HOUSTON, TX, Nov 09 (MARKET WIRE) --
Magnum Hunter Resources Corporation (NYSE Amex: MHR) (the "Company")
announced operational and financial results today for the three and nine
month periods ended September 30, 2009.
OPERATIONAL UPDATE
The Company's average daily production for the month ended October 31,
2009 was approximately 750 Barrels of oil per day ("Boepd"), a 28%
increase in average daily production of 586 Boepd reported in the third
quarter of 2009. The Company is anticipating to exit fiscal year 2009
with an average daily production rate in excess of 900 Boepd as a result
of: (i) the successful drilling of three horizontal wells in the Mohall
Field of North Dakota, (ii) the acquisition of an additional working
interest in the East Chalkley Field of South Louisiana, (iii) the
acquisition of Sharon Resources, and (iv) the resumption of drilling
activities in the Cinco Terry Field of West Texas. With the anticipated
closing of the recent announcement to acquire the assets of Appalachian
Basin focused Triad Energy and certain Affiliates, currently scheduled in
January 2010, Magnum Hunter should exit January 2010 with a daily
production rate of approximately 1,800 Boepd. An 1,800 Boepd daily
production rate would represent an approximate 160% increase over the
Company's first nine months 2009 average daily production rate of 692
Boepd. Triad's estimated net total production for the quarter ended
September 30, 2009 was 90,481 Boe (983 Boepd, 59% crude oil).
Magnum Hunter's actual total net production for the three months ended
September 30, 2009 decreased approximately 6% or, 3,425 Boe (37 Boepd), to
approximately 53,927 Boe (586 Boepd) from 57,353 Boe (623 Boepd) produced
during the comparable three month period of 2008. The third quarter 2009
decline in production levels can be directly attributable to extraordinary
factors including: (i) a 10 day complete shut-in of all production at the
Company's Mohall Field in North Dakota for purposes of verifying the
fields response level to secondary recovery efforts from ongoing water
flood operations, (ii) the additional shut-in of selective individual
producing wells within the Mohall Field to allow for required expansion
activities to the field's production facilities in order to accommodate
new incremental production added from three successful horizontal wells
drilled in the field during the third quarter, and (iii) the separate
shut-in of certain producing wells within the Mohall Field for various
safety reasons to allow for the above mentioned drilling activities.
The Company has drilled six wells (gross) thus far in the fourth quarter
of 2009 with two drilling rigs currently running.
FINANCIAL AND OPERATIONAL RESULTS FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2009
Magnum Hunter reported a net loss of $3.1 million, or ($0.08) per basic
and fully diluted shares outstanding for the third quarter of 2009, as
compared to 2008's third quarter net loss of $535.5 thousand, or ($0.01)
per basic and fully diluted shares outstanding. The loss reported in the
third quarter of 2009 is primarily attributable to the substantial
decline in the realized price for crude oil (down 44%, from $106.33 per
Bbl. to $59.53 per Bbl.) and realized natural gas prices (down 66%, from
$7.34 per Mcf to $2.52 per Mcf) when compared to the third quarter of
2008. Total revenues for the three months ended September 30, 2009 and
September 30, 2008 were $2.3 million and $6.0 million, respectively.
The Company reported an increase in general and administrative expenses as
compared to the third quarter of 2008 of $1.5 million. The general and
administrative expense increase for the third quarter of 2009 was due to:
(i) non-recurring transactional expenses associated with the acquisition
of Sharon Resources, Inc. and Triad, (ii) non-recurring expenses
associated with the acquisition of an additional working interest in the
Company operated East Chalkley Field, located in Cameron Parish,
Louisiana, and (iii) non-recurring expenses during the third quarter of
2009 associated with certain changes in the senior management of the
Company and the vesting of incentive stock options due to performance.
