Amended Annual Report (10-k/a)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________

Form 10-K/A

Amendment No. 1


x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2014

Commission file number: 001-32997

____________________________________

Magnum Hunter Resources Corporation

(Name of registrant as specified in its charter)



Delaware	86-0879278
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

777 Post Oak Boulevard, Suite 650, Houston, Texas 77056
(Address of principal executive offices, including zip code)

Registrant’s telephone number including area code: (832) 369-6986

Securities registered under Section 12(b) of the Act:



Title of Each Class	Name of Each Exchange on Which Registered

Common Stock, par value $.01 per share 10.25% Series C Cumulative Perpetual Preferred Stock 8.0% Series D Cumulative Preferred Stock Depositary Shares, each representing a 1/1,000 interest in a share of 8.0% Series E Cumulative Convertible Preferred Stock	NYSE NYSE MKT NYSE MKT NYSE MKT

Securities registered under Section 12(g) of the Act:
None

____________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ¨ No x

Indicate by check mark if the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	x		Accelerated filer	¨
Non-accelerated filer	¨	(Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act Yes ¨ No x

State the aggregate market value of voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $1,560,087,080

As of February 23, 2015, 200,935,464 shares of the registrant’s common stock were issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Documents incorporated by reference: Portions of the registrant’s notice of annual meeting of shareholders and proxy statement to be filed pursuant to Regulation 14A within 120 days after the registrant’s fiscal year end of December 31, 2014 are incorporated by reference into Part III of this Form 10-K.

EXPLANATORY NOTE

This Form 10-K/A (this “Amendment”) amends Magnum Hunter Resources Corporation’s (the “Company”) annual report on Form 10-K for the year ended December 31, 2014 (the “Original 10-K”), which was filed with the Securities and Exchange Commission on March 2, 2015.

The Company is filing this Amendment to amend Part IV, Item 15 to include the separate financial statements of Eureka Hunter Holdings, LLC and its consolidated subsidiaries (“Eureka Hunter”) as required by Rule 3-09 of Regulation S-X (the “Rule 3-09 financial statements”), which were not included in the Original 10-K because Eureka Hunter’s financial statement audit was not complete at the time the Company filed the Original 10-K. The Rule 3-09 financial statements are provided as Exhibit 99.2 to this Amendment.

Pursuant to Rule 3-09 of Regulation S-X, the Company is required to file separate audited consolidated financial statements for Eureka Hunter because Eureka Hunter is a significant investee of the Company accounted for by the equity method. The requirement under Rule 3-09(b) of Regulation S-X is that the separate financial statements of a significant investee should be provided as of the same dates and for the same periods as the audited consolidated financial statements required by Rules 3-01 and 3-02 of Regulation S-X. Based on interpretive guidance of the staff of the Securities and Exchange Commission, the Company is required to present the separate audited consolidated financial statements of Eureka Hunter only for the period of time in which it was a significant investee. Eureka Hunter was a significant investee for the 14-day period from December 18, 2014 to December 31, 2014. The Company requested and received a letter from the staff of the Securities and Exchange Commission stating that the staff would not object to the Company including the audited consolidated financial statements of Eureka Hunter for the year ended December 31, 2014 rather than for the 14-day period in which it was a significant investee.

The Company also has included as Exhibits to this Amendment the certifications required under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002.

This Amendment speaks as of the original filing date of the Original 10-K and reflects only the changes to the Original 10-K described above. No other information included in the Original 10-K has been modified or updated in any way, and the Company has not updated the disclosures contained herein to reflect any events which occurred subsequent to the filing of the Original 10-K or to modify the disclosure contained in the Original 10-K other than to reflect the changes described above.

PART IV


Item 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES


1.	Financial Statements: The following consolidated financial statements of the Company and the Report of Independent Registered Public Accounting Firm are included in Part II, Item 8 of the Original 10-K:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets at December 31, 2014 and 2013

Consolidated Statements of Operations for the years ended December 31, 2014, 2013, and 2012

Consolidated Statements of Comprehensive Loss for the years ended December 31, 2014, 2013, and 2012

Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2014, 2013, and 2012

Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013, and 2012

Notes to the Consolidated Financial Statements


2.	Financial Statement Schedules: Except for the consolidated financial statements of Eureka Hunter Holdings, LLC listed below, all financial statement schedules are omitted as inapplicable or because the required information is contained in the financial statements, or the notes thereto, included in the Original 10-K.

