Hyperion Exploration to Exceed its 2011 Guidance

Hyperion Exploration released initial results today for 3 wells, 2 in Garrington and 1 in Buck Lake. The results are very encouraging and likely to exceed the conservative type curve set by the company:

Area Well (WI %) Status 3 day Average 7 day Average

14 day Average

24 Hour Rate
30 Day Type Curve?
Garrington 8-27
(100 %)
Producing 418 boe/d
82% oil
413 boe/d
86% oil
530 boe/d
90% oil
194 boe/d
84% oil
Garrington 9-27 (100 %) Producing 1,444 boe/d
89% oil
1,008 boe/d
88 %
744 boe/d
89% oil
630 boe/d
91% oil
194 boe/d
84% oil
Buck Lake 4-16
(60 %)
Testing 624 boe/d
64% oil
632 boe/d
61% oil
176 boe/d
92% oil

The key to exceeding their exit production lies not in the flush rates reported above, it lies in the completion method that more and more Cardium players are using: slick water completion. Notice the difference in IP rates between well 8-27 using water based foam for fracking and 9-27 using Slick Water for fracking. The current type curve for all their wells was built on oil based fluids used to simulate the formation.

?Hyperion expects to use slick water fracs for future well stimulation at Garrington.?

Hyperion is saving it?s best for last in their drill program and ?that?s Pembina where they have 2 net wells to drill with an expected 30 day type curve of 275 boe/d. These wells will be simulated with slick water as well which in my opinion will result in blowing away the type curve and exiting the year at much higher than 1500 boe/d. The first well is currently drilling to be followed by the second well in Q4.

This is what I love about companies like HYX, they know how to manage expectations and it sometimes gives them a lot of maneuvering ground. For example, in this scenario, the company might be able to meet its exit guidance without needing to drill the last Pembina well if market conditions deteriorate further.

Hyperion HYX.V 0.375 [-0.015] has been cut to pieces by Mr. Market but that doesn?t bother me at all. Flow Through shares were bought at $1.80 per share when the market price was $0.50, a huge vote of confidence in this company. The turbulence will pass and I will be there to reap the benefits sooner or later.

Here?s a link to the news release.

Do you agree the company is likely to overdeliver this year?