Significant Reserve Growth in 2012 Hyperion Exporation Corp. Announces Significant Reserve Growth in 2012, Operations Update for Niton/McLeod, and Fourth Quarter and Year End 2012 Financial Results
CALGARY, ALBERTA--(Marketwired - April 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) ---------------------------------------- Before Tax Net Present Value Light Oil NGL's Gas Boe's Discounted at (Mbbl) (Mbbl) (MMcf) (Mboe) 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 $97,948.4 ---------------------------------------------------------------------------- 2012 Reserve Addition Metrics, Including Change in Future Development Capital(3) ----------------------------------------------------------------------------Category Finding & Development Cost, including change in Finding, Development & Future Future Acquisition Cost, including Development Development change in Future Development Capital Capital Capital ($/boe) ($000's) ------------------------------ Including Land Excluding Land Acquisitions Acquisitions ($/boe) ($/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. Financial Highlights ---------------------------------------------------------------------------- 3 Months Ended December 12 Months Ended 31 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 ($) (0.25) (0.01) nm (0.22) (0.09) Nm ----------------------------------------------------------------------------Capital expenditures including deposits(1) 5,929 9,018 (34%) 43,386 52,720 (18%)----------------------------------------------------------------------------Working capital (deficit) exit (33,871) (5,732) 485% (33,871) (5,732) 485% ----------------------------------------------------------------------------Unused credit facilities 21,192 22,000 (4%) 21,192 22,000 (4%)----------------------------------------------------------------------------Production ----------------------------------------------------------------------------Oil (bbls/day) 738 687 7% 761 427 78% ----------------------------------------------------------------------------NGL (bbls/day) 195 115 70% 156 98 59% ----------------------------------------------------------------------------Natural gas (mcf/day) 3,430 3,123 10% 3,147 2,785 13% ----------------------------------------------------------------------------Total (boe/day ) (6:1) 1,505 1,323 14% 1,442 989 46% ----------------------------------------------------------------------------Per 1 million common share basic & FD (boe/day )(2) 27.773 24.396 14% 26.610 20.951 27% ----------------------------------------------------------------------------Average realized price ($'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 period(3) 54,190 54,190 0% 54,190 54,190 0% ----------------------------------------------------------------------------Weighted average basic and fully diluted common shares o/s(3) 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".