The following consolidated financial statements of Eureka Hunter Holdings, LLC required by Rule 3-09 of Regulation S-X are provided as Exhibit 99.2 to this Amendment:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheet at December 31, 2014

Consolidated Statement of Operations for the year ended December 31, 2014

Consolidated Statement of Changes in Members' Equity (Deficit) for the year ended December 31, 2014

Consolidated Statement of Cash Flows for the year ended December 31, 2014

Notes to the Consolidated Financial Statements


3.	Exhibits: See the list of exhibits in the Index to Exhibits to this Amendment, which is incorporated by reference herein.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



MAGNUM HUNTER RESOURCES CORPORATION

By:	/s/ GARY C. EVANS
	Gary C. Evans
	Chairman of the Board and Chief Executive Officer

Date: March 12, 2015



INDEX TO EXHIBITS

Exhibit Number		Description

2.1+		Arrangement Agreement between the Registrant and NGAS Resources, Inc., dated December 23, 2010 (incorporated by reference from the Registrant’s current report on Form 8-K filed on December 30, 2010).

2.2+		Arrangement Agreement between the Registrant and NuLoch Resources Inc., dated January 19, 2011 (incorporated by reference from the Registrant’s current report on Form 8-K filed on January 25, 2011).

2.2.1+		Plan of Arrangement under Section 193 of the Business Corporations Act (Alberta) with respect to the Acquisition of NuLoch Resources Inc. by the Registrant (incorporated by reference from the Registrant’s registration statement on Form S-4 filed on April 8, 2011).

2.3+		Asset Purchase Agreement, dated March 21, 2012, by and among Eureka Hunter Holdings, LLC, TransTex Gas Services LP, and Eureka Hunter Acquisition Sub LLC (incorporated by reference from the Registrant’s current report on Form 10-Q filed on May 3, 2012).

2.3.1		First Amendment to Asset Purchase Agreement, dated April 2, 2012, by and between Eureka Hunter Holdings, LLC, TransTex Gas Services, LP, and Eureka Hunter Acquisition Sub LLC (incorporated by reference from the Registrant’s quarterly report on Form 10-Q filed on May 3, 2012).

2.4+		Purchase and Sale Agreement, dated as of April 17, 2012, by and between Baytex Energy USA Ltd. and Bakken Hunter, LLC (incorporated by reference from the Registrant’s current report on Form 8-K filed on April 24, 2012).

2.4.1		First Amendment to Purchase and Sale Agreement, dated May 17, 2012, by and between Baytex Energy USA Ltd. and Bakken Hunter, LLC (incorporated by reference from the Registrant’s current report on Form 8-K filed on May 23, 2012).

2.4.2		Second Amendment to Purchase and Sale Agreement, dated May 22, 2012, by and between Baytex Energy USA Ltd. and Bakken Hunter, LLC (incorporated by reference from the Registrant’s current report on Form 8-K filed on May 23, 2012).

2.5+		Stock Purchase Agreement, dated as of October 24, 2012, by and among Triad Hunter, LLC, Viking International Resources Co., Inc., all of the stockholders of Viking International Resources Co., Inc., and solely for the purposes set forth therein, the Registrant (incorporated by reference from the Registrant’s current report on Form 8-K filed on October 30, 2012).

2.6+		Purchase and Sale Agreement, dated as of November 21, 2012, between Samson Resources Company and Bakken Hunter, LLC (incorporated by reference from the Registrant’s current report on Form 8-K filed on November 28, 2012).+

2.7+		Stock Purchase Agreement, dated as of April 2, 2013, between the Registrant, Penn Virginia Oil & Gas Corporation, and Penn Virginia Corporation (incorporated by reference from the Registrant's current report on Form 8-K filed on April 8, 2013).

2.8+		Asset Purchase Agreement, dated as of August 12, 2013, between Triad Hunter, LLC and MNW Energy, LLC (incorporated by reference from the Registrant's quarterly report on Form 10-Q filed on November 8, 2013).

2.9+		Purchase and Sale Agreement, dated as of September 2, 2013, between Williston Hunter, Inc. and Oasis Petroleum of North America LLC (incorporated by reference from the Registrant's current report on Form 8-K filed on September 4, 2013).+

2.10+		Purchase and Sale Agreement, dated as of November 19, 2013, by and among PRC Williston, LLC, Williston Hunter ND, LLC and Enduro Operating LLC (incorporated by reference from the Registrant's current report on Form 8-K filed on November 22, 2013).

2.11+		Purchase and Sale Agreement, dated January 21, 2013, among Shale Hunter, LLC, Magnum Hunter Resources Corporation, Magnum Hunter Production, Inc. and Energy Hunter Partners 2012-A Drilling & Production Fund, Ltd., New Standard Energy Texas LLC and New Standard Energy Limited (incorporated by reference from the Registrant's current report on Form 8-K filed on January 23, 2014).