The Sharon Resources acquisition was closed by the Company on the last
day of the quarter or September 30, 2009. Total consideration paid by
Magnum Hunter for Sharon Resources was 2.3 million of the Company's
restricted common shares. Total consideration paid by Magnum Hunter for
the East Chalkley additional working interest was approximately $1.7
million in cash. The effective date for the East Chalkley acquisition was
July 1, 2009 with the actual closing occurring on October 15, 2009.
Magnum Hunter reported a net loss of $7.8 million, or ($0.21) per basic
and fully diluted shares outstanding for the nine months ended September
30, 2009 as compared to a net loss of $4.1 million, or ($0.11) per basic
and fully diluted shares for the nine months ended September 30, 2008.
The net loss for the nine months ended September 30, 2009 is also
attributable to the aforementioned substantial decline in crude oil and
natural gas prices, lower production in the Mohall Field of North Dakota
from the required operational shut-in of field production as described
above, and the aforementioned non-recurring expenses.
Operating cash flow (before changes in working capital accounts) generated
by Magnum Hunter during the first nine months of 2009 was approximately
$1.0 million compared to $4.0 million generated by the Company during the
first nine months of 2008. Magnum Hunter's operating cash flow (before
changes in working capital accounts) was positively impacted during the
first nine months of 2008 from a non-recurring cash flow add back of a
loss on the extinguishment of debt in the amount of $2.8 million during
fiscal year 2008.
NEW FINANCINGS UPDATE
On October 26, 2009, Magnum Hunter announced that the Company received a
commitment for a new $150 million three-year term senior secured revolving
credit facility (the "new bank facility") provided by the Bank of Montreal
("BMO"). This new bank facility will be used for general corporate
purposes including the acquisition of crude oil and natural gas
properties. An initial borrowing base of $25 million has been
established. Based on values assigned to crude oil and natural gas
properties which may be either acquired or discovered over time, the
Company's borrowing base may be increased up to a maximum of $150 million
in commitment level. The Company's senior management team is working with
a number of additional financial institutions that will possibly
participate in this new credit facility once closed.
The Company filed a Form 8-K with the Securities and Exchange Commission
(the "SEC") on November 5, 2009 announcing that Magnum Hunter had issued
and sold, for gross proceeds of approximately $3.8 million, an aggregate
of 2.3 million shares of the Company's common stock, together with one
fifth of a warrant to purchase one share of the Company's common stock
for each share of common stock purchased. Each warrant issued to a
purchaser will (i) be exercisable for one share of the Company's common
stock at any time after the shares of common stock underlying the warrant
are registered with the SEC for resale pursuant to an effective
registration statement, (ii) have a cash exercise price of $2.50 per
share of the Company's common stock, and (iii) upon notice to the holder
of the warrant, be redeemable by the Company for $0.01 per share of the
Company's common stock underlying the warrant if (a) the Registration
Statement as filed with the SEC is effective and (b) the average trading
price of the Company's common stock as traded and quoted on the NYSE Amex
equals or exceeds $3.75 per share for at least 20 days in any period of
30 consecutive days. The Company's common stock purchased in this
transaction is being issued pursuant to a prospectus supplement filed
with the SEC in connection with a takedown from the Company's existing
$100 million universal shelf registration statement on Form S-3, which
became effective on October 15, 2009. Purchasers of this issuance of
common shares by the Company included, amongst others, Magnum Hunter's
Chairman, Vice Chairman, Executive Vice President and Chief Financial
Officer, and three other members of the Company's Board of Directors.
With a combination of cash currently on hand ($2.3 million of cash as of
September 30, 2009), the Company's anticipated cash flow from operations
through year-end 2009, net proceeds from the above described recent sale
of the Company's common shares, and an expected borrowing base
availability revision under the new $150 million senior secured credit
facility with BMO ($27 million of senior secured debt was outstanding as
of September 30, 2009), Magnum Hunter believes it has adequate cash
liquidity to meet all of the Company's existing capital expenditures and
other capital requirements through the balance of fiscal year 2009 and
beginning 2010.
TRIAD ACQUISITION
Magnum Hunter announced on October 29, 2009 that the Company had entered
into a definitive agreement with an Appalachian Basin energy company,
privately-held Triad Energy Corporation and certain Affiliates
(collectively "Triad"), to purchase substantially all of Triad's oil and
gas exploration and production operating assets. The $81 million total
purchase price consists of (i) the assumption and refinancing of
approximately $58 million of Triad senior debt owed to secured lenders,
(ii) the issuance of $15 million of the Company's Redeemable Convertible
Preferred Stock with a 2.75% fixed coupon payable quarterly and (iii) the
payment of up to $8 million in cash. The Triad transaction is currently
expected to close in January 2010.
MANAGEMENT COMMENTS
Mr. Gary C. Evans, Chairman of the Company, commented, "The third quarter
of 2009 was really a transitional period for Magnum Hunter. We completed
several small acquisitions, drilled or participated in 3 gross new wells,
all of which were successful, and positioned the company for strong growth
in 2010. With the Company's new management team executing on its strategic
plan, we would anticipate our future financial and operational results to
be reflective of our ongoing efforts to create incremental value for our
shareholders. Our vision for Magnum Hunter remains firm on committing the
Company's resources to focusing on operations and strategic property
acquisitions in known geologic regions while increasing our exposure to
certain shale resource plays in the United States. Our recent Sharon
acquisition with its approximately 7,400 net acres in the oil-leg of the
rapidly expanding Eagle Ford Shale play and our pending Triad acquisition
with its approximate 47,000 net acre exposure to the emerging Marcellus
Shale play in the Appalachian Basin, are two new resource plays that
should have significant impact on our Company beginning in 2010. We
continue to see a tremendous amount of deal flow from the mergers and
acquisitions market, particularly in the distressed asset arena. Our
primary focus in the short term will be on closing the Triad acquisition
and integrating their asset base into our expanding production profile."
MAGNUM HUNTER RESOURCES CORPORATE PROFILE
Magnum Hunter Resources Corporation and subsidiaries are a Houston, Texas
based independent exploration and production company engaged in the
acquisition of exploratory leases and producing properties, secondary
enhanced oil recovery projects, exploratory drilling, and production of
oil and natural gas in the United States.
For more information, please view our website at http://
www.magnumhunterresources.com
FORWARD-LOOKING STATEMENTS
The statements contained in this press release that are not historical are
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
including statements, without limitation, regarding the Company's
expectations, beliefs, intentions or strategies regarding the future. Such
forward-looking statements may relate to, among other things: (1) the
Company's proposed exploration and drilling operations on its and Triad's
various properties, (2) the expected production and revenue from its and
Triad's various properties, (3) the Company's proposed redirection as an
operator of certain properties and (4) estimates regarding the reserve
potential of its and Triad's various properties. These statements are
qualified by important factors that could cause the Company's actual
results to differ materially from those reflected by the forward-looking
statements. Such factors include but are not limited to: (1) the
Company's ability to finance the continued exploration, drilling and
operation of its and Triad's various properties, (2) positive confirmation
of the reserves, production and operating expenses associated with its and
Triad's various properties; and (3) the general risks associated with oil
and gas exploration, development and operation, including those risks and
factors described from time to time in the Company's reports and
registration statements filed with the Securities and Exchange Commission,
including but not limited to the Company's Annual Report on Form 10-K,
Form 10-K/A and Form10-K/A for the year ended December 31, 2008 filed
with the Securities and Exchange Commission on March 31, 2009, April 29,
2009 and September 11, 2009, respectively, and the Company's Quarterly
Reports on Form 10-Q for the quarters ending March 31, 2009 and June 30,
2009, filed on May 11, 2009 and August 14, 2009, respectively. The
Company cautions readers not to place undue reliance on any
forward-looking statements. The Company does not undertake, and
specifically disclaims any obligation, to update or revise such
statements to reflect new circumstances or unanticipated events as they
occur.
Contact:
M. Bradley Davis
Senior Vice President of Capital Markets
bdavis@magnumhunterresources.com
(832) 203-4545
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