Hyperion Exploration Corp.
TSX VENTURE : HYX

Hyperion Exploration Corp.

April 24, 2014 07:30 ET

Hyperion Exploration Corp. Announces Fourth Quarter and Year Ended December 31, 2013 Financial Results and Operations Update

CALGARY, ALBERTA--(Marketwired - April 24, 2014) - Hyperion Exploration Corp. ("Hyperion" or the "Company") (TSX VENTURE:HYX) announces it has filed on SEDAR its audited annual financial statements, related Management's Discussion and Analysis ("MD&A) and Annual Information Form ("AIF") for the year ended December 31, 2013. The financial statements, MD&A and AIF will be available for review at www.sedar.com or www.hyperionexploration.com.

Financial and Operational Highlights

Three Months Ended
December 31,
Year Ended
December 31,
2013 2012 2013 2012
FINANCIAL ($000'S except per share amounts)
Oil sales (net of financial contract settlements) 3,296 5,938 17,032 23,432
NGL sales 694 896 3,721 2,812
Natural gas sales 915 1,106 2,788 2,970
Total Oil, NGL, & Natural gas 4,905 7,940 23,541 29,214
Funds inflow (outflow) from operations3 1,696 4,313 10,208 15,255
Per common share basic & FD ($) 0.03 0.08 0.19 0.28
Net earnings (loss) 222 (13,348 ) (13,560 ) (11,945 )
Per common share basic & FD ($) nm (0.25 ) (0.25 ) (0.22 )
Capital expenditures (net of dispositions) 364 5,929 8,157 43,386
Net debt 3 (31,840 ) (33,871 ) (31,840 ) (33,871 )
Unused credit facilities 14,365 21,192 14,365 21,192
PRODUCTION
Oil (bbls/day) 409 738 520 761
NGL (bbls/day) 142 195 150 156
Natural gas (mcf/day) 2,651 3,430 3,029 3,147
Total (boe/day ) (6:1) 993 1,505 1,175 1,442
Per 1 million common share basic & FD (boe/day )1 18.324 27.773 21.682 26.610
REALIZED PRICES (excluding financial contracts)
Oil ($/bbl) 89.42 82.26 91.06 83.01
NGL ($/bbl) 53.04 49.98 50.82 49.38
Natural gas ($/mcf) 3.75 3.51 3.37 2.58
Average ($/boe) 53.69 54.81 54.90 54.80
OPERATING NETBACK ($'S/BOE)3
Oil, natural gas and NGL sales 53.69 54.81 54.90 54.80
Royalties 7.69 4.32 6.94 6.70
Operating and transportation expenses 13.16 11.32 13.00 12.22
Operating netback 32.84 39.17 34.96 35.88
COMMON SHARES (000'S)
Basic and fully diluted common shares o/s, end of period2 54,190 54,190 54,190 54,190
Weighted average basic and fully diluted common shares o/s2 54,190 54,190 54,190 54,190
  1. Weighted average basic and fully diluted common share count used in calculation. Figures not adjusted for net debt.
  2. Basic and fully diluted common shares outstanding are equal as all dilutive instruments are considered anti-dilutive under IFRS.
  3. Certain financial measures such as "funds flow", "funds flow per boe", "funds flow per share", "operating netback", and "Net debt" do not have standardized meaning prescribed by Canadian generally accepted accounting principles ("GAAP"). Management believes that in addition to net income, funds flow from operations and netback are useful supplemental measures as they provide an indication of the results generated by the Corporation's principal business activities before the consideration of how those activities are financed or how the results are taxed. Investors are cautioned, however, that these measures should not be construed as alternatives to net income determined in accordance with IFRS, as an indication of Hyperion's performance. These financial measures do not have a standardized meaning prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other issuers. "Funds flow" is calculated based on cash flows from operating activities before changes in non-cash working capital, transaction costs from acquisitions and decommissioning expenditures incurred. "Operating netback" is calculated by deducting royalties, production expenses and transportation expenses from oil and gas revenue. "Funds flow from operations per share" is calculated using weighted average number of shares outstanding consistent with the net income (loss) per share calculation. "Net debt" represents bank debt and accounts payable and accrued liabilities less accounts receivable and prepaid expenses and deposits.

Operations Update and Outlook

As disclosed in July 2013, the Corporation engaged independent advisors to assist in a strategic process to explore opportunities to maximize shareholder value. During this process the Corporation has been focused on reducing its indebtedness. Accordingly, the Corporation has not drilled or completed any new wells since the third quarter of 2013 and minimal capital has been spent on production optimization and maintenance. This will continue to be the plan through the first half of 2014. The Corporation's free cash flow is being applied towards reducing its indebtedness.

The Corporation has further reduced indebtedness with the sale of the oil and natural gas assets at Chip Lake on January 31, 2014 for total cash consideration, net of adjustments, of $3.1 million. Post sale of Chip Lake and as disclosed in the April 2, 2014 press release, Hyperion has a Proved plus Probable Developed Producing reserves ("P+PDP") Net Asset Value ("NAV") of $0.86 per share with no future development capital ("FDC") required and total Proved plus Probable ("P+P") NAV of $1.44 per share with FDC of $54.3 million. These NAV calculations include management's estimates of value for undeveloped land ($11.6 million), proprietary seismic and other assets ($1.3 million).

The revolving credit facility was amended to $30 million as a result of the disposition and reduction in the borrowing base. However, there was no change to the unused acquisition/development facility of $10 million. The annual review of Hyperion's credit facilities is underway and will be completed in May. The Corporation estimates net debt at the end of the first quarter to be approximately $27 million. Production for the first quarter, based on field estimates, is estimated to be 820 boepd.

One option being evaluated as part of the strategic process is to identify sources of capital to advance the extended reach horizontal ("ERH") development drilling program at Niton/McLeod. Based on industry results, drilling an ERH well has the potential to more than double the initial production of a short reach horizontal ("SRH") well. The evolution to ERH wells in the Cardium at Niton/McLeod (29,030 net acres) is expected to improve capital efficiency in excess of 20% and accelerate capital payouts to less than 1.5 years. Based on lands currently captured, and with the successful implementation of an ERH development program, the Company has an unbooked inventory of 51.6 ERH and 31.0 SRH wells at Niton/McLeod. All wells at Niton/McLeod included in the reserves evaluated in the McDaniel Report were based upon SRH wells. Going forward the Company plans to convert wells currently booked as SRH to ERH where it has sufficient contiguous lands.

About Hyperion

Hyperion is a publicly traded, junior light oil and gas company with core operations in the Niton/McLeod, Garrington, North Pembina, and Buck Lake areas. The common shares of the Company trade on the TSX Venture Exchange under the trading symbol "HYX".

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. 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. 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 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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