2.11.1+		Transition Services Agreement, dated January 28, 2014, between Shale Hunter, LLC and New Standard Energy Texas LLC (incorporated by reference from the Registrant's current report on Form 8-K filed on January 30, 2014).

2.12+		Purchase and Sale Agreement, dated March 31, 2014, between Williston Hunter Canada, Inc. and BDJ Energy Inc. (incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q filed on May 9, 2014).

2.13+		Share Purchase Agreement, dated April 21, 2014, between the Registrant and Steppe Resources Inc. (incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q filed on May 9, 2014).

2.14+@		Transaction Agreement, dated September 15, 2014 (entered into on September 16, 2014), by and among Eureka Hunter Holdings, LLC, the Registrant, MSIP II Buffalo Holdings LLC (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on September 22, 2014).

2.14.1+		Letter Agreement, dated November 18, 2014, by and among Eureka Hunter Holdings, LLC, the Registrant and MSIP II Buffalo Holdings, LLC (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on November 24, 2014).

2.15+		Purchase and Sale Agreement, dated September 29, 2014, entered into on September 30, 2014, between Bakken Hunter, LLC and LGFE-BH L.P. (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on October 6, 2014).

2.16+		Purchase and Sale Agreement, dated October 9, 2014, by and between Bakken Hunter, LLC and SM Energy Company (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on October 14, 2014).

3.1		Restated Certificate of Incorporation of the Registrant, filed February 13, 2002 (incorporated by reference from the Registrant’s registration statement on Form SB-2 filed on March 21, 2006).

3.1.1		Certificate of Amendment of Certificate of Incorporation of the Registrant, filed May 8, 2003 (incorporated by reference from the Registrant’s registration statement on Form SB-2 filed on March 21, 2006).

3.1.2		Certificate of Amendment of Certificate of Incorporation of the Registrant, filed June 6, 2005 (incorporated by reference from the Registrant’s registration statement on Form SB-2 filed on March 21, 2006).

3.1.3		Certificate of Amendment of Certificate of Incorporation of the Registrant, filed July 18, 2007 (incorporated by reference from the Registrant’s quarterly report on Form 10-QSB filed on August 14, 2007).

3.1.4		Certificate of Ownership and Merger Merging Magnum Hunter Resources Corporation with and into Petro Resources Corporation, filed July 13, 2009 (incorporated by reference from the Registrant’s current report on Form 8-K filed on July 14, 2009).

3.1.5		Certificate of Amendment of Certificate of Incorporation of the Registrant, filed November 3, 2010 (incorporated by reference from the Registrant’s current report on Form 8-K filed on November 2, 2010).

3.1.6		Certificate of Amendment of Certificate of Incorporation of the Registrant, filed May 9, 2011 (incorporated by reference from the Registrant’s quarterly report on Form 10-Q filed on March 31, 2011).

3.1.7		Certificate of Amendment of Certificate of Incorporation of the Registrant, filed June 29, 2011 (incorporated by reference from the Registrants registration statement on Form S-4 filed on January 14, 2013).

3.1.8		Certificate of Amendment of Certificate of Incorporation of the Registrant, filed January 25, 2013 (incorporated by reference from Amendment No. 1 to the Registrant’s registration statement on Form S-4 filed on February 5, 2013).

3.2		Amended and Restated Bylaws of the Registrant, dated March 15, 2001 as amended on April 14, 2006, and May 26, 2011 (incorporated by reference from the Registrant's quarterly report on Form 10-Q filed on August 9, 2011).

4.1		Form of certificate for common stock (incorporated by reference from the Registrant’s annual report on Form 10-K filed on February 18, 2011).

4.2		Certificate of Designation of Rights and Preferences of 10.25% Series C Cumulative Perpetual Preferred Stock, dated December 10, 2009 (incorporated by reference from the Registrant’s registration statement on Form 8-A filed on December 10, 2009).



4.2.1		Certificate of Amendment of Certificate of Designation of Rights and Preferences of 10.25% Series C Cumulative Perpetual Preferred Stock, dated August 2, 2010 (incorporated by reference from the Registrant’s quarterly report on Form 10-Q filed on August 12, 2010).

4.2.2		Certificate of Amendment of Certificate of Designation of Rights and Preferences of 10.25% Series C Cumulative Perpetual Preferred Stock, dated September 8, 2010 (incorporated by reference from the Registrant’s current report on Form 8-K filed on September 15, 2010).

