Magnum Hunter Resources Corporation (NYSE: MHR) (NYSE Amex:
MHR-PrC) (NYSE Amex: MHR-PrD) (the "Company" or "Magnum Hunter")
announced today that the Company has closed on a new $250 million
five-year term senior secured revolving credit facility (the "New
Bank Facility"). The new borrowing base (the "New Borrowing Base")
has been established at $145 million. The initial borrowing base
has been set at $120 million upon the completion of the Company's
acquisition of NGAS Resources, Inc. (NASDAQ: NGAS) ("NGAS"), which
is closing today. The borrowing base shall increase to the New
Borrowing Base level of $145 million upon the closing of the
Company's acquisition of Williston Basin focused NuLoch Resources,
Inc. (TSX-V: NLR) (PINKSHEETS: NULCF) ("NuLoch"), which is expected
to occur on or about April 29, 2011. Borrowings under the New Bank
Facility will be used for general corporate purposes, including
development of existing oil & gas properties.
The New Bank Facility provides for a semi-annual redetermination
of the borrowing base, which is based on the value assigned to the
Company's proved crude oil and natural gas reserves as determined
by third party engineering consultants. The New Borrowing Base has
been established based upon the proved reserve values as of
December 31, 2010 from a combination of NGAS's, NuLoch's, and the
Company's total proved reserves. Based on values assigned to crude
oil and natural gas properties which may be either acquired or
drilled over time, the Company's borrowing base may increase up to
the maximum $250 million commitment level. The New Bank Facility
replaces Magnum Hunter's $150 million three-year term secured
revolving credit facility, which had a borrowing base of $71.5
million. The New Bank Facility also provides for an interest rate
margin ranging from LIBOR plus 2.25% to LIBOR plus 3.25% depending
on the level of outstanding borrowings at any given time under the
New Bank Facility, which is a lower cost of funds than the prior
senior bank facility.
Bank of Montreal serves as the "Administrative Agent" under the
facility, with Capital One, N.A. serving as "Syndication Agent,"
Amegy Bank National Association, KeyBank National Association and
UBS Securities LLC serving as "Co-Documentation Agents" and BMO
Capital Markets serving as Lead Arranger and Sole Bookrunner. New
participating banks that have been added to the facility are
Citibank, N.A., Credit Suisse AG, Deutsche Bank Trust Company
Americas, and Union Bank, N.A.
Management Comments
Mr. Ronald D. Ormand, Executive Vice President and Chief
Financial Officer of Magnum Hunter, commented, "Our Company's new
bank facility validates the incremental asset value that has been
created from a combination of our acquisition and drilling efforts.
The Company's previously announced fiscal year 2011 drilling and
development capital expenditure budget of $150 million is expected
to increase by a minimum of $80 million as a result of the NGAS and
NuLoch transactions. The 2011 capital budget will be funded using a
combination of the following sources: (i) liquidity from undrawn
borrowings under the new bank facility including cash; (ii)
increased cash flows from operating activities; (iii) divestitures
of non-strategic assets; (iv) non-recourse debt and/or equity
financing for the future development costs associated with the
Eureka Hunter pipeline gathering system and processing facility;
and (v) continued issuance of the Company's Series 'D'
non-convertible perpetual preferred stock under the Company's
'At-The-Market' sales program under our existing shelf registration
statement. Magnum Hunter has no plans to issue additional common
equity in fiscal 2011. We appreciate the continued support of our
existing bank group and we welcome the addition of four new banks
to the syndicate which include Citibank, Credit Suisse, Deutsche
Bank, and Union Bank."
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 acquisition of NuLoch Resources
Inc. ("NuLoch"), forward-looking statements include, but are not
limited to, statements regarding the expected timing of the
completion of the proposed transaction; the ability to complete the
proposed transaction considering the various closing conditions;
the benefits of such transaction and its impact on the Company's
business; and any statements of assumptions underlying any of the
foregoing. In addition, if and when the 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 acquisition, 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 the proposed transaction will not be consummated; failure
to satisfy any of the conditions to the proposed transaction, such
as 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 the proposed
transaction; failure to realize the expected benefits of the
proposed transaction; negative effects of announcement or
consummation of the 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 definitive proxy statement with the Securities and
Exchange Commission ("SEC"). STOCKHOLDERS ARE
URGED TO READ THE DEFINITIVE PROXY STATEMENT 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 has been 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 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 definitive proxy statement and other
relevant materials filed with the SEC are 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 Company's definitive proxy statement for the transaction,
which was filed with the SEC on April 1, 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.
Magnum Hunter Contact: M. Bradley Davis Senior Vice
President of Capital Markets bdavis@magnumhunterresources.com (832)
203-4545
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