Magnum Hunter Resources Corporation (NYSE Amex: MHR) (NYSE Amex:
MHR-PC) ("Magnum Hunter" or the "Company") announced today that its
wholly-owned subsidiary, Triad Hunter, LLC ("Triad Hunter"), has
executed a definitive agreement to acquire oil and gas properties
and leasehold mineral interests located in Wetzel and Lewis
Counties, West Virginia (the "Marcellus Assets"). The Seller of the
asset portfolio is PostRock Energy Corporation (NASDAQ: PSTR),
based out of Oklahoma City, Oklahoma.
Triad Hunter will acquire the Marcellus Assets for a total
purchase price of $39.75 million. The purchase price will be a
combination of (i) 50% in cash in the total amount of $19.875
million, and (ii) 50% payable in 3.2 million newly issued
restricted common shares of Magnum Hunter stock. The value of the
share consideration was based on the volume weighted average price
of the Company's common stock on the NYSE Amex for the 10
consecutive trading days prior to the date on which the parties
entered into the definitive agreement, or approximately $6.20 per
share. The 3.2 million new shares of restricted common stock to be
issued as consideration represents approximately 4.0% of the
Company's 79.2 million fully-diluted common shares outstanding as
of December 23, 2010. No debt will be assumed by Triad Hunter and
no other consideration beyond the cash component and the issuance
of new Magnum Hunter restricted common stock will be paid for the
Marcellus Assets.
The acquisition is subject to certain conditions and scheduled
to close in two phases, each of which is expected to be completed
by mid-January 2011. The first closing contemplates the sale of the
Wetzel County assets for $28 million and the second closing
contemplates the sale of the Lewis County assets for $11.75
million. Aggregate consideration is subject to adjustments based on
title, indemnities and certain other matters.
Description of the Marcellus Assets
The oil and gas properties will be 100% operated by Triad
Hunter. They consist of eight proved developed producing wells, six
developed non-producing wells (shut-in), two wells behind pipe, and
fifteen proved undeveloped locations. Based on the analysis
completed by the Company's in-house reservoir engineers, as of
November 1, 2010, the Marcellus Assets had total proved reserves of
approximately 24.3 Bcfe (11% proved developed producing) with net
production of approximately 905 Mcfe per day (100% natural gas).
The Company's in-house reservoir engineers estimate the Marcellus
Shale probable reserves of these assets total 165.4 Bcfe.
The total acreage being acquired by Triad Hunter includes
approximately 11,378 gross acres (8,652 net acres) located in
Wetzel (40% of gross acres and 27% of net acres) and Lewis
Counties, West Virginia. The majority of future lease expirations
across the acreage being acquired can be extended through a
manageable drilling program which is planned for early 2011. The
acquired acreage is located in the general proximity to Triad
Hunter's existing West Virginia Marcellus Shale exposure, more
specifically acreage located in Tyler, Pleasants, and Doddridge
Counties, West Virginia.
Management Comments
Mr. Gary C. Evans, Chairman and Chief Executive Officer of
Magnum Hunter commented, "Since our initial investment in this
region beginning with the acquisition of Triad Hunter earlier this
year, we have continued to expand our Company's exposure to this
resource play with a primary focus in West Virginia. This has been
accomplished via a combination of new leases, farm-in's, joint
ventures, and now this acquisition which further expands our
operations into two additional counties. We plan to be one of the
most active drillers in Northwest West Virginia in 2011 and have
made the financial commitments in the midstream area to realize the
greatest value possible from each molecule of natural gas produced.
All of these new assets are either within close proximity to our
existing Eureka Hunter pipeline system or adjacent to our expansion
plans for next year."
About Magnum Hunter Resources
Corporation
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. The Company is presently active in three of the "big five"
emerging shale plays in the United States.
For more information, please view our website at
http://www.magnumhunterresources.com/
Forward-Looking Statements
This press release contains statements concerning Magnum Hunter
Resources Corporation's expectations, beliefs, plans, intentions,
objectives, goals, strategies, future events or performance and
underlying assumptions and other statements that are not historical
facts. These statements and others contained in this presentation
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"), Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and the Private Securities
Litigation Reform Act of 1995 (the "Litigation Reform Act"). Actual
results may differ materially from those expressed or implied by
these statements. You can generally identify our forward-looking
statements by the words "anticipate", "believe", "continue",
"could", "estimate", "expect", "forecast", "goal", "intend", "may",
"objective", "plan", "potential", "predict", "projection",
"should", "will", or other similar words. Such forward-looking
statements relate to, among other things: (1) the Company's
proposed exploration and drilling operations on its various
properties, (2) the expected production and revenue from its
various properties, (3) the Company's proposed redirection as an
operator of certain properties and (4) estimates regarding the
reserve potential of its 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 various properties, (2)
positive confirmation of the reserves, production and operating
expenses associated with its various properties, (3) the general
risks associated with oil and gas exploration, development and
operations, 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 for the period
ended December 31, 2009 filed on March 31, 2010, and the Company's
Quarterly Reports on Form 10-Q for the quarters ending March 31,
2010, June 30, 2010 and September 30, 2010, filed on November 16,
May 17, 2010, August 12,2010 and November 12, 2010, respectively.
Magnum Hunter Resources Corporation cautions readers not to place
undue reliance on any forward-looking statements. Magnum Hunter
Resources Corporation does not undertake, and specifically
disclaims any obligation, to update or revise such statements to
reflect new circumstances or unanticipated events as they
occur.
Magnum Hunter Contact: M. Bradley Davis Senior Vice
President of Capital Markets bdavis@magnumhunterresources.com (832)
203-4545
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