4.3		Certificate of Designation of Rights and Preferences of 8.0% Series D Cumulative Preferred Stock, dated March 16, 2011 (incorporated by reference from the Registrant’s current report on Form 8-K filed on March 17, 2011).

4.4		Indenture, dated May 16, 2012, by and among the Registrant, the Guarantors named therein, Wilmington Trust, National Association and Citibank, N.A., as Paying Agent, Registrar and Authenticating Agent (incorporated by reference from the Registrant’s current report on Form 8-K filed on May 16, 2012).

4.4.1		First Supplemental Indenture, dated October 18, 2012, by and among the Registrant, the Guarantors named therein, Wilmington Trust, National Association, as Trustee, and Citibank, N.A., as Paying Agent, Registrar and Authenticating Agent (incorporated by reference from the Registrant's registration statement on Form S-4 filed on January 14, 2013).

4.4.2		Second Supplemental Indenture, dated December 13, 2012, by and among the Registrant, the Guarantors named therein, Wilmington Trust, National Association, as Trustee, and Citibank, N.A., as Paying Agent, Registrar and Authenticating Agent (incorporated by reference from the Registrant's registration statement on Form S-4 filed on January 14, 2013).

4.4.3		Third Supplemental Indenture, dated April 24, 2013, by and among the Registrant, the Guarantors named therein, Wilmington Trust, National Association, as Trustee, and Citibank, N.A., as Paying Agent, Registrar and Authenticating Agent (incorporated by reference from the Registrant’s annual report on Form 10-K filed on June 14, 2013).

4.4.4		Fourth Supplemental Indenture, dated July 23, 2013, by and among Shale Hunter, LLC, Wilmington Trust, National Association, as Trustee, and Citibank, N.A., as Paying Agent, Registrar and Authenticating Agent (incorporated by reference from the Registrant’s quarterly report on Form 10-Q filed on August 9, 2013).

4.4.5		Fifth Supplemental Indenture, dated January 27, 2014, by and among the Registrant, Citibank, N.A., as Paying Agent, Registrar and Authenticating Agent, and Wilmington Trust, National Association, as Trustee (incorporated by reference from the Registrant's annual report on Form 10-K filed on March 2, 2015).

4.4.6		Sixth Supplemental Indenture, dated November 10, 2014, by and among Bakken Hunter Canada, Inc., Citibank, N.A., as Paying Agent, Registrar and Authenticating Agent, and Wilmington Trust, National Association, as Trustee (incorporated by reference from the Registrant's annual report on Form 10-K filed on March 2, 2015).

4.4.7		Seventh Supplemental Indenture, dated December 4, 2014, by and among Triad Holdings, LLC, Citibank, N.A., as Paying Agent, Registrar and Authenticating Agent, and Wilmington Trust, National Association, as Trustee (incorporated by reference from the Registrant's annual report on Form 10-K filed on March 2, 2015).

4.5		Certificate of Designations of Rights and Preferences of the 8.0% Series E Cumulative Convertible Preferred Stock of the Registrant, dated November 2, 2012 (incorporated by reference from the Registrant’s current report on Form 8-K filed on November 8, 2012).

4.6		Deposit Agreement, dated as of November 2, 2012, by and among the Registrant, American Stock Transfer & Trust Company, as Depositary, and the holders from time to time of the depositary receipts described therein (incorporated by reference from the Registrant’s current report on Form 8-K filed on November 8, 2012).

10.1*		Amended and Restated Stock Incentive Plan of Registrant (incorporated by reference from the Registrant’s current report on Form 8-K filed on December 3, 2010).

10.1.1*		First Amendment to Amended and Restated Stock Incentive Plan (incorporated by reference from the Registrant’s proxy statement on Annex C of Schedule 14A filed on April 1, 2011).

10.1.2		Second Amendment to the Magnum Hunter Resources Corporation Amended and Restated Stock Incentive Plan (incorporated by reference from the Registrant’s registration statement on Form S-8 filed on February 14, 2013).



10.1.3*		Third Amendment to the Magnum Hunter Resources Corporation Amended and Restated Stock Incentive Plan (incorporated by reference from the Registrant’s current report on Form 8-K filed on January 23, 2013).

10.2*		Form of Stock Option Agreement under the Registrant’s Amended and Restated Stock Incentive Plan (incorporated by reference from the Registrant’s annual report on Form 10-K filed on February 18, 2011).

10.3*		Form of Restricted Stock Award Agreement under the Registrant’s Amended and Restated Stock Incentive Plan (incorporated by reference from the Registrant’s current report on Form 8-K filed on December 3, 2010).

