 million of positive working capital to the Company (post-closing of the Pembina/Niton acquisition). 
  • On October 18, 2010, the Company participated to its 43% working interest in the completion of a newly drilled Cardium horizontal light oil well (through the vendor) in the Pembina area of west central Alberta. This well (1-17) was flowed for a brief clean-up period recovering frac water, nitrogen and formation light oil. The operator has elected to forgo a production test prior to installation of permanent production equipment. The operator has indicated the well will be placed on production in early December using a single well battery at a reduced rate until the well is tied-in to conserve solution gas. Unrestricted production is expected in late December 2010 or early January 2011.
  • On November 8, 2010, the Company closed the Pembina/Niton asset acquisition.
  • On November 24, 2010, the Company announced the filing of the final short form prospectus qualifying the distribution of the Common Shares and Common Share purchase warrants underlying the Subscription Receipts issued pursuant to the Offering, the completion of the name change, the completion of the consolidation and commencement of trading on the TSX Venture Exchange under the new symbol "HYX".
  • Through October and November 2010, Hyperion acquired an additional 1.5 net sections (990 acres) of land for approximately $86/acre that are prospective for Charlie Lake light oil development. 

POSITIONED FOR GROWTH

The Company has a drilling inventory of 56.3 net drilling locations (32.8 net Cardium Horizontal light oil wells at Pembina, 17.5 net Charlie Lake light oil wells at Paradise British Columbia, 6 Upper Mannville Wilrich liquid rich gas wells at Niton and 26,693 net acres of undeveloped land.

FINANCIAL HIGHLIGHTS

  3 Months Ended September 30, 2010   9 Months Ended September 30, 2010  
  2010   2009   % Change   2010   2009   % Change  
Financial                        
Oil and NGL sales, net of royalties ($) 172,856   31,191   454 % 210,451   86,291   144 %
Natural gas sales net of royalties ($) 31,819   2,622   1114 % 37,881   6,598   474 %
Total oil, NG, & oil net of royalties ($) 204,675   33,813   505 % 248,332   92,889   167 %
Funds from operations ($) (1,174,931 ) (24,644 ) 4,668 % (1,490,700 ) (114,388 ) 1203 %
Per share basic and fully diluted ($) (0.007 ) (0.002 ) 368 % (0.020 ) (0.007 ) 177 %
Net earnings (loss) ($) (872,112 ) (77,431 ) 1,026 % (1,052,221 ) (155,735 ) 576 %
Per share basic and fully diluted ($) (0.005 ) (0.005 ) 11 % (0.014 ) (0.010 ) 44 %
Capital expenditures including deposits ($) 7,008,833   24   29,203,371 % 7,479,940   163   4,588,820 %
Working capital exit ($) 5,750,525   1,071,885   436 % 5,750,525   1,071,885   436 %
Production                        
Oil & NGL (bbls per day) 28   5   460 % 12   6   100 %
Natural gas (mcf per day) 123   2   6,050 % 49   1   4,800 %
Total (boe per day) (6:1) 49   5   809 % 20   6   227 %
                         
Average realized price                        
Oil & NGL ($ per bbl) 67.13   67.04   0 % 67.15   51.75   30 %
Natural gas ($ per mcf) 2.91   2.64   10 % 3.04   3.57   -15 %
Average ($ per boe) 45.73   53.59   -15 % 45.02   47.01   -4 %
Netback ($ per boe)                        
Oil, natural gas and NGL sales 47.61   54.98   -13 % 47.51   51.07   -7 %
Royalties (1.88 ) (1.39 ) 35 % (2.49 ) (4.06 ) -39 %
Operating expenses (37.75 ) (63.71 ) -41 % (37.09 ) (45.23 ) -18 %
Operating netback 7.98   (10.12 ) -179 % 7.93   1.78   346 %
Common Shares (pre-consol./post-split1)                        
Common shares o/s, end of period 201,093,667   15,869,253   1,167 % 201,093,667   15,869,253   1,167 %
Weighted average basic shares o/s 161,590,953   15,869,253   918 % 74,700,408   15,869,253   371 %
                         

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.

OUTLOOK

The Paradise and Pembina/Niton acquisitions provide the asset base for Hyperion to execute its strategy of providing growth through lower risk, repeatable, light oil development. During Q4 2010, the Company expects to spend a total of $2.3 million to drill 1 gross (0.4 net) Cardium light oil well, purchase the rental compressor at Paradise, acquire additional lands at Paradise and optimize production. For 2011, the Company expects to spend $16.6 million to drill 4 gross (2.6 net) Cardium horizontal light oil wells at Pembina and 6 gross (5 net) Charlie Lake light oil wells at Paradise, with capital also allocated to seismic and optimization, for a 2010 – 2011 total capital program of $18.9 million, 89% ($16.8 million) of which is allocated to drilling, completion and equip / tie-in activities and the remaining $2.1 million targeted towards land, seismic and optimization projects. No capital has been allocated to acquisitions, although the Company continues to evaluate new opportunities that fit with its strategy to acquire assets which lead to lower risk repeatable light oil development projects.

The Company expects 2011 production to average 830 boe/d with exit production of 1,000 boe/d (68% light oil/NGL weighted), representing a significant increase over the 68 boe/d resulting from the Paradise acquisition announced in July 2010.

2010/2011 OPERATIONAL PROFILE

Capital   $18.9 million
New Production Additions   840 boe/d based on initial 30 day rates. Typically new wells maintain 50 % of their initial 30 day production rate after one year.
Production   830 boe/day 2011 average, 1,000 boe/d exit (68% light oil/NGL weighted)
Royalty Rate   16%
Operating Cost   $11.39/boe
G&A (expensed)   $8.69/boe (declining to $6.32 Q4/2011 as volume increases)

The management and directors of Hyperion appreciate the confidence and support of our shareholders. We look forward to partnering with you to build an exceptional light oil and gas company.

READER ADVISORY

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.

Readers are further cautioned that the preparation of financial statements in accordance with Canadian generally accepted accounting principles ("GAAP") requires management to make certain judgements and estimates that affect the reported amounts of assets, liabilities, revenues and expenses. Estimating reserves is also critical to several accounting estimates and requires judgments and decisions based upon available geological, geophysical, engineering and economic data. These estimates may change, having either a negative or positive effect on net earnings as further information becomes available, and as the economic environment changes.

Cash flow from operations and operating netbacks are not recognized measures under GAAP. Management of Hyperion believe that in addition to net income, cash flow from operations and operating netbacks are useful supplemental measures as they demonstrate an ability to generate the cash necessary to repay debt or fund future growth through capital investment. Readers are cautioned, however, that these measures should not be construed as an alternative to net income determined in accordance with GAAP as an indication of Hyperion's performance. Hyperion's method of calculating these measures may differ from other companies and, accordingly, they may not be comparable to measures used by other companies. For these purposes, Hyperion defines cash flow from operations as cash provided by operations before changes in non-cash operating working capital and defines operating netbacks as revenue less royalties and operating expenses.

Readers are also cautioned that this press release may contain the term reserve life index, which is not a recognized measure under GAAP. Management believes that this measure is a useful supplemental measure of the length of time the reserves would be produced over at the rate used in the calculation. Readers are cautioned, however, that this measure should not be construed as an alternative to other terms determined in accordance with GAAP as a measure of performance. The method of calculating this measure may differ from other companies, and accordingly, they may not be comparable to measures 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.

Contact Information