Hyperion Exploration Corp.
TSX VENTURE : HYX

Hyperion Exploration Corp.

May 24, 2012 18:29 ET

Hyperion Exploration Corp. Announces First Quarter 2012 Highlights, Increased Bank Facilities, and Financial and Operating Results for the Quarter Ended March 31, 2012

CALGARY, ALBERTA--(Marketwire - May 24, 2012) - Hyperion Exploration Corp. ("Hyperion" or the "Corporation") (TSX VENTURE:HYX) is pleased to announce first quarter 2012 highlights, an increase to existing bank facilities and financial and operating results for the quarter ended March 31, 2012. Selected financial and operational information is outlined below and should be read in conjunction with Hyperion's unaudited financial statements and related management discussion and analysis which will be available for review under Hyperion's SEDAR profile at www.sedar.com.

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% 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 currently includes 12 gross (8.34 net) Cardium wells and 2 gross (2 net) Glauconite wells. In Q1 2012, 6 gross (4.24 net) wells have been drilled and put on production. 2 gross (1.25 net) Cardium wells are awaiting further completion, tie- in and equipping work anticipated to commence in June 2012, weather dependent. 1 gross (1 net) Glauconite well drilled in Q1 and completed in Q2 has recently been put on production. Drilling of the balance of the 2012 drilling program as currently planned, consisting of 5 gross (3.85 net) wells, will occur in the summer and fall of 2012.

In Q2 the Corporation's budgeted production levels will be effected due to an extended turnaround at a 3rd party gas processing facility as well as the disposition of the Paradise property, effective April 16th (budgeted to produce approximately 80 boe per day). The turnaround work was anticipated to take 14 days. This downtime has extended significantly beyond management's and the facility operator's expectations and is currently estimated to take 34 days. It is expected that the extended turnaround will result in approximately 300 boe/day of production being shut in during the month of May. Hyperion will assess the actual impact on budgeted Q2 and annual average production after the turnaround is complete and production has been restored. Also in Q2 the Corporation completed the 10-27 Garrington Glauconite light oil well. Due to operational delays the well did not commence production operations until late May. The well is currently producing back frac oil with full recovery expected in early June.

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.

Q1 2012 Highlights

The following represents the highlights of Hyperion's first quarter 2012 operations:
  • Average in Q1 2012 of 1,312 boe per day. This is a 107% increase compared to the Q1 2011 production average of 633 boe per day.
  • In Q1 2012 Hyperion expended total capital, including land acquisitions and work overs, of $26.9 million drilling 9 gross (6.49 net) wells targeting light oil. Of these, 8 gross (5.49 net) wells were drilled horizontally in the Cardium formation and 1 gross (1 net) well targeting Glauconite light oil. All Cardium wells placed on production in Q1 have met or exceeded the Corporation's type curve expectations.
  • Maintained Q1 2012 production compared with Q4 2011 with delayed Q4 2011 drilling being executed in Q1 2012.
  • Increased Q1 2012 production by 20% per share over Q1 2011.
  • Increased Q1 2012 funds flow by 301% year over year to $3.3 million, representing a 200% increase in funds flow per share.
  • Continued to achieve operating efficiencies, reducing operating and transportation costs from $14.41 per boe in Q4 2011 to $12.24 per boe in Q1 2012.
  • Positioned the Corporation for future growth with an unbooked reserve drilling inventory of 53 net locations, (41 or 77.3% targeting light oil).

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 sector and Hyperion executed on a record level of drilling activity in Q1 2012, which saw the Corporation running three operated and one non-operating drilling rig. During Q1 2012, 6 gross (4.24 net) Cardium light oil wells have been drilled and placed on production. An additional 2 gross (1.25 net) Cardium wells are awaiting further completion, tie-in and equipping work anticipated to commence in June 2012, weather dependent. Also 1 gross (1 net) Glauconite well drilled in Q1 and completed in Q2 is on production.

Hyperion has concluded the sale of the 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.

Increase to Bank Facility

Hyperion is also pleased to announce an increase of its existing banking facilities with its credit provider to $50.0 million. The Corporation's revolving operating facility to a borrowing limit of $40.0 million and an acquisition/development facility to a borrowing limit of $10.0 million. Security for these facilities will continue to be provided by way of a charge over the petroleum and natural gas assets of the Corporation. The facilities are subject for review on or before November 1, 2012.

FINANCIAL HIGHLIGHTS
3 Months Ended March 31
2012 2011 Change
Financial ($000's except per share amounts)
Oil sales (net of financial contract settlements) 5,334 1735 207 %
NGL sales 685 285 140 %
Natural gas sales 641 782 (18 %)
Total Oil, NGL, & Natural gas 6,660 2,802 138 %
Funds inflow (outflow) from operations 3,275 817 301 %
Per common share basic & FD ($) 0.06 0.03 200 %
Net earnings (loss)1 173 (1,057 ) nm
Per common share basic & FD ($) 0.00 (0.03 ) 100 %
Capital expenditures including deposits 26,851 30,408 (12 %)
Working capital (deficit) exit (26,088 ) 8,208 nm
Unused credit facilities1 39,479 13,000 204 %
Production
Oil (bbls per day) 677 224 202 %
NGL (bbl per day) 124 53 134 %
Natural gas (mcf per day) 3,069 2,133 44 %
Total (boe per day) (6:1) 1,312 633 107 %
Per 1 million common share basic & FD (boe per day)2 24.25 20.26 20 %
Average realized price ($'s - production weighted)
Oil ($ per bbl) 86.59 85.97 1 %
NGL ($ per bbl) 60.79 59.57 2 %
Natural gas ($ per mcf) 2.29 4.07 (44 %)
Average ($ per boe) 55.77 49.20 13 %
Netback ($'s per boe)
Oil, natural gas and NGL sales 55.77 49.20 13 %
Royalties 11.29 5.63 101 %
Operating and transportation expenses 12.24 9.37 31 %
Operating netback 32.24 34.20 (6 %)
Common Shares (000's)
Basic and fully diluted common shares o/s, end of period3 54,190 32,190 68 %
Weighted average basic and fully diluted common shares o/s3 54,190 31,241 73 %
1 Using amended facilities subsequent to March 31, 2012 as described herein.
2 Weighted average basic and fully diluted common share count used in calculation. Figures not adjusted for debt or working capital positions.
3 Basic and fully diluted common shares outstanding are considered equivalent prior to Q1 2012 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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