Magnum Hunter Resources Corporation (NYSE: MHR) (NYSE Amex:
MHR-PrC) (NYSE Amex: MHR-PrD) ( the "Company" or "Magnum Hunter")
announced today that its wholly-owned subsidiary, Triad Hunter, LLC
("Triad Hunter"), has executed a definitive agreement and closed on
the acquisition of oil and gas properties and leasehold mineral
interests located in Wetzel County, West Virginia (the "Marcellus
Assets") for a cash purchase price of $20.0 Million. Magnum Hunter
funded the purchase price consideration with existing working
capital. Aggregate consideration is subject to certain post closing
adjustments based on title, indemnities and other specific matters.
The seller is a privately-held independent E&P company.
Description of the Marcellus Assets
The oil and gas properties acquired represent the non-operated
50% interest in a joint venture focused exclusively in Wetzel
County, West Virginia. Triad Hunter had previously announced on
December 27, 2010 the purchase of the operated 50% interest in
subject joint venture from PostRock Energy Corporation (NASDAQ:
PSTR). Triad Hunter has recently participated with Stone Energy in
the drilling of two new horizontal Marcellus wells on this mineral
acreage. The Lantz Mills Unit 2-#2H, a 4,800' lateral, and the
Lantz Mills Unit 3-#5H, a 5,300' lateral are owned 50% by Triad
Hunter. Both wells are scheduled for fracture stimulation in early
May. Additionally, Triad Hunter has recently drilled the top hole
of three new operated Marcellus wells (100% owned). The lateral
section of these wells is anticipated to be approximately 5,700'
each. First fracture stimulation is scheduled for mid June. Triad
Hunter will be the 100% owner and operator of the properties
acquired today. The Marcellus assets acquired include 2,225 net
contiguous acres in the geo- pressured Marcellus Shale. There are
20 identified horizontal drilling locations, of which only 7 gross
locations are currently booked as proved undeveloped locations.
Acreage being acquired has been de-risked with 7 producing
Marcellus wells located across the property. Based on the analysis
completed by the Company's third party reserve engineers as of
December 31, 2010, the acquired Marcellus Assets had total proved
reserves of approximately 11.5 Bcfe (16% proved developed
producing) with net production of approximately 517 Mcfe per day
(100% natural gas). The majority of future lease expirations across
the mineral acreage acquired can be extended through a manageable
drilling program during 2011 that is currently underway.
Management Comments
Mr. Gary C. Evans, Chairman and Chief Executive Officer of
Magnum Hunter, commented, "Today's acquisition announcement
represents another 'bolt on' acquisition in one of our Company's
three liquids rich unconventional resource play regions. We
consider the Marcellus Assets acquired to be accretive to
shareholders and will further expand our footprint in West
Virginia. Triad Hunter previously acquired the 50% operated
interest associated with these properties in December 2010.
Beginning with our entry into the Appalachia with our first
acquisition (Triad Hunter) in February 2010, the Company's overall
presence in the Appalachian Basin has been steadily increasing. We
plan to continue to be one of the most active drillers in
northwestern West Virginia. Furthermore, we have made the financial
commitments in the midstream area of gathering and processing to
realize the greatest value possible from each molecule of natural
gas produced. The Marcellus Assets acquired with this transaction
are within close proximity to our Eureka Hunter pipeline system and
planned expansions to this system currently in progress."
About Magnum Hunter Resources
Corporation
Magnum Hunter Resources Corporation is an independent oil and
gas company engaged in the acquisition, development and production
of oil and natural gas, primarily in the states of West Virginia,
North Dakota, and Texas. The Company is presently active in three
of the most prolific shale resource plays in the United States,
namely the Marcellus Shale, Eagle Ford Shale and Williston
Basin/Bakken Shale.
