Magnum Hunter Discusses Two Big Deals in the Works

By -
From Seeking Alpha's transcript of Magnum Hunter's quarter two earnings call comes this statement by CEO Gary Evans:
So let's now turn to the two most important things we've been working on. One is our Utica joint venture, and the second is our contemplated sale of our ownership interest in Eureka Hunter. 
So the Utica JV, we went through a long, prolonged process with a number of parties. We decided to choose one party predominantly based on economics related to their proposal, and those negotiations have been going on since March and here we are August. And I think it's important for you to understand that they have been very active negotiations. I can't even tell you the number for term sheets we're up to – in the twenties – but it's important for you to understand the depth and the level of the negotiations because we basically have been negotiating all the way to the definitive agreement. So we expect news of that in very short order, hopefully, early next week, and we will file 8-K according to that. We spent a whole lot of time looking at which wells we would drill, how we would do them and set the program to be a very, very good program and will help us prove-up acreage that we have over in Ohio. So we believe that we're very close. It's never done till the fat lady sings but there's been active, healthy negotiations and both parties are having great desire to complete the transaction. Citibank has been representing this on this matter since early in the year. 
The second item has due with our Eureka Hunter holdings divestiture. We were originally approached by one MLP, were kind of given a price range. They did a fair amount of work. We kind of gave them an opportunity to get to the number. We weren't satisfied with the number, so we went out to a broader group. It's a small though; it's less than seven. We presented to almost all of these parties. We've gotten three more bids now – or three total bids. We're expecting more over the weekend and this week. And so we will pick a horse probably by the end of the next week or at the latest the beginning of the following. All the parties are the parties that I think our shareholders will be happy that we would sell to. We believe that this is a tremendous asset. There's a lot of interest. We've been very, very selective on who we would show this to. We have chosen not to show it to our competitors, only entities that we believe can add value and can enhance the true asset that we've worked so hard to build over the last five years. 
So that transaction obviously is a major catalyst for Magnum Hunter. It allows us to significantly improve our liquidity position, and it's why the banks have been so good in working with us, unlike the lot of our peers. There are a number of companies that are going to have significant borrowing base reductions coming forward due to commodity prices and the greater scrutiny the Fed is putting on U.S. banks with energy loans. We don't have any of that. We were first movers in putting a second lien in last September/October. We were first mover into putting a small revolver in that had the restricted covenants that you would normally see removed, so it would give us time and flexibility. That doesn't happen if you don't have good assets. So even though our equity has been pummeled like many of our peers, look at the way our debt is trading. And our debtholders understand the quality of the asset base that Magnum Hunter has. We don't attract people like Keith Yankowsky having substandard assets.
Read much, much more by clicking here.

Columbus Business First reports that these two deals could bring $1 billion to Magnum Hunter:
The company expects to generate more than $500 million by selling its interest in its Eureka Hunter Midstream pipeline system. That could happen in as soon as three weeks, although a longer timeline is possible. 
The other deal is more likely to close sooner. A joint venture partnership for its Utica shale acreage should close early this week, executives from the Texas shale driller told analysts Friday in a second-quarter earnings call. It would bring in $450 million.
Connect with us on Facebook and Twitter!

Popular posts from this blog

Fracktivist in Dimock Releases Carefully Edited Video, Refuses to Release the Rest

By -
Image
From Energy in Depth: There is something very strange going on along Carter Road, in Dimock, Pennsylvania, and I’m not speaking of natural gas, methane migration, contamination, litigation or even the extensive water testing there by the EPA and others.  No, I’m talking about a new “Watergate” conspiracy, complete with 18 minutes of missing tape (well, video, actually). It seems the ever-present Green Party member and  naturist   Vera Scroggins  (a/k/a  Vera Duerga ) has posted a video of Craig Sautner meeting with the EPA.  Mysteriously, the video is but 14 seconds in length, cutting off conversation in what is obviously mid-stream.  It raises a question Craig Sautner, like  Ronald Reagan in Kings Row , might have asked, “Where’s the rest of me?’  Carter Road, isn’t Kings Row, of course, (at least not until you arrive at  the mansion Scott Ely, one of the Dimock litigants, is building with his royalty money ), but there appears to be...
Read more

The Second Largest Oil and Gas Merger - Cabot and Cimarex

By -
Image
       Due to investor pressure, the U.S shale drillers are being pushed to improve financial and operational performance after a few years of poor returns. Even though the industry has improved its numbers, when compared to last year, investors still want more to be done for them to earn more money.      That's why two mid-tier shale drillers, Cabot and Climarex, have decided to merge in order to eliminate $100 million in annual costs, which means more money for the investors. This all-stock transaction is valued at about $7.4 billion, which is relatively high for the oil and gas sector.      The new entity will be renamed and the headquarters located in Houston, Texas. Cabot shareholders will own 49.5 percent of the new entity, and Climarex the rest.       The Cimarex-Cabot merger will address the investor's demand for a higher amount of returning cash. The initial plan is to pay a 50-cent-per-share special dividen...
Read more

Do You Know The History of Fracking?

By -
Image
  In 2018, 59% of total oil production in the U.S came from hydraulic fracking, which means it accounted for more than two-thirds of domestically manufactured gas. By 2024, fracking will reach an astounding $68 billion market value! Of course, fracking is not a new drilling method as you can trace it back hundreds of years. That's why we want to consider the history of hydraulic fracturing (fracking). We will be stating historical facts about it and focusing on the major historical occurrences that have influenced modern-day fracking. Pre-Fracking Days The idea of fracking started back in 1862 when Edward A.L. Roberts (Civil War veteran) witnessed Confederate soldiers exploding artillery rounds into a canal that obstructed a battlefield. At the time, Edward A.L. Roberts called it superincumbent fluid tamping. On April 26th, 1865, Edward A.L. Roberts began experimenting with exploding torpedoes, which consisted of lowering a torpedo containing an amount of powder from fifteen to tw...
Read more