Magnum Hunter Resources Announces New Shale Play Entry
HOUSTON, TX -- (Marketwire) -- 08/08/12 -- Magnum Hunter Resources Corporation (MHR) (NYSE MKT: MHR.PRC) (NYSE MKT: MHR.PRD) ("Magnum Hunter" or the "Company") announced today that the Company has closed on the acquisition of 1,885 net mineral acres located in Atascosa County, Texas for approximately $2.35 million, implying a net per acre cost of $1,246. With this acquisition, the Company now has approximately 7,278 gross acres and 5,212 net acres located in Atascosa County, Texas.
The acquired acreage has both Eagle Ford Shale and Pearsall Shale potential and gives the Company approximately 10 additional net drilling locations in the Pearsall Shale and 10 - 13 additional net drilling locations in the Eagle Ford Shale. This now gives the Company approximately 40 net Pearsall locations assuming 750' spacing within its Atascosa core area. The Company spud its first well on the acquired acreage on August 4, 2012 and will drill vertically to the run logs and cores for a full formation evaluation on the Pearsall Shale. This well will then be drilled horizontally and completed in the Eagle Ford Shale.
The Company's Atascosa core area appears to have an ideal geologic setting for the Pearsall development. Management believes the area to be located within the "wet gas to rich condensate window." The area is bound by the Charlotte fault trend eight miles to the north and the Karnes fault trend to the south. The Pearsall Shale is located about 2500' beneath the Eagle Ford Shale and is approximately 500-600' in thickness. Composed of interbedded organic shale, silica and limestone, the Pearsall Shale is similar in composition to the Eagle Ford Shale.
Commenting on Magnum Hunter's entry into a fifth shale play, Mr. Gary C. Evans, Chairman and CEO, stated, "As mentioned in our Second Quarter 2012 Operations Update press release dated July 31, 2012, the Company is actively reviewing additional acreage expansion opportunities throughout the South Texas region where we continue to successfully develop our leasehold position in the Eagle Ford. We are consistently approached by industry participants with expansion opportunities due to the knowledge and experience we have gained over the past three years. Our management team has proven its ability to react quickly and efficiently in our effort to acquire additional acreage and existing properties at a favorable cost structure compared to our peers. Magnum Hunter has been fortunate to report some of the highest initial production rates of any company in the oil window of the Eagle Ford to-date. Additionally, our ultimate recoveries are approaching 500,000 bbls of oil equivalent per well. We have been monitoring the Pearsall Shale developments for almost a year now. We are excited about the prospects for future development of the evolving Pearsall Shale play and anticipate additional expansion of our existing leasehold position in this region. We are not increasing our capital budget for the Eagle Ford Division at this time, but merely shifting capital allocation to Atascosa County in order to complete these initial tests."
About Magnum Hunter Resources Corporation
Magnum Hunter Resources Corporation is an independent exploration and production company engaged in the acquisition, development and production of crude oil, natural gas and natural gas liquids, primarily in West Virginia, Kentucky, Ohio, Texas, North Dakota and Saskatchewan, Canada. The Company is active in five of the most prolific unconventional shale resource plays in North America, namely the Marcellus Shale, Utica Shale, Eagle Ford Shale, Pearsall Shale and Williston Basin/Bakken Shale. Magnum Hunter Resources is based in Houston, Texas. For more information, visit www.magnumhunterresources.com.
The statements and information contained in this press release that are not statements of historical fact, including any estimates and assumptions contained herein, are "forward looking statements" as defined in Section 27A of the Securities Act of 1933, as amended, referred to as the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, referred to as the Exchange Act. These forward-looking statements include, among others, statements, estimates and assumptions relating to our business and growth strategies, our oil and gas reserve estimates, our ability to successfully and economically explore for and develop oil and gas resources, our exploration and development prospects, future inventories, projects and programs, expectations relating to availability and costs of drilling rigs and field services, anticipated trends in our business or industry, our future results of operations, our liquidity and ability to finance our exploration and development activities and our midstream activities, market conditions in the oil and gas industry and the impact of environmental and other governmental regulation. In addition, with respect to any pending acquisitions described herein, 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 any 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 others, the following: adverse economic conditions in the United States, Canada 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 we receive for our oil and natural gas; the effects of government regulation, permitting and other legal requirements; future developments with respect to the quality of our properties, including, among other things, the existence of reserves in economic quantities; uncertainties about the estimates of our oil and natural gas reserves; our ability to increase our production and oil and natural gas income through exploration and development; our ability to successfully apply horizontal drilling techniques; the effects of increased federal and state regulation, including regulation of the environmental aspects, of hydraulic fracturing; 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 our drilling plans and related budgets; regulatory, environmental and land management issues, and demand for gas gathering services, relating to our midstream operations; and the adequacy of our capital resources and liquidity including, but not limited to, access to additional borrowing capacity.
These factors are in addition to the risks described in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's 2011 annual report on Form 10-K, as amended, filed with the Securities and Exchange Commission, which we refer to as the SEC. Most of these factors are difficult to anticipate and beyond our control. Because forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such statements. You 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, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We urge readers to review and consider disclosures we make in our reports that discuss factors germane to our business. See in particular our reports on Forms 10-K, 10-Q and 8-K subsequently filed from time to time with the SEC. All forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements.
Contact: Gabe Scott Vice President -- Capital Markets and Corporate Development email@example.com (832) 203-4539
Source: Magnum Hunter Resources