CALGARY, ALBERTA–(Marketwired – Apr 22, 2013) – Hyperion Exploration Corp. (“Hyperion” or the “Company”) (TSX VENTURE:HYX) is pleased to announce significant 2012 year end reserve growth, an operations update highlighting success at the Niton/McLeod light oil Cardium play, and highlights of operating results for the quarter and year ended December 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. Hyperion’s reserves were evaluated by McDaniel & Associates Consultants Ltd. (“McDaniel”) effective December 31, 2012, in accordance with National Instrument 51- 101 (“NI 51-101”) – Standards for Disclosure for Oil and Gas Activities of the Canadian Securities Administrators (the “McDaniel Report”). All of the Company reserves were evaluated in the McDaniel Report.
| 2012 Year End Reserve Highlights: |
- Increased Total Proved (“TP”) plus Probable Reserves (“P+P”) by 48% to 8,167.5 Mboe (57% liquids) and Total Proved (“TP”) Reserves by 51% to 4,918.5 Mboe (56% liquids) ;
- Increased P+P Reserves per basic share by 48%;
- Increased P+P, Before Tax Net Present Value, discounted at 10% (“BT NPV10%”) by 29% to $ 97.9 million;
- Increased P+P, BT NPV10% value per share basic by 29% to $1.81;
- Achieved P+P finding, development and acquisition cost (FD&A) of $19.30/boe, including changes in future development capital;
- Achieved P+P finding and development cost (F&D) of $20.04/boe, including changes in future development capital;
- Achieved a P+P Recycle Ratio of 2.0 based on FD&A of $19.30/boe and a Q4, 2012 field netback of $39.17/boe;
- Increased Reserve Life Index (RLI) to 9.0 years (TP) and 14.9 years (P+P) based on Q4 2012 production of 1,505 boe/day compared to 6.7 years (TP) and 11.4 years (P+P) in 2011;
- Reserve additions in 2012, replaced 604% of production;
- Successful initial drilling results and associated booking of future locations on Hyperion’s Niton – McLeod Cardium light oil play have attributed 2,456 Mboe (81% liquids) or 65% of the 3,799 Mboe, P+P, reserves additions in 2012. The drilled and booked locations (16.3 net) at Niton – McLeod represent approximately 9.4% of the original inventory of 172 net locations, with 156 net un-booked locations remaining; and
- 100% of reserves evaluated by McDaniel per NI 51-101 standards.
| Summary of Company Reserves as at December 31, 2012(1),(2),(3),(4),(5) |
|
| Reserve Category |
(Gross) |
|
|
|
|
Light Oil
(Mbbl |
) |
NGL’s
(Mbbl |
) |
Gas
(MMcf |
) |
Boe’s
(Mboe |
) |
Before Tax Net Present Value Discounted at 10% ($000s |
) |
| Proved |
|
|
|
|
|
|
|
|
|
|
|
Developed Producing |
1,144.2 |
|
462.8 |
|
8664.4 |
|
3,051.1 |
|
$55,662.4 |
|
|
Non-Producing |
32.8 |
|
2.4 |
|
42.2 |
|
42.2 |
|
$990.8 |
|
|
Undeveloped |
875.7 |
|
215.7 |
|
4402.7 |
|
1,825.2 |
|
$9,651.8 |
|
| Total Proved |
2,052.7 |
|
681.0 |
|
13,109.3 |
|
4,918.5 |
|
$66,305.1 |
|
|
|
|
|
|
|
|
|
|
|
|
| Probable |
|
|
|
|
|
|
|
|
|
|
|
Developed Producing |
372.2 |
|
190.2 |
|
3,334.3 |
|
1.118.1 |
|
$11,793.0 |
|
|
Non-Producing |
11.5 |
|
1.3 |
|
22.3 |
|
16.5 |
|
$187.7 |
|
|
Undeveloped |
1,150.5 |
|
207.9 |
|
4,536.2 |
|
2,114.4 |
|
$19,662.7 |
|
| Total Probable |
1,534.2 |
|
399.3 |
|
7,892.9 |
|
3,249.1 |
|
$31,643.3 |
|
|
|
|
|
|
|
|
|
|
|
|
| Total Proved & Probable |
3,586.9 |
|
1,080.3 |
|
21,002.2 |
|
8,167.5 |
|
$97,948.4 |
|
|
| 2012 Reserve Addition Metrics, Including Change in Future Development Capital(3) |
|
| Category |
Finding, Development & Acquisition Cost, including change in Future Development Capital |
|
Finding & Development Cost, including change in Future Development Capital
($/boe |
) |
Future Development Capital ($000’s |
) |
|
Including Land Acquisitions ($/boe |
) |
Excluding Land Acquisitions
($/boe |
) |
|
|
|
|
| Total Proved |
$24.03 |
|
$22.19 |
|
$24.86 |
|
$39,287 |
|
| Total Proved & Probable |
$19.30 |
|
$18.03 |
|
$20.04 |
|
$65,227 |
|
| Notes: |
| (1) |
The tables above are a summary of the oil, NGL and natural gas reserves of the Company and the net present value of future net revenue attributable to such reserves as evaluated in the McDaniel Report, based on forecast price and cost assumptions. The tables summarize the information from the McDaniel Report, and may differ slightly than the original report due to rounding. |
| (2) |