For more information, please view our website at
http://www.magnumhunterresources.com/
Forward-Looking Statements
The statements and information contained in this press release
that are not statements of historical fact, including all estimates
and assumptions contained herein, are "forward looking statements"
as defined in Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward looking statements include, among others,
statements, estimates and assumptions relating to the Company's
business and growth strategies, its oil and gas reserve estimates,
its ability to successfully and economically explore for and
develop oil and gas resources, its exploration and development
prospects, future inventories, projects and programs, expectations
relating to availability and costs of drilling rigs and field
services, anticipated trends in the Company's business or industry,
the Company's future results of operations, its liquidity and
ability to finance our exploration and development activities,
market conditions in the oil and gas industry and the impact of
environmental and other governmental regulation. In addition, with
respect to the Company's pending acquisitions of NGAS Resources,
Inc. ("NGAS") and NuLoch Resources Inc. ("NuLoch"), forward-looking
statements include, but are not limited to, statements regarding
the expected timing of the completion of the proposed transactions;
the ability to complete the proposed transactions considering the
various closing conditions; the benefits of such transactions and
their impact on the Company's business; and any statements of
assumptions underlying any of the foregoing. In addition, if and
when either proposed transaction is consummated, there will be
risks and uncertainties related to the Company's ability to
successfully integrate the operations and employees of the Company
and the acquired business. Forward-looking statements generally can
be identified by the use of forward-looking terminology such as
"may", "will", "could", "should", "expect", "intend", "estimate",
"anticipate", "believe", "project", "pursue", "plan" or "continue"
or the negative thereof or variations thereon or similar
terminology. These forward-looking statements are subject to
numerous assumptions, risks, and uncertainties. Factors that may
cause our actual results, performance, or achievements to be
materially different from those anticipated in forward-looking
statements include, among other, the following: adverse economic
conditions in the United States and globally; difficult and adverse
conditions in the domestic and global capital and credit markets;
changes in domestic and global demand for oil and natural gas;
volatility in the prices the Company receives for its oil and
natural gas; the effects of government regulation, permitting, and
other legal requirements; future developments with respect to the
quality of the Company's properties, including, among other things,
the existence of reserves in economic quantities; uncertainties
about the estimates of the Company's oil and natural gas reserves;
the Company's ability to increase its production and oil and
natural gas income through exploration and development; the
Company's ability to successfully apply horizontal drilling
techniques and tertiary recovery methods; the number of well
locations to be drilled, the cost to drill, and the time frame
within which they will be drilled; drilling and operating risks;
the availability of equipment, such as drilling rigs and
transportation pipelines; changes in the Company's drilling plans
and related budgets; and the adequacy of the Company's capital
resources and liquidity including, but not limited to, access to
additional borrowing capacity.
With respect to the Company's pending acquisitions, factors,
risks and uncertainties that may cause actual results, performance
or achievements to vary materially from those anticipated in
forward-looking statements include, but are not limited to, the
risk that either proposed transaction will not be consummated;
failure to satisfy any of the conditions to either proposed
transaction, such as in the case of the NGAS transaction the
inability to obtain the requisite approvals of the NGAS
shareholders and the Supreme Court of British Columbia, or in the
case of the NuLoch transaction the inability to obtain the
requisite approvals of NuLoch's shareholders, the Company's
stockholders and the Court of Queen's Bench of Alberta; adverse
effects on the market price of the Company's common stock or on its
operating results because of a failure to complete either proposed
transaction; failure to realize the expected benefits of either
proposed transaction; negative effects of announcement or
consummation of either proposed transaction on the market price of
the Company's common stock; significant transaction costs and/or
unknown liabilities; general economic and business conditions that
affect the companies following the proposed transaction; and other
factors. These factors are in addition to the risks described in
the Company's public filings made from time to time with the
Securities and Exchange Commission. Most of these factors are
difficult to anticipate and beyond the Company's control. Because
forward-looking statements are subject to risks and uncertainties,
actual results may differ materially from those expressed or
implied by such statements. Readers are cautioned not to place
undue reliance on forward-looking statements, contained herein,
which speak only as of the date of this document. Other unknown or
unpredictable factors may cause actual results to differ materially
from those projected by the forward-looking statements. Unless
otherwise required by law, the Company undertakes no obligation to
publicly update or revise any forward-looking statements, including
estimates, whether as a result of new information, future events,
or otherwise. The Company urges readers to review and consider
disclosures it make in its public filings made from time to time
with the Securities and Exchange Commission that discuss factors
germane to its business, including its Annual Report on Form 10-K
for the year ended December 31, 2010, as amended. All
forward-looking statements attributable to the Company are
expressly qualified in their entirety by these cautionary
statements.
Additional Information About the Proposed NuLoch Transaction
In connection with the proposed NuLoch transaction, the Company
has filed a preliminary proxy statement and will file a definitive
proxy statement with the Securities and Exchange Commission
("SEC"). The information contained in the preliminary filing is not
complete and may be changed. STOCKHOLDERS ARE
URGED TO READ THE DEFINITIVE PROXY STATEMENT WHEN IT BECOMES
AVAILABLE AND ANY OTHER RELEVANT MATERIALS FILED WITH THE SEC
CAREFULLY IN THEIR ENTIRETY BEFORE MAKING ANY VOTING OR INVESTMENT
DECISION WITH RESPECT TO THE PROPOSED TRANSACTION BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND
THE PARTIES THERETO.
