Hyperion Exploration Corp.

Hyperion Exploration Corp.

November 15, 2012 17:13 ET

Hyperion Exploration Corp. Announces Third Quarter 2012 Highlights, Niton/McLeod Development Update, and Financial and Operating Results for the Quarter Ended September 30, 2012

CALGARY, ALBERTA--(Marketwire - Nov. 15, 2012) - Hyperion Exploration Corp. ("Hyperion" or the "Company") (TSX VENTURE:HYX) is pleased to announce third quarter 2012 highlights and operating results for the quarter ended September 30, 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.

Q3 2012 Highlights

The following represents the highlights of Hyperion's third quarter 2012 operations:

  • Record average production in Q3 2012 of 1,522 boe/d (64% light oil and NGLs), a 45% increase compared to the Q3 2011 production average of 1,050 boe per day (54% light oil and NGLs);

  • Record Q3 2012 funds flow of $4.2 million or $0.08/share, a 69% year over year increase;

  • Enhanced Niton/McLeod undeveloped land position via farm-in providing a combined total of 35,680 gross (32,508 net) acres of Cardium rights and future growth potential with an un-booked drilling inventory of 191 gross (172 net) light oil locations;

  • Continued to achieve operating efficiencies, increasing field netbacks from $30.32 per boe in Q3 2011 to $34.84 per boe in Q3 2012;

  • Reduced operating costs from Q2 2012 to $10.38/boe, a decrease of 12%;

  • In Q3 2012, Hyperion expended total capital, including land acquisitions and work overs, of $3.6 million;

  • Drilled 1 gross (0.89 net) Cardium light oil well in the Niton/McLeod area which was completed and tied-in in Q4 2012;

  • Completed and tied-in 1 gross (0.85 net) Cardium light oil well in the Garrington area that was drilled in late Q2 2012; and

  • Equipped and tied in 1 gross (0.5 net) Cardium light oil well in the Pembina area that was drilled late in Q1 2012.

Niton/McLeod Cardium Light Oil Development Update

During the third quarter, Hyperion drilled 1 gross (0.89 net) Cardium light oil horizontal well at McLeod ("02-02" well), over 20 kilometers (12 miles) from the Company's first Cardium horizontal light oil well ("05-14" well). The 02-02 was completed and placed on production in late October and has achieved a production rate of 209 boe/d (87% oil) in its first 21 days of production (IP21). The current performance of 02-02 is on track to exceed the Company's risked production profile of IP30 161 boe/d (92% oil) for a Cardium horizontal light oil well at Niton/McLeod. The Company's technically supported upside production profile for a Cardium horizontal well at Niton/McLeod is an IP30 of 225 boe/day (92% oil).

The results of 02-02 are very encouraging and support the continued development of the Company's inventory of 191 gross (172 net) potential locations at Niton/McLeod.

Operations Update

Hyperion achieved record production in the third quarter as a result of its successful drilling program in the first of half of 2012 in the Garrington and Pembina areas, highlighting the low risk, high quality nature of these assets. Typically, the Company would look to expand its drilling inventory in these areas to continue the track record of growth. The challenge for Hyperion is that these areas are highly coveted and highly competitive. Land prices reached levels in excess of $10,000/hectare ($4,000/acre), representing over $0.5MM per Cardium horizontal drilling location. At these levels, Hyperion recognized the need to look elsewhere to source Cardium light oil opportunities of comparable quality yet not subjected to similar industry competition. This approach required significant technical commitment and after 1.5 years, Hyperion identified and sourced the Niton/McLeod opportunity.

In August 2012, Hyperion announced a new undeveloped land acquisition and farm-in providing for a combined total of 35,680 gross (32,508 net) acres of Cardium rights in the Niton/McLeod area, with an average working interest of approximately 90%. Hyperion has the opportunity base to provide consistent, multi-year light oil production and cash flow per share growth with a strong return on capital.

Within this new Niton/McLeod land position, the Company estimates the Total Petroleum Initially In Place ("TPIIP"), effective August 15, 2012, to be 171 MMbbls of light oil and a primary recovery factor of 11.7%. The new Niton/McLeod acreage and farm-in increases Hyperion's Cardium light oil horizontal well inventory at Niton/McLeod to 191 gross (172 net) potential locations. This brings Hyperion's total inventory of Cardium light oil horizontal drilling locations to 215 gross (196 net). Estimates of TPIIP, recoverable reserves, and drilling locations are based on management's current geological and economic models, and future drilling success. These estimates are subject to change with varying economic conditions and actual drilling results.

In addition to Hyperion's activity at Niton/McLeod, the Company also completed, equipped and tied in 1 gross (0.85net) Cardium light oil well at Garrington and equipped and tied in 1 gross (0.5 net) Cardium light oil well at Pembina.

To date in 2012, Hyperion drilled 11 gross (8.12 net) wells, consisting of 10 gross (7.12 net) Cardium light oil wells and 1 gross (1 net) Glauconite light oil well. Drilling of the balance of the 2012 drilling program will occur in the Niton/McLeod area consisting of 1 gross (1 net) Cardium light oil well.


The successful acquisition and farm in of lands at Niton/McLeod in mid-2012 represents a noteworthy change to Hyperion's 2012 capital spending plan. The Company re-allocated $4 million dollars to land acquisitions and committed to a rolling option drilling commitment as part of the farm in agreement. Hyperion commenced operations on the Niton/McLeod farm-in lands by spudding 02-02 in September 2012. After flow testing, 02-02 was placed on production on October 24, 2012 and after 21 days the well has averaged 209 boe/d (87% oil). The 02-02 result, along with sustained production performance from 05-14, supports continued development in the area. The next phase of development is the third Cardium horizontal well at Niton/McLeod which is planned to be spud in November 2012. This well is expected to be on production by year end 2012.

Hyperion intends to further accelerate development at Niton/McLeod in early 2013, based on success, with an additional two Cardium horizontal wells to be drilled by the end of February 2013.

Hyperion remains committed to pursuing growth through the drill bit and to execute its strategy of acquiring assets that compliment and expand its repeatable development drilling inventory. Utilizing cash flow from operations and over $19 million of unused banking facilities, Hyperion will continue to engage in development activities in the Niton/McLeod area.


3 Months Ended September 30 9 Months Ended September 30
2012 2011 Change 2012 2011 Change
Financial ($000's except per share amounts)
Oil sales (net of financial contract settlements) 5,943 3,842 54 % 17,544 8,389 109 %
NGL sales 717 604 19 % 1,916 1,625 18 %
Natural gas sales 709 1,025 (31 )% 1,864 2,963 (37 )%
Total Oil, NGL, & Natural gas 7,369 5,481 34 % 21,324 12,977 64 %
Funds inflow (outflow) from operations 4,165 2,464 69 % 10,938 5,453 101 %
Per common share basic & FD ($) 0.08 0.06 33 % 0.20 0.11 82 %
Net earnings (loss) 131 (2,400 ) nm 1,399 (3,581 ) nm
Per common share basic & FD ($) 0.00 0.04 Nm 0.03 0.08 (63 )%
Capital expenditures including deposits1 3,641 11,393 (68 )% 37,452 43,703 (14 )%
Working capital (deficit) exit (32,255 ) (613 ) 5162 % (32,255 ) (613 ) 5162 %
Unused credit facilities 19,831 24,000 (17 )% 19,831 24,000 (17 )%
Oil (bbls per day) 794 478 66 % 764 342 124 %
NGL (bbls per day) 182 94 93 % 140 91 55 %
Natural gas (mcf per day) 3,273 2,866 14 % 3,052 2,670 14 %
Total (boe per day) (6:1) 1,522 1,050 45 % 1,413 877 61 %
Per 1 million common share basic & FD (boe per day)2 28.08 19.37 45 % 26.07 16.18 61 %
Average realized price ($'s - production weighted)
Oil ($ per bbl) 81.34 88.73 (8 )% 83.84 90.60 (7 )%
NGL ($ per bbl) 42.97 65.64 (35 )% 49.96 61.12 (22 )%
Natural gas ($ per mcf) 2.35 3.89 (40 )% 2.23 4.06 (45 )%
Average ($ per boe) 52.66 56.76 (7 )% 55.10 54.20 2 %
Netback ($'s per boe)
Oil, natural gas and NGL sales 52.66 56.76 (7 )% 55.10 54.20 2 %
Royalties 5.86 12.05 (51 )% 7.59 9.11 (17 )%
Operating and transportation expenses 11.96 14.39 (17 )% 12.62 12.40 2 %
Operating netback 34.84 30.32 15 % 34.89 32.69 7 %
Common Shares (000's)
Basic and fully diluted common shares o/s, end of period3 54,190 54,190 0 % 54,190 54,190 0 %
Weighted average basic and fully diluted common shares o/s3 54,190 54190 0 % 54,190 44,852 21 %
(1) Net of Paradise disposition with net proceeds of $3,718.
(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 Q3 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 judgments 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, the Company 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.

Total Petroleum Initially-in-Place ("TPIIP") - is defined in the Canadian Oil and Gas Evaluation Handbook ("COGEH") as the quantity of petroleum that is estimated to exist originally in naturally occurring accumulations. TPIIP includes that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet to be discovered. There is no certainty that it will be economically viable or technically feasible to produce any portion of this TPIIP except for those portions identified as proved or probable reserves.

There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.

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