Gross reserves means the total working interest (operating or non‐operating) share of remaining recoverable reserves owned by Hyperion before deductions of royalties payable to others and without including any royalty interests owned by Hyperion. |
| (3) |
Based on McDaniel December 31, 2012 escalated price forecast, as applicable. |
| (4) |
The net present value of future net revenue attributable to the Company’s reserves is stated without provision for interest costs and general and administrative costs, but after providing for estimated royalties, production costs, development costs, other income, future capital expenditures, and well abandonment costs for only those wells assigned reserves by McDaniel, as applicable. |
| (5) |
Commodity pricing was prepared by McDaniel and was used, subject to quality and transportation adjustments, in the evaluation of Hyperion’s reserves effective as at December 31, 2012. |
The Company will file its Annual Information Form, which will include Hyperion’s reserves data and other oil and gas information for the year ended December 31, 2012 as mandated by NI 51-101, on or before April 22, 2013.
Operations Update
In 2012 Hyperion announced a new undeveloped land acquisition and farm-in in the Niton/McLeod area of west central Alberta for the development of a new, internally sourced, Cardium light oil development. Hyperion has access to 34,000 net acres of undeveloped land on this trend with up to 156 net un-booked horizontal drilling locations identified.
Hyperion has significantly de-risked the Niton/McLeod development with 5 gross (4.89 net) Cardium light oil wells drilled and now on production. Based on modelling nearby vertical Cardium production, Hyperion developed a horizontal Cardium oil well production performance type curve that exhibits an IP30 rate of 160 boe/day (92% light oil) and reserves of 145 mboe (83% light oil).
Hyperion is very encouraged by its Cardium horizontal well performance to date and the Company continues to improve on capital efficiency. The first Cardium horizontal oil well drilled by Hyperion in the Niton/McLeod area, utilized intermediate casing, which is considered the lowest risk drilling procedure for evaluating a new area. Hyperion was satisfied through the drilling of the first well that the Cardium formation drills in the area as expected. This gave confidence in switching to a mono bore drilling procedure which has significantly reduced drilling times and associated well costs. Hyperion’s capital cost for its first horizontal Cardium well in the area was $3.85 million compared to one of the last wells drilled, at $3.25 million. The mono bore drilling procedure, increased use of pad drilling and other efficiencies realized on completion/tie ins are expected to save up to $750 thousand of capital per well, reducing capital costs to $3.10 million per well. In addition, the Company expects additional costs savings to be realized under a continuous drilling operation through minimized mobilization costs.
Hyperion has also become more capital efficient with completion techniques and will make further refinements on future wells. The Company has learned that equipping wells with artificial lift as quickly as possible after a brief flow back period can save significantly on testing and evaluation costs. Reduced flow back and testing means Hyperion must rely on the bottom hole pump to unload completion fluid. Despite extended clean up times and the potential for reduced IP30 rates as a result of this technique, the Company has demonstrated a shallower production decline over the first 60 days, allowing the well to achieve the same cumulative oil production as the type curve for this period.
The performance of Hyperion’s drilling program in the Niton/McLeod area to date is as follows:
Hyperion 02-02-56-14W5M
Hyperion’s first Cardium horizontal light oil well drilled at Niton/McLeod was spud on September 9, 2012 and placed on production October 24, 2012. The horizontal well was completed with a 20 stage slick water based fracture completion. The well was flow tested for an extended five day period for clean-up of frac water and to initiate oil production. This well achieved an IP30 (average production during the first 30 days of production) of 190 boe/day (86% oil). During the fifth month of production, the well continues to meet type curve production performance with a production rate of 64 boe/day(80% oil).