The definitive proxy statement will be mailed to the Company's
stockholders seeking their approval of the issuance of the Company
shares as consideration for the proposed transaction, including the
Company shares issuable upon exchange of certain exchangeable
shares that may be issued in connection with the transaction. The
Company's stockholders may also obtain a copy of the definitive
proxy statement free of charge once it is available by directing a
request to: Magnum Hunter Resources Corporation at 832-369-6986 or
777 Post Oak Boulevard, Suite 650, Houston, Texas 77056 Attention:
Investor Relations. In addition, the preliminary proxy statement
is, and the definitive proxy statement and other relevant materials
filed with the SEC will be, available free of charge at the SEC's
website at www.sec.gov or stockholders may access copies of such
documentation filed with the SEC by the Company by visiting the
Investors section of the Company's website at
www.magnumhunterresources.com.
Participants in the Solicitation
The Company and its respective directors, executive officers and
other members of management and employees, under SEC rules, may be
deemed to be participants in the solicitation of proxies in
connection with the proposed transaction. Information regarding the
names, affiliations and interests of certain of the Company's
executive officers and directors in the solicitation is available
in the preliminary proxy statement for the Company's 2011 Annual
Meeting of Stockholders, which was filed with the SEC on March 16,
2011.
This document shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there by
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
The Company shares and the exchangeable shares to be issued in the
proposed transaction in exchange for NuLoch shares have not been
and will not be registered under the Securities Act of 1933, as
amended (the "Securities Act"), and may not be offered or sold in
the United States absent registration or an applicable exemption
from registration requirements. The Company intends to issue such
shares pursuant to the exemption from registration set forth in
Section 3(a)(10) of the Securities Act. The arrangement agreement
for the transaction contemplates that the issuance of the Company
shares upon exchange of the exchangeable shares will be registered
under the Securities Act.
Additional Information About the Proposed NGAS Transaction
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there by
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
In connection with the proposed NGAS transaction, NGAS has filed a
proxy statement and NGAS and the Company will file other relevant
materials with the SEC. INVESTORS AND SECURITY
HOLDERS OF NGAS ARE URGED TO READ THE PROXY STATEMENT AND ANY OTHER
RELEVANT MATERIALS FILED WITH THE SEC CAREFULLY AND IN THEIR
ENTIRETY BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH
RESPECT TO THE PROPOSED TRANSACTION BECAUSE THEY CONTAIN AND WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND
THE PARTIES THERETO.
Investors and security holders may obtain a free copy of the
proxy statement and any other documents filed by the Company and
NGAS with the SEC at the SEC's website at www.sec.gov. The proxy
statement and such other documents filed by NGAS may also be
obtained for free by contacting NGAS at 959-263-3948 or 120
Prosperous Place, Suite 201, Lexington, Kentucky 40509-1844 or by
visiting NGAS's website at www.ngas.com. Copies of any materials
filed by the Company may also be obtained for free by contacting
Magnum Hunter at 832-369-6986 or 777 Post Oak Boulevard, Suite 650,
Houston, Texas 77056 Attention: Investor Relations or by visiting
the Company's website at www.magnumhunterresources.com.
Participants in the Solicitation
The Company, NGAS and their respective directors, executive
officers and other members of management and employees, under SEC
rules, may be deemed to be participants in the solicitation of
proxies of NGAS shareholders in connection with the proposed
transaction. Investors and security holders may obtain more
detailed information regarding the names, affiliations and
interests of certain of the Company's executive officers and
directors in the solicitation by reading the preliminary proxy
statement for the Company's 2011 Annual Meeting of Shareholders,
which was filed with the SEC on March 16, 2011, and the proxy
statement of NGAS relating to the proposed transaction, and other
relevant materials filed with the SEC when they become available.
Investors and security holders may obtain more detailed information
regarding the names, affiliations and interests of NGAS's executive
officers and directors in the solicitation by reading the proxy
statement for NGAS's 2010 Annual Meeting of Shareholders, which was
filed with the SEC on April 29, 2010, and NGAS's proxy statement
relating to the proposed transaction which was filed with the SEC
on March 9, 2011, and other relevant materials to be filed with the
SEC when they become available. Certain executives and directors of
NGAS Resources, Inc. have interests in the proposed transaction
that may differ from the interests of NGAS's shareholders
generally, including benefits conferred under severance, retention
and change of control arrangements and continuation of director and
officer insurance and indemnification. These interests and any
additional benefits in connection with the proposed transaction are
described in the proxy statement.
Magnum Hunter Contact: M. Bradley Davis Senior Vice
President of Capital Markets bdavis@magnumhunterresources.com (832)
203-4545
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