10.4*		Form of Stock Appreciation Right Agreement under the Registrant’s Amended and Restated Stock Incentive Plan (incorporated by reference from the Registrant’s current report on Form 8-K filed on December 3, 2010).

10.5*		Form of Executive Change of Control Retention Agreements (incorporated by reference from the Registrant’s annual report on Form 10-K filed on February 29, 2012).

10.5.1*		Amendment to Form of Executive Change of Control Retention Agreements (incorporated by reference from the Registrant’s annual report on Form 10-K filed on February 29, 2012).

10.6*		Form of Indemnification Agreement for Directors (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on June 7, 2013).

10.7*		Form of Indemnification Agreement for Officers (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on June 7, 2013).

10.8		Omnibus Settlement Agreement and Release, dated as of January 9, 2014, by and among the Registrant, Magnum Hunter Production, Inc., Eureka Hunter Pipeline, LLC, Seminole Energy Services, L.L.C., Seminole Gas Company, L.L.C., Seminole Murphy Liquids Terminal, L.L.C., NGAS Gathering II, LLC, and NGAS Gathering, LLC (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on January 14, 2014).

10.9		Securities Purchase Agreement, dated as of March 20, 2014, by and among the Registrant and investors party thereto (incorporated by reference from the Registrant’s registration statement on Form S-1 filed on March 31, 2014).

10.10		Registration Rights Agreement, dated as of March 20, 2014, by and among the Registrant and investors party thereto (incorporated by reference from the Registrant’s registration statement on Form S-1 filed on March 31, 2014).

10.11		Credit Agreement, dated March 28, 2014, by and among Eureka Hunter Pipeline, LLC, as borrower, ABN AMRO Capital USA, LLC, as lender and administrative agent, and the other lenders party thereto (incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q filed on May 9, 2014).

10.11.1		First Amendment to Credit Agreement, dated as of November 19, 2014, by and among Eureka Hunter Pipeline, LLC, ABN AMRO Capital USA, LLC, as administrative agent, and the lenders party thereto (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on November 24, 2014).

10.12*		Eureka Hunter Holdings, LLC Management Incentive Compensation Plan (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on May 16, 2014).

10.12.1*		Form of Eureka Hunter Holdings, LLC Equity Incentive Plan Award Letter (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on May 16, 2014).

10.12.2*		Form of Eureka Hunter Holdings, LLC Class B Common Unit Agreement (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on May 16, 2014).

10.13		Securities Purchase Agreement, dated as of May 27, 2014, by and among the Registrant and investors party thereto (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on May 30, 2014).

10.14		Registration Rights Agreement, dated as of May 27, 2014, by and among the Registrant and investors party thereto (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on May 30, 2014).

10.15		Form of Warrant to Purchase Shares of Common Stock of the Registrant (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on May 30, 2014).



10.16@		Second Amended and Restated Limited Liability Company Agreement of Eureka Hunter Holdings, LLC, dated October 3, 2014, by and among Eureka Hunter Holdings, LLC, the Registrant, MSIP II Buffalo Holdings, LLC, and certain other limited liability company members (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on October 9, 2014).

10.17		Fourth Amended and Restated Credit Agreement, dated October 22, 2014, by and among the Registrant, Bank of Montreal, the lenders party thereto and the agents party thereto (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on October 28, 2014).

10.17.1		First Amendment to Credit Agreement and Limited Waiver, dated February 24, 2015, by and among the Registrant, the guarantors party thereto, the lenders party thereto and Bank of Montreal (incorporated by reference from the Registrant's annual report on Form 10-K filed on March 2, 2015).

10.18		Second Lien Credit Agreement, dated October 22, 2014, by and among the Registrant, Credit Suisse AG, Cayman Islands Branch, the lenders party thereto and the agents party thereto (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on October 28, 2014).

10.19*##		Letter Agreement, dated January 29, 2015, by and between the Registrant and R. Glenn Dawson.

10.20##		Release and Confidentiality Agreement, dated January 29, 2015, by and between the Registrant and R. Glenn Dawson.

12.1##		Computation of Ratio of Earnings to Fixed Charges.

21.1##		List of Subsidiaries.

23.1##		Consent of BDO USA, LLP with respect to the consolidated financial statements of Magnum Hunter Resources Corporation.

23.2##		Consent of Cawley Gillespie & Associates, Inc.

23.3#		Consent of BDO USA, LLP with respect to the consolidated financial statements of Eureka Hunter Holdings, LLC.