Hyperion 03-19-55-13W5M
The 03-19 well was spud on November 20, 2012 and placed on production December 30, 2012. The horizontal well was completed with a 19 stage slick water based fracture completion. Based on experience from flow testing on the first well, we determined that an extended flow test requiring testers on site with associated capital cost was not required and limited the clean-up period to 3 days. A shortened flow back period reduced the IP30 for 3-19 to 153 boe/day (90% oil), but also flattened the decline curve. During the third month of production the well is performing above the type curve at 107 boe/day (85% oil).
Hyperion 15-11-56-14W5M
The 15-11 well was spud on December 20, 2012 and placed on production January 31, 2013. The horizontal well was completed with a 19 stage slick water based fracture completion. The well had a very limited flow test / clean up period of two days prior to being shut-in to install production equipment. The well achieved an IP30 of 130 boe/day (90% oil), which is below type curve, but is meeting type curve performance expectations for month two at 107 boe/day (86% oil).
Hyperion 09-21-55-13W5M
The 09-21 well was spud on January 4, 2013 and placed on production February 8, 2013. As a result of difficulties during the drilling operation the effective horizontal length was shorter than planned, resulting in the well being completed with 16 stage slick water based fracture completion vs. the planned 20 stage completion. The number of fracture stages is directly proportional to the expected productivity and as a result the well achieved an IP30 of 101 boe/day (85% oil). Since the start of month two to approximately three weeks into the month the well has experienced a flat production profile of approximately 64 boe/day (86% oil).
In Summary, Hyperion is pleased with the progress achieved at Niton/McLeod in terms of well productivity, capital efficiency and reserve recognition. This asset base contains all attributes for top tier growth including a low risk, repeatable, drilling profile, and strong internal rate of return. Hyperion currently holds 37,440 gross (34,000net) acres of Cardium rights in the Niton/McLeod area, including the previously announced farm in, with an average working interest of approximately 90%. Total Petroleum Initially In Place (“TPIIP”) effective as of April 18, 2013, is internally estimated to be up to 171 MMbbls (net) of light oil with a primary recovery factor of 11.7%. The Niton/McLeod area is characterized by up to 191 gross (172 net) Cardium horizontal drilling locations with recycle ratios of greater than 2.0. At year end 2012, approximately 9.4% of these locations have been drilled or booked with approximately 174 gross (156) net locations remaining as un-booked. These estimates are subject to change with varying economic conditions and future drilling results.
Q4 2012 Financial Highlights
The following represents the highlights of Hyperion’s fourth quarter and year ended 2012 operations:
- Average production in Q4 2012 of 1,505 boe/day (62% light oil and NGLs), a 14% increase compared to the Q4 2011 production average of 1,323 boe/day (61% light oil and NGLs);
- Average annual production in 2012 of 1,442 boe/day (64% light oil and NGLs), a 46% increase compared to 2011 production average of 989 boe/day (53% light oil and NGLs);
- Record quarterly funds flow in Q4 2012 of $4.3 million or $0.08/share, a 8% year over year increase;
- 2012 annual funds flow of $15.3 million or $0.29/share, a 61% year over year increase;
- In 2012 enhanced Niton/McLeod undeveloped land position via farm-in providing access to a combined total of approximately 34,000 net acres of Cardium rights and future growth potential with an un-booked drilling inventory of 174 gross (156 net) light oil locations;
- Continued to achieve operating efficiencies with field netbacks of $39.17 per boe in Q4 2012 and $36.10 for the 2012 fiscal year;
- Reduced operating costs in Q4 2012 to $10.38/boe, a decrease of 16% year over year;
- In Q4 2012, Hyperion expended total capital, including land acquisitions and work overs of $5.9 million;
- In Q4 2012, Hyperion drilled 2 gross (2.0 net) Cardium horizontal oil wells and completed/tied in 2 gross (1.89 net) Cardium light oils well in the Niton/McLeod area;
- In 2012, Hyperion expended total capital, including land acquisitions and work overs of $43.4 million;
- In 2012, Hyperion drilled 12 gross (9.38) and completed 11 gross (8.38 net) Cardium light oil wells in the Garrington, Pembina, Buck Lake, and Niton/McLeod areas and drilled/completed 1 gross (1.0 net) Glauconite light oil well in the Garrington area.
