Hyperion Exploration Corp.
TSX VENTURE : HYX

Hyperion Exploration Corp.

November 14, 2013 07:30 ET

Hyperion Exploration Corp. Announces Third Quarter September 30, 2013 Financial and Operating Results, Operational Update and Bank Line Renewal

CALGARY, ALBERTA--(Marketwired - Nov. 14, 2013) - Hyperion Exploration Corp. ("Hyperion" or the "Company") (TSX VENTURE:HYX) announces operating results for the quarter ended September 30, 2013. 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 2013 Financial Highlights

The following represents the highlights of Hyperion's third quarter ended September 30, 2013:

  • Average production in Q3 2013 of 1,094 boe/day (56% light oil and NGLs), a 28% decrease compared to the Q3 2012 production average of 1,522 boe/day (64% light oil and NGLs);

  • Quarterly funds flow in Q2 2013 of $2.3 million or $0.04/share;

  • Field netbacks of $37.10 per boe in Q3 2013, a 6% increase over Q3 2012;

  • Field netbacks from the 5 Niton/McLeod horizontal wells drilled prior to Q3 2013 have averaged $58.02 per boe during the first nine months of 2013;

  • In Q3 2013, Hyperion expended total capital, including land acquisitions and work overs of $2.7 million; and

  • As at September 30, 2013 total unused and available credit facilities of over $15 million.

Financial Highlights

3 Months Ended September 30 9 Months Ended September 30
2013 2012 Change 2013 2012 Change
Financial ($000's except per share amounts)
Oil sales (net of financial contract settlements) 4,455 5,943 -25 % 13,909 17,544 -21 %
NGL sales 720 717 0 % 2,806 1,916 46 %
Natural gas sales 660 709 -7 % 2,094 1,864 12 %
Total Oil, NGL, & Natural gas 5,835 7,369 -21 % 18,809 21,324 -12 %
Funds inflow (outflow) from operations 2,232 4,165 -46 % 8,512 10,938 -22 %
Per common share basic & FD ($) 0.04 0.08 -50 % 0.16 0.20 -20 %
Net earnings (loss) 103 131 -21 % (13,782 ) 1,399 -1085 %
Per common share basic & FD ($) 0.00 0.00 -0 % (0.25 ) 0.03 -933 %
Capital expenditures including deposits1 2,724 3,641 -25 % 7,795 37,452 -79 %
Working capital (deficit) exit (33,154 ) (32,255 ) 3 % (33,154 ) (32,255 ) 3 %
Unused credit facilities 15,027 19,831 -24 % 15,027 19,831 -24 %
3 Months Ended September 30 9 Months Ended September 30
2013 2012 Change 2013 2012 Change
Production
Oil (bbls per day) 471 794 -41 % 557 764 -27 %
NGL (bbls per day) 141 182 -23 % 153 140 9 %
Natural gas (mcf per day) 2,871 3,273 -12 % 3,156 3,052 3 %
Total (boe per day) (6:1) 1,091 1,522 -28 % 1,236 1,413 -13 %
Per 1 million common share basic & FD (boe per day)2 20.13 28.09 -28 % 22.81 26.07 -13 %
Average realized price ($'s - production weighted)
Oil ($ per bbl) 102.83 81.34 26 % 91.46 83.84 9 %
NGL ($ per bbl) 50.91 42.97 18 % 50.12 49.96 0 %
Natural gas ($ per mcf) 2.73 2.35 16 % 3.36 2.23 51 %
Average ($ per boe) 58.18 52.66 10 % 55.74 55.10 1 %
Netback ($'s per boe)
Oil, natural gas and NGL sales 58.18 52.66 10 % 55.74 55.10 1 %
Royalties 7.14 5.86 22 % 6.74 7.59 -11 %
Operating and transportation expenses 13.94 11.96 17 % 12.96 12.62 3 %
Operating netback 37.10 34.84 6 % 36.04 34.89 3 %
Common Shares (000's)
Basic and fully diluted common shares o/s, end of period 54,190 54,190 0 % 54,190 54,190 0 %
Weighted average basic and fully diluted common shares o/s 54,190 54,190 0 % 54,190 54,190 0 %
1 Net income includes non-cash asset impairment charges of $15,100 in Q1 2013
2 Weighted average basic and fully diluted common share count used in calculation. Figures not adjusted for debt or working capital positions.

Operations Update

Hyperion drilled 1 gross (1 net) Cardium horizontal oil well in the Niton/McLeod area in Q3, 2013. The 15-25 well was drilled in August, placed on production in late September and achieved a 30 day average production rate (IP30) of 101 boe/d (92 % oil and liquids). As a result of a short 24 hour frac water flow back period, Hyperion expects the 15-25 well to have a flatter production profile than wells that were completed with a more extensive flow back. Hyperion wells that were placed on production after an extensive frac water flow back period, typically 2-5 days, start with a higher oil cut and this translates into a higher IP30 oil rate.

The 15-25 well was the third earning well drilled as part of the 8,000 acre farm-in in the Niton/McLeod area. Hyperion has now fully earned three of the four primary earning blocks under the farm-in agreement, with capital plans in place to earn the remaining prospective lands. Costs to drill, complete, tie in and equip were reduced from $3.7 million on the first well in the Niton/McLeod area to $2.9 million for the 15-25 well (both of which were the first wells on a four well pad). With a continued focus on capital efficiency, Hyperion is currently preparing to drill an extended reach horizontal well. Hyperion's current total well length of approximately 3,000m (with 1,300m of horizontal pay) would initially be increased to approximately 4,000m (with 2,300 m of horizontal pay), with the opportunity for longer wells based on success. Based on actual offset performance, a long reach horizontal well in Hyperion's tier one acreage at Niton/McLeod is expected to have a type curve with an IP30 of 220 boe/d (90% light oil/NGL) and reserves of 220 mboe (83% light oil/NGL). The short horizontal wells have a type curve IP30 of 160 boe/d (90% light oil/NGL) and reserves of 148 mboe (83% light oil/NGL). Based on cost reductions achieved to-date, and using the infrastructure built for the first well on a pad (road, lease and gas pipeline), on stream capital cost for the long reach horizontal on a full development basis are expected to average $3.6 million and $2.6 million for a short horizontal well. The long horizontal wells are expected to yield a rate of return of greater than 85% with the short horizontals providing a rate of return of greater than 45%.

The Company currently has an inventory in Niton/McLeod of up to 167 gross (151 net, unbooked) short horizontal locations. Management estimates that long reach horizontal drilling techniques could be applied to 45% of this existing Niton/McLeod inventory.

Hyperion expects to drill its first long reach horizontal Cardium oil well in the Niton/McLeod area in early 2014.

Renewal of Bank Facilities

As a result of the schedule lending review with its credit provider, the lending limits of its existing banking facilities remain unchanged at $46.0 million. The Company's revolving operating facility remains at a borrowing limit of $36.0 million and an acquisition/development facility remains at 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 Company. The facilities are subject for review on or before January 1, 2014.

About Hyperion

Hyperion is a publicly traded, junior light oil and gas company with a strategy of growing through acquisitions which lead to lower risk, scalable and repeatable development drilling projects. Hyperion's core Alberta operations are in the Niton/McLeod, Garrington, North Pembina, Buck Lake, and Chip 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 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 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.

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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