31.1#		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2#		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1^		Certification of the Chief Executive Officer and Chief Financial Officer provided pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.1##		Independent Engineer Reserve Report for the year ended December 31, 2014 prepared by Cawley Gillespie & Associates, Inc.

99.2#		Consolidated financial statements of Eureka Hunter Holdings, LLC as of and for the year ended December 31, 2014.

101.INS##		XBRL Instance Document.

101.SCH##		XBRL Taxonomy Extension Schema Document.

101.CAL##		XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB##		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE##		XBRL Taxonomy Extension Presentation Linkbase Document.

101.DEF##		XBRL Taxonomy Extension Definition Presentation Linkbase Document.



*		The referenced exhibit is a management contract, compensatory plan or arrangement.

+		The schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K and will be provided to the SEC upon request.

@		Portions of this exhibit are subject to a request for confidential treatment and have been redacted and filed separately with the SEC.

#		Filed herewith.

##		Filed with the Original 10-K.

^		This exhibit is furnished herewith and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

Exhibit 23.3

Consent of Independent Registered Public Accounting Firm

Magnum Hunter Resources Corporation

Houston, Texas

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-194932, 333-196618 and 333-197859) and Form S-8 (Nos. 333-168802, 333-169814, 333-171168, 333-177488, and 333-186674) of Magnum Hunter Resources Corporation of our report dated March 12, 2015, relating to Eureka Hunter Holding, LLC's consolidated financial statements, which appears in this Form 10-K/A of Magnum Hunter Resources Corporation.

/s/ BDO USA, LLP

Dallas, Texas

March 12, 2015

Exhibit 31.1

CERTIFICATION

I, Gary C. Evans, chairman and chief executive officer of MAGNUM HUNTER RESOURCES CORPORATION (the “Company”), certify that:


1.	I have reviewed this annual report on Form 10-K/A of the Company;


2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: March 12, 2015

By:		/s/ Gary C. Evans
		Gary C. Evans,
		Chairman and Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, Joseph C. Daches, chief financial officer of MAGNUM HUNTER RESOURCES COPORATION (the “Company”), certify that:


1.	I have reviewed this annual report on Form 10-K/A of the Company;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: March 12, 2015

By:		/s/ Joseph C. Daches
		Joseph C. Daches,
		Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Magnum Hunter Resources Corporation (the “Company”) on Form 10-K/A for the year ended December 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gary C. Evans, chairman and chief executive officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 12, 2015

/s/ Gary C. Evans

Gary C. Evans,

Chairman and Chief Executive Officer

In connection with the Annual Report of Magnum Hunter Resources Corporation (the “Company”) on Form 10-K/A for the year ended December 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph C. Daches, chief financial officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 12, 2015

/s/ Joseph C. Daches

Joseph C. Daches,

Chief Financial Officer

Exhibit 99.2

Eureka Hunter Holdings, LLC

Consolidated Financial Statements and Report of Independent Registered Public Accounting Firm

As of and for the Year Ended December 31, 2014

INDEX TO FINANCIAL STATEMENTS



Report of Independent Registered Public Accounting Firm				1
Consolidated Balance Sheet at December 31, 2014				2
Consolidated Statement of Operations for the year ended December 31, 2014				3
Consolidated Statement of Changes in Members' Equity (Deficit) for the year ended December 31, 2014				4
Consolidated Statement of Cash Flows for the year ended December 31, 2014				5
Notes to Consolidated Financial Statements				6

Report of Independent Registered Public Accounting Firm

Board of Managers

Eureka Hunter Holdings, LLC

Grapevine, Texas

We have audited the accompanying consolidated balance sheet of Eureka Hunter Holdings, LLC as of December 31, 2014, and the related consolidated statements of operations, changes in members’ equity (deficit), and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Eureka Hunter Holdings, LLC at December 31, 2014, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ BDO USA, LLP

Dallas, Texas

March 12, 2015

Eureka Hunter Holdings, LLC

Consolidated Balance Sheet

(in thousands, except units)



	December 31, 2014
CURRENT ASSETS:
Cash and cash equivalents	$	6,380
Accounts receivable, net of valuation allowance of $93	4,079
Accounts receivable - related party	4,568
Inventory	1,040
Prepaid expenses	1,046
Total current assets	17,113

PROPERTY AND EQUIPMENT, NET	439,046

OTHER ASSETS:
Deferred financing costs, net of accumulated amortization of $490	1,682
Other assets	198
Intangible assets, net of accumulated amortization of $5,969	4,524
Total other assets	6,404
Total assets	$	462,563

