HOUSTON, TX--(Marketwire - May 25, 2010) - Magnum Hunter Resources Corporation (
Terms of the new Joint Agreement include Magnum Hunter and Hunt Oil working together within the AMI on an equal and joint basis throughout these two South Texas counties for a period up through December 2014. Both companies have cross-assigned existing ownership interests in their respective lease acreage positions for both Lavaca and Gonzales Counties. Additionally, Magnum Hunter and Hunt Oil will share all future leasing, exploration, drilling, completion and development costs and other expenses in the AMI on a "fifty-fifty" basis. Each company has also agreed to allow the other company to be the designated operator for all wells on lease acres specifically contributed by each company to the AMI under the Joint Agreement. It is the intent of both companies that all new wells to be drilled under the Joint Agreement within the AMI will be horizontal Eagle Ford Shale wells.
The Joint Agreement covers 28,187 (gross acres) and 26,822 (net acres) with 50% ownership interest owned by each company being 14,094 (gross acres) and 13,411 (net acres).
The Joint Agreement potentially allows for two wells to be drilled on the joint acreage position within the AMI during 2010. One of the first two exploratory wells to be drilled will be the Magnum Hunter operated "Gonzo Hunter #1-H" well located in Gonzales County. The "Gonzo Hunter #1-H" well is currently anticipated to be spudded around the first of June 2010. The Joint Agreement allows for the option of a second well to be drilled on the Hunt Oil acreage in the AMI during 2010 with Hunt Oil as operator. It is presently anticipated that Magnum Hunter and Hunt Oil will own a 50.0% working interest in each of the contemplated wells.
Magnum Hunter has allocated approximately $30.7 million out of its fiscal year 2010 total capital expenditure budget of $55.0 million (55.7% of the total capex budget) for the Eagle Ford Shale oil-window of South Texas. Approximately $10.6 million out of the $30.7 million capex budget for 2010 will be for purposes of horizontally drilling three unbooked Eagle Ford Shale exploratory locations. The balance of the Company's 2010 capex budget is dedicated to the Eagle Ford Shale play for additional leasing related activities that are currently ongoing.
Management Comments
Mr. H.C. "Kip" Ferguson, Executive Vice President of Exploration of Magnum Hunter, commented, "We are extremely pleased to announce the execution of this Joint Agreement with Hunt Oil Company today and the establishment of an AMI for Gonzales and Lavaca Counties, Texas. Very few companies in our industry enjoy such a tremendous reputation for success, highly regarded ethical standards, and a 76 year commitment to operational and technical excellence as does Hunt Oil. The Joint Agreement and AMI announced today will allow Magnum Hunter to spread our exploratory risk over a larger number of prospects in an area of the Eagle Ford Shale play we believe to be especially prospective based on recent well data released by EOG Resources, Inc. (NYSE: EOG). With spudding of the "Gonzo Hunter #1-H" exploratory well scheduled for early June, we are hopeful that Magnum Hunter's early and continuing efforts in this emerging unconventional play will add significant incremental shareholder value for fiscal year 2010 and beyond."
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 http://www.magnumhunterresources.com/
About Hunt Oil Company
Hunt Oil Company, an affiliate of Hunt Consolidated, Inc. which is a part of the Hunt family of companies directed by Ray L. Hunt, headquartered in Dallas, Texas, was founded in 1934 and today is one of the leading privately held independent energy companies. Hunt Oil Company, its subsidiaries and affiliated entities, engage in oil and gas exploration and production activities in the United States, Canada, Yemen, Peru and a number of other countries. In addition, Hunt is integrally involved in the start-up of major liquefied natural gas (LNG) projects in Yemen and Peru.
For more information, please view Hunt Oil's website at http://www.huntoil.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, 2009, June 30, 2009, and September 30, 2009 filed on May11, 2009, August 14, 2009, and November 16, 2009, 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.
Contact Information:
Contact:
M. Bradley Davis
Senior Vice President of Capital Markets
bdavis@magnumhunterresources.com
(832) 203-4545