CALGARY, ALBERTA -- (Marketwired) -- 07/17/13 -- Hyperion Exploration Corp. ("Hyperion" or the "Company") (TSX VENTURE: HYX) announces the renewal of its banking facilities, operations update and 2013 guidance.
RENEWAL OF BANK FACILITIES
As a result of the scheduled lending review with its credit provider, the lending limits of its existing banking facilities have been revised to $46.0 million from $50.0 million. The Company's revolving operating facility has been revised to a borrowing limit of $36.0 million from $40.0 million. The acquisition/development facility remains at a borrowing limit of $10.0 million.
The revised facilities focuses Hyperion's 2013 drilling program to certain non-operated partner wells and the necessary farm-in earning wells in the Niton/McLeod area.
Hyperion plans to spud its next Cardium, light oil horizontal well, in late July 2013. This well will be the third earning well on the previously announced 8,000 acre farmin in the Niton/McLeod area and is expected to evaluate the productivity of some of the thickest net pay seen by the Company in the area.
In the second quarter, Hyperion's technical team's efforts were focused on reducing well costs through more efficient drilling, completion, and tie-in methods. Hyperion expects to reduce future capital costs per well by up to 10% from prior results. The first well on a new 4 well drilling pad is expected to cost $3.3 million versus $3.7 million as on previous wells. The first well carries the cost of the lease road, multi-well pad and solution gas sales pipeline.
Based on initial success achieved by industry with drilling extended reach Cardium horizontal wells, Hyperion believes the use of extended reach horizontal wells at Niton/McLeod has the potential to be a game changer for improving capital efficiency and project economics. 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 of horizontal pay) with the opportunity for longer wells based on success. Hyperion's analysis of actual performance of similar long reach wells indicates a significant enhancement in production, reserves and capital efficiency. 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), reserves of 220 mboe (83 % light oil/NGL). The short horizontal wells have an IP30 of 160 boe/d (90 % light oil/NGL), reserves of 148 mboe (83 % light oil/NGL). On stream capital cost for the long reach horizontal on a full development basis are expected to average $3.8 million versus the comparable short horizontal well at $2.7 million.
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's inactivity in the field late in the first quarter and in the second quarter was a result of several factors. Hyperion executed the drilling of four Cardium horizontal light oil drills in its new area of Niton/McLeod between October 2012 and January 2013. The Company felt that it was critical to establish the productivity profile for these wells before committing to a subsequent drill program. Furthermore, challenging capital markets specific to junior oil and gas in Canada required Hyperion to be financially prudent with its use of debt. Finally, as a result of Hyperion's ongoing objective to be a leader in capital efficiency, Hyperion specifically limited its operations during spring break up and into June to maintain base production levels. Despite these efforts, Hyperion's second quarter production was negatively impacted by approximately 75 boe/d. This was directly the result of limited access to producing wells attributable to wet roads and third party facility maintenance/downtime.
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