CURRENT LIABILITIES:
Accounts payable	$	45,447
Accounts payable - related party	2,913
Accrued expenses	1,150
Accrued expenses - related party	500
Accrued sales tax payable	11,691
Deferred revenue - current	1,616
Total current liabilities	63,317

Long term debt	100,000
Deferred revenue - long term	37
Total liabilities	163,354

Commitments & Contingencies (Note 10)

MEMBERS’ EQUITY:
Series A-1 Units, 13,729,849 units issued and outstanding as of December 31, 2014 (Notes 7 and 8)	387,962
Series A-2 Units, 13,640,593 units issued and outstanding as of December 31, 2014 (Notes 7 and 8)	484,236
Additional contributed capital	(358,246		)
Accumulated deficit	(214,743		)
Total members’ equity	299,209
Total liabilities and members’ equity	$	462,563

See accompanying notes to the consolidated financial statements.

Eureka Hunter Holdings, LLC

Consolidated Statement of Operations

(in thousands)



	For the Year Ended December 31, 2014
REVENUE:
Gas gathering revenue	$	20,505
Gas gathering revenue - related party	14,230
Equipment rental and service revenue	9,009
Equipment sales revenue	720
Total revenue	44,464

OPERATING EXPENSES:
Gas gathering expense	12,826
Equipment rental and service expense	5,114
Depreciation and amortization	16,421
General and administrative expense	15,004
Gain on sale of assets	(12		)
Loss on impairment	799
Total expenses	50,152

OPERATING LOSS	(5,688		)

OTHER EXPENSE:
Interest expense, net of amounts capitalized	(7,359		)
Loss on embedded derivative	(91,792		)
Loss on equity method investment	(350		)
Total other expense	(99,501		)

Net loss	(105,189		)

Preferred dividends	(19,343		)
Loss on extinguishment of Series A Preferred Units	(51,692		)

Net loss attributable to common unit holders	$	(176,224	)

See accompanying notes to the consolidated financial statements.

Eureka Hunter Holdings, LLC

Consolidated Statement of Changes in Members' Equity (Deficit)

(in thousands, except units)



	Series A Common Units		Series A Common			Series A-1 Units		Series A-1			Series A-2 Units	Series A-2		Additional Contributed Capital			Accumulated Deficit			Total Members' Equity (Deficit)
Balance at December 31, 2013	13,847,093		$	367,843		—		$	—		—	$	—	$	(310,235	)	$	(90,211	)	$	(32,603	)
Issued Series A Common Units upon cash contribution from MHR	2,755,976		55,120			—		—			—	—		—			—			55,120
Issued Series A Common Units for cash	409,024		8,180			—		—			—	—		—			—			8,180
Issued Series A Preferred Units in payment of preferred distributions paid-in-kind (Note 7)	(97,492	)	—			—		—			—	—		—			(1,950		)	(1,950		)
Issued Series A Preferred Units for cash, net of costs (Note7)	(610,000	)	—			—		—			—	—		—			—			—
Contributions	—		—			—		—			—	—		6,568			—			6,568
Distributions	—		—			—		—			—	—		(41		)	—			(41		)
Preferred unit distributions and accretion	—		—			—		—			—	—		—			(17,393		)	(17,393		)
Distribution of property to MHR	—		—			—		—			—	—		(2,846		)	—			(2,846		)
Conversion of Series A Common Units to Series A-1 and Series A-2 Units (Note 7)	(16,304,601	)	(431,143		)	15,895,577		422,962			409,024	8,181		—			—			—
Conversion of Series A Preferred Units to Series A-2 Units (Note 7)	—		—			—					10,592,540	381,055		(51,692		)	—			329,363
Issued Series A-1 Units for cash	—		—			566,828		20,000			—	—		—			—			20,000
Issued Series A-2 Units for cash	—		—			—					1,133,655	40,000		—			—			40,000
MHR capital adjustment (Note 8)	—		—			(1,227,182	)	—			—	—		—			—			—
Purchase by MSI of 5.5% interest from MHR (Note 8)	—		—			(1,505,374	)	(55,000		)	1,505,374	55,000		—			—			—
Net loss	—		—			—		—			—	—		—			(105,189		)	(105,189		)
Balance at December 31, 2014	—		$	—		13,729,849		$	387,962		13,640,593	$	484,236	$	(358,246	)	$	(214,743	)	$	299,209

See accompanying notes to the consolidated financial statements.

