There are 2 things I like about Hyperion Exploration HYX.V 0.425 [0.00]: the CEO and the Cardium land package.?? The Cardium might not be the sexiest play in the patch right now but that does not mean you can’t put together good quality assets and build shareholder wealth. I spoke with the CEO last week to get a feel on how operations were progressing and was not surprised to learn that the company is easily on track to hit their exit rate guidance for 2011.
HYX completed 2 net wells at Garrington that should be tied and on-stream by September 25th. The wells might potentially exceed the company’s type curve based on preliminary results. A 3rd well (0.6 net) at Buck Lake is scheduled for completion next week. The company will have 1 (0.6 net) well at Buck Lake and 2 net wells at Pembina left to drill for the balance of 2011. In my opinion, given the quality of management in setting expectations and by leaving the best for last (2xPembina wells @IP30 of 275), there’s a good chance the company will exceed its exit rate of 1,500 boe/d (67% liquids). I expect the next operational update to be released as soon as IP30 rates are??established.
Financially, the company is expecting to exit the year with a 0.8:1 debt to cash flow ratio. Following several marketing presentations, the CEO believes that the bulk of opportunity is currently in the junior space as institutional money will flow right back in as soon as fears of a potential recession die down. The market will reward those who prove their ability to execute and I believe HYX will be one of them. While oil has been surprisingly resilient, he does not expect notable improvement in natural gas prices this winter.ie prices might rise pressured by cold temperatures but there’s plenty of supplies to meet an uptick in demand.
HYX is not a complicated company to follow, in 3-4 months time the price will look different from current levels depending on the market’s sentiment. A brighter outlook coupled with success in execution will be very rewarding to shareholders while the share price won’t be pretty if we slip back into a recession regardless of execution.
What is your opinion on HYX?