|
3 Months Ended December 31 |
|
12 Months Ended December 31 |
|
|
2012 |
|
2011 |
|
Change |
|
2012 |
|
2011 |
|
Change |
|
| Financial ($000’s except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
| Oil sales (net of financial contract settlements) |
5,938 |
|
6,130 |
|
(3 |
%) |
23,432 |
|
14,521 |
|
61 |
% |
| NGL sales |
896 |
|
677 |
|
32 |
% |
2,812 |
|
2,300 |
|
22 |
% |
| Natural gas sales |
1,106 |
|
995 |
|
11 |
% |
2,970 |
|
3,957 |
|
(25 |
%) |
| Total Oil, NGL, & Natural gas |
7,940 |
|
7,802 |
|
2 |
% |
29,214 |
|
20,778 |
|
41 |
% |
| Funds inflow (outflow) from operations |
4,313 |
|
4,000 |
|
8 |
% |
15,255 |
|
9,453 |
|
61 |
% |
| Per common share basic & FD ($) |
0.08 |
|
0.07 |
|
14 |
% |
0.28 |
|
0.20 |
|
40 |
% |
| Net earnings (loss) |
(13,348 |
) |
(593 |
) |
nm |
|
(11,945 |
) |
(4,173 |
) |
nm |
|
| Per common share basic & FD ($) |
(0.25 |
) |
(0.01 |
) |
nm |
|
(0.22 |
) |
(0.09 |
) |
Nm |
|
| Capital expenditures including deposits1 |
5,929 |
|
9,018 |
|
(34 |
%) |
43,386 |
|
52,720 |
|
(18 |
%) |
| Working capital (deficit) exit |
(33,871 |
) |
(5,732 |
) |
485 |
% |
(33,871 |
) |
(5,732 |
) |
485 |
% |
| Unused credit facilities |
21,192 |
|
22,000 |
|
(4 |
%) |
21,192 |
|
22,000 |
|
(4 |
%) |
| Production |
|
|
|
|
|
|
|
|
|
|
|
|
| Oil (bbls/day) |
738 |
|
687 |
|
7 |
% |
761 |
|
427 |
|
78 |
% |
| NGL (bbls/day) |
195 |
|
115 |
|
70 |
% |
156 |
|
98 |
|
59 |
% |
| Natural gas (mcf/day) |
3,430 |
|
3,123 |
|
10 |
% |
3,147 |
|
2,785 |
|
13 |
% |
| Total (boe/day ) (6:1) |
1,505 |
|
1,323 |
|
14 |
% |
1,442 |
|
989 |
|
46 |
% |
| Per 1 million common share basic & FD (boe/day )2 |
27.773 |
|
24.396 |
|
14 |
% |
26.610 |
|
20.951 |
|
27 |
% |
| Average realized price ($’s – production weighted) |
|
|
|
|
|
|
|
|
|
|
|
|
| Oil ($/bbl) |
82.26 |
|
97 |
|
(15 |
%) |
83.45 |
|
93.20 |
|
(10 |
%) |
| NGL ($/bbl) |
49.98 |
|
64.25 |
|
(22 |
%) |
49.97 |
|
64.29 |
|
(22 |
%) |
| Natural gas ($/mcf) |
3.51 |
|
3.46 |
|
1 |
% |
2.58 |
|
3.89 |
|
(34 |
%) |
| Average ($/boe) |
54.81 |
|
64.14 |
|
(15 |
%) |
55.02 |
|
57.56 |
|
(4 |
%) |
| Netback ($’s/boe) |
|
|
|
|
|
|
|
|
|
|
|
|
| Oil, natural gas and NGL sales |
54.81 |
|
64.14 |
|
(15 |
%) |
55.02 |
|
57.56 |
|
(4 |
%) |
| Royalties |
4.32 |
|
11.67 |
|
(63 |
%) |
6.70 |
|
9.97 |
|
(33 |
%) |
| Operating and transportation expenses |
11.32 |
|
14.41 |
|
(21 |
%) |
12.22 |
|
13.08 |
|
(7 |
%) |
| Operating netback |
39.17 |
|
38.06 |
|
3 |
% |
36.10 |
|
34.51 |
|
5 |
% |
| 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 |
|
54,190 |
|
0 |
% |
54,190 |
|
47,205 |
|
15 |
% |
| 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. |
Hyperion is a publically traded, junior light oil and gas company resulting from the recapitalization of Triple 8 Energy Ltd. in July 2010. Hyperion’s business strategy is to grow through acquisitions which lead to lower risk, scalable and repeatable, light oil, development drilling projects. Currently Hyperion has 54,190,359 common shares outstanding. 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 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.
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.
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.