Eureka Hunter Holdings, LLC

Consolidated Statement of Cash Flows

(in thousands)



	For the Year Ended December 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(105,189	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	16,421
Amortization and write-off of deferred financing costs	3,240
Impairment of assets	799
Gain on the sale of assets	(12		)
Loss on embedded derivative	91,792
Loss on equity method investment	350
Bad debt expense	93
Allocated general and administrative expense	6,526
Changes in operating assets and liabilities:
Accounts receivable	(401		)
Accounts receivable - related party	(2,837		)
Inventory	(98		)
Prepaid expenses	(527		)
Other assets	18
Accounts payable	(10,807		)
Accrued expenses	1,070
Accounts payable and accrued expenses - related party	1,340
Deferred revenue	113
Net cash provided by operating activities	1,891

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for property and equipment	(176,726		)
Proceeds from the sale of assets	34
Net cash used in investing activities	(176,692		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowing of notes payable	100,000
Repayments on notes payable	(50,000		)
Cash paid for deferred financing costs	(2,172		)
Issuance of Series A Preferred units, net of costs	11,956
Preferred distributions paid	(10,238		)
Issuance of Series A Common units	63,300
Issuance of Series A-1 units	20,000
Issuance of Series A-2 units	40,000
Net cash provided by financing activities	172,846

NET DECREASE IN CASH AND CASH EQUIVALENTS:	(1,955		)
Cash and cash equivalents, beginning of period	8,335
Cash and cash equivalents, end of period	$	6,380

SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for interest	$	3,314
Change in accrued capital expenditures	$	42,650
Distribution of net assets to MHR	$	2,846
Issued Series A Preferred units in payment of preferred distribution paid-in-kind	$	1,950
Exchange of Series A-2 units for redeemable preferred stock and embedded derivative liability	$	381,055

See accompanying notes to the consolidated financial statements.

NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS

Eureka Hunter Holdings, LLC (the “Company” or “Eureka Holdings”) is a Delaware limited liability company formed on March 21, 2012, and was a majority-owned subsidiary of Magnum Hunter Resources Corporation (“Magnum Hunter” or “MHR”) through December 18, 2014. On March 21, 2012, Magnum Hunter contributed its interests in Eureka Hunter Pipeline, LLC (“Eureka Pipeline”), which Magnum Hunter acquired through the acquisition of Triad Hunter, LLC ("Triad") on February 12, 2010, to the Company. On April 2, 2012, the Company, and its wholly-owned subsidiary, TransTex Hunter, LLC ("TransTex") (formerly known as Eureka Hunter Acquisition Sub, LLC), closed on their purchase of certain assets of TransTex Gas Services, LP, under an asset purchase agreement dated March 21, 2012. On December 18, 2014, Magnum Hunter sold approximately 5.5% of its equity interest in the Company, which decreased its interest in the Company to below 50%. See Note 8 - “Members' Equity” for more information. The Company engages in midstream operations involving the gathering of natural gas through the Company’s ownership and operation of a gas gathering system in the Marcellus and Utica Basins of northwestern West Virginia and southeastern Ohio, referred to as the Eureka Hunter Pipeline Gathering System. Through its ownership of TransTex, the Company also leases, services and sells gas treating and processing equipment, most of which is leased to third party operators for treating gas at the wellhead.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Presentation

The consolidated financial statements include the accounts of Eureka Holdings and its wholly-owned subsidiaries, Eureka Pipeline and TransTex. All significant intercompany balances and transactions have been eliminated in consolidation. Investments in significant noncontrolled entities are accounted for using the equity method.

The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of the Company’s financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates are based on information that is currently available and on various other assumptions that management believes to be reasonable under the circumstances. Actual results could differ from those estimates under different assumptions and conditions. Significant items subject to such estimates and assumptions include embedded derivative liabilities, useful lives of property and equipment, and other liabilities and contingencies.

Cash and Cash Equivalents

Cash and cash equivalents include cash in banks and highly liquid debt securities that have original maturities of three months or less. At December 31, 2014, the Company had cash deposits in excess of FDIC insured limits at various financial institutions. The Company periodically assesses the financial condition of the institutions where these funds are held and believes that its credit risk is minimal.

Accounts Receivable

Accounts receivable are customer obligations due under agreed-upon trade terms and are stated at their historical carrying amount. Accounts receivable consists of gas gathering service and processing equipment rental and service revenue. Management reviews accounts receivable periodically and reduces the carrying amounts by a valuation allowance that reflects the best estimate of the amount that may not be collectible. The Company recorded an allowance at December 31, 2014 of $0.1 million related to one third party customer. At December 31, 2014, the Company had accounts receivable related to deferred revenue of $1.0 million.

Accounts Receivable - Related Party

Accounts receivable primarily consists of transportation service revenue from Triