Hyperion Exploration Corp.
TSX VENTURE : HYX

Hyperion Exploration Corp.

October 06, 2011 05:00 ET

Hyperion Exploration Corp. Announces Operations Update

CALGARY, ALBERTA--(Marketwire - Oct. 6, 2011) - Hyperion Exploration Corp. ("Hyperion" or the "Company") (TSX VENTURE:HYX) is pleased to announce initial production results from its operated 2011 Cardium light oil drilling program. Initial results have exceeded the Company's original estimates for wells completed and on production. At Garrington two gross (2 net) wells are now on production and at Buck Lake one gross (0.6 net) well is currently being tested. Hyperion expects to execute its remaining 2011 capital program as forecasted in its 2011 capital budget.

Operating Results

(all production figures in gross volumes)

Area Well (WI %) Status 3 day
Average
(1
) 7 day
Average
(1
) 14 day
Average
(1
) Last
24 Hour
Rate
(1
) 30 Day Type Curve (2 )
Garrington 8-27
(100
%) Producing 418 boe/d
82% oil
413 boe/d
86% oil
- 530 boe/d
90% oil
194 boe/d
84% oil
9-27
(100
%) Producing 1,444 boe/d
89% oil
1,008 boe/d
88
% 744 boe/d
89% oil
630 boe/d
91% oil
Buck Lake 4-16
(60
%) Testing 624 boe/d
64% oil
- - 632 boe/d
61% oil
176 boe/d
92% oil
5-16
(60
%) Spud in
Q4 2011
- - - -
Pembina 4-24
(100
%) Currently Drilling - - - - 275 boe/d
92% oil
5-24
(100
%) Spud in
Q4 2011
- - - -
Notes:
  1. In gross volumes at 6:1 barrels equivalent; average for periods based on field data after first new oil produced
  2. Hyperion's estimated production type curve in each area based on actual performance of local and relevant wells

Over time the Company expects production rates to decline based on typical Cardium decline characteristics. Although initial results are encouraging, longer term production results are required to determine production performance relative to area type well performance.

Garrington

Hyperion initiated its operated, Cardium light oil development on schedule in early July with the drilling of two gross (2 net) wells. These wells were drilled back to back off a common drilling pad and then completed with two different stimulation techniques. The first well, 9-27, was stimulated with 20 fracs at 20 tonnes per frac using slick water. After installing a bottom hole pump, the well achieved a production rate of 744 boe/d (89% liquids) over the first 14 days of production, compared to an internal area type well of 194 boe/d (84% liquids) for the first 30 days. The second well, 8-27, was stimulated with 20 fracs at 20 tonnes per frac using a water-based foam system. The well is currently flowing (with a bottom hole pump to be installed at a later date) and achieved a production rate of 413 boe/d (86% liquids) over the first 7 days of production compared to an internal area type well of 194 boe/d (84% liquids) for the first 30 days. The decision to conduct one water-based foam fracture stimulation and one slick water stimulation was intended to evaluate and identify the ideal stimulation method and optimize longer term production rates. Based on the initial production rates, both wells are expected to achieve, if not outperform Hyperion's 30 day average initial production type curve rate of 194 boe/d (84% liquids). The 9-27 well, which was frac'd with slick water, has significantly outperformed Hyperion's initial production expectations and outperformed on a relative basis to the water-based foam stimulation. Based on these results, Hyperion expects to use slick water fracs for future well stimulation at Garrington.

Hyperion has 18 additional net drilling locations at Garrington, including 7 Cardium light oil and 11 locations targeting Glauconite light oil, Elkton liquids rich gas, and Ellerslie light oil.

Buck Lake

Included in the 2011 capital program is the drilling of two gross (1.2 net) Cardium horizontal light oil wells in the Buck Lake area. The first well at Buck Lake, 4-16, has been drilled and fracture stimulated with 18 fracs at 20 tonnes per frac using slick water. The well has produced an average of 624 boe/d (64% oil) over the first 3 days of a flow test. Based on these results, the well has the potential to meet or exceed Hyperion's internal 30 day, average initial production type curve of 175 boe/d (92% oil). Drilling of the Company's second Buck Lake Cardium horizontal light oil well, 5-16 (0.6 net), is expected to commence in Q4 2011. Further production updates will be provided as both 4-16 and 5-16 wells produce at reliable and indicative rates. Hyperion has 12 additional net Cardium horizontal light oil drilling locations at Buck Lake identified to-date.

Pembina

Hyperion's 2011 capital budget also includes the drilling of two, 100% working interest, Cardium horizontal light oil wells at Pembina. The first of these wells, 4-24, is currently being drilled. The second well, 5-24, will be drilled immediately following 4-24. Similar to the Garrington wells, these will be drilled from a common pad. Hyperion also expects to stimulate each of these wells with 20 fracs at 20 tonnes per frac, back to back, using slick water.

Further updates will be provided as the 4-24 and 5-24 wells produce at reliable and indicative rates.

Early in 2011, Hyperion participated in the drilling and slick water stimulation of 2 gross (0.8 net) Cardium horizontal light oil wells on its Pembina lands. These wells went on production in late March 2011 and have each produced in excess of 36,000 bbls (gross) of oil. Both wells continue to produce at approximately 190 boe/d gross, of which 83% of production is light oil, seven months after they were placed on production. These production rates continue to be above Hyperion's type curve for the area which at month 7, is 158 boe/d (92% oil). For reference, the 30 day average initial production type curve rate is 275 boe/d (92% oil).

Hyperion has over 7 additional net Cardium locations at Pembina identified to-date.

OUTLOOK

Hyperion remains focussed on per share growth through the execution of the 2011 capital budget. The Company continues to execute on schedule, with 6 gross (5.2 net) Cardium horizontal light oil wells to be drilled in the second half of 2011.

  • At year end 2011, Hyperion will have increased its inventory by two net wells to 64 net locations (53 targeting light oil). The new locations are added as a result of increased geological confidence in Hyperion's Cardium assets at Niton.
  • Hyperion expects to execute its 2011 capital program within its guided capital expenditure budget of $33.0 million.
  • The 2011 capital program is fully funded through a combination of existing cash, working capital, and unused bank facilities of $24 million.
  • Hyperion remains confident that it will meet or exceed its 2011 operational 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); and
    • Average operating cost of $12.20/boe.

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.

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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