Attached files
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8-K - CURRENT REPORT - MAGNUM HUNTER RESOURCES CORP | magnum_8k-021210.htm |
EX-3.1 - CERTIFICATE OF DESIGNATION - MAGNUM HUNTER RESOURCES CORP | magnum_8k-ex0301.htm |
EX-99.2 - PRO FORMA FINANCIAL INFORMATION - MAGNUM HUNTER RESOURCES CORP | magnum_8k-ex9902.htm |
EXHIBIT
99.1
NEWS RELEASE | FOR IMMEDIATE RELEASE |
MAGNUM
HUNTER RESOURCES
ANNOUNCES
FINAL CLOSING
ON
THE ACQUISITION OF
APPALACHIAN
BASIN FOCUSED
TRIAD
ENERGY
Houston – (Market Wire) – February
16, 2010 – Magnum Hunter Resources Corporation (NYSE Amex: “MHR” and
“MHR-PC”, the “Company”) announced today that the Company has closed on the
previously announced acquisition of privately-held Triad Energy Corporation and
affiliates (collectively “Triad”), an Appalachian Basin focused energy
company. The final closing announced today follows the January 28,
2010 announcement by Magnum Hunter that the United States Bankruptcy Court for
the Southern District of Ohio, Eastern Division had approved an order confirming
Triad Energy Corp.’s Plan of Reorganization which ratified and approved Magnum
Hunter’s Asset Purchase Agreement to acquire substantially all of the assets of
Triad and certain of its affiliated entities which was originally executed on
October 28, 2009.
The Triad
assets acquired primarily consist of oil and gas property interests in
approximately 2,000 operated wells and include over 88,000 net mineral acres
located in the states of Kentucky, Ohio, and West Virginia, a natural gas
pipeline (Eureka Hunter Pipeline), two salt water disposal facilities, three
drilling rigs, workover rigs, and other oilfield equipment.
Magnum
Hunter paid cash, issued restricted securities and refinanced Triad’s
outstanding debt obligations in the aggregate of approximately $81 million. The
$81 million total purchase price is broken out in components of (i) the
repayment of $55 million of Triad senior debt via drawing under the Company’s
existing $150 million revolving commercial bank commercial bank line of credit
($70 million borrowing base) and assuming approximately $3 million of equipment
indebtedness , (ii) issuance to Triad’s senior lenders of $15 million in Series
B Redeemable Convertible Preferred Stock with a 2.75% fixed coupon payable
quarterly and (iii) paying approximately $8 million in cash.
About
Triad Hunter, LLC and Affiliates
Triad
Energy Corporation was a 23 year old Reno, Ohio headquartered oil and natural
gas exploration and production company previously focused exclusively in the
Appalachian Basin with operations in Ohio, West Virginia and Kentucky. As of
June 30, 2009, supported by a reserve report prepared by an independent third
party engineering firm, Triad Energy had total proved reserves of approximately
5.2 MMBoe (69% crude oil and 69% classified as proved developed producing).
Triad had a present value on proved reserves discounted at 10% ($69.89 per Bbl
and $3.835 per Mcf) as of June 30, 2009 of $74.1 million. Daily production from
existing wells is approximately 1,000 Boe. The third party engineering report
does not reflect any future potential that may exist from the drilling of
horizontal wells in the Marcellus Shale formation on approximately 50,000 net
mineral acres.
The Company’s wholly owned subsidiary, Triad Hunter LLC, presently controls approximately 88,417 net mineral acres located in Ohio, West Virginia and Kentucky, with approximately 75% of this acreage classified as held by production “HBP”. Triad Hunter’s lease acreage position is concentrated and contiguous with the existing operations and production the Company acquired from Triad. Proved reserves and upside production potential is reflected in Triad’s mature oil fields currently under primary and secondary development, conventional fields with additional development and behind pipe potential and horizontal drilling of Triad Hunter’s Marcellus Shale acreage position.
Other
assets acquired in the closing include (i) oilfield service equipment (three air
drilling rigs, pole units, frac tanks, trailers, gang trucks, vacuum trucks,
etc.), (ii) two commercial salt water disposal facilities, and (iii) the control
of over 182 miles of existing natural gas pipelines and pipeline right-of-ways
(Eureka Hunter Pipeline). It is anticipated that the midstream assets can be
utilized to solve a portion of the existing Appalachian Basin regional takeaway
challenges and allow Magnum Hunter to significantly expand this natural gas
transportation and processing business to third parties.
Management
Comments
Mr. Gary
C. Evans, Chairman and Chief Executive Officer of the Company, commented, “We
are extremely pleased to announce final closing on the acquisition of the assets
of Triad Energy and its related entities. Magnum Hunter has already begun the
process of integrating Triad Hunter’s diverse group of assets and its employees
into our existing base of operations. Along with the tremendous upside we see
from an approximate 50,000 net mineral acreage position in the Marcellus Shale,
we believe there exists additional upside potential for value enhancement within
the existing Triad Hunter asset portfolio which also includes an evolving
horizontal play in the Huron formation. With establishment of this
new core area of operations for the Company, Magnum Hunter now has one of the
most cost effective ownership positions in the Appalachian Basin. We are
planning on drilling a minimum of two Marcellus horizontal wells on our acquired
acreage before mid-year adjacent to our existing pipeline. We have
recently begun the process of converting the newly acquired Eureka Hunter
Pipeline located in Northern West Virginia from a low pressure gathering system
with minimal throughput capacity, to one that can move up to 200 million cubic
feet per day of new gas capacity. The opportunity for booking
incremental new proven reserves in this region is substantial for Magnum Hunter
since no proved undeveloped reserves have previously been accounted for on our
Marcellus Shale acreage lease position.”
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 four”
emerging shale plays in the United States.
For more
information, please view our website at www.magnumhunterresources.com
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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, August 14, 2009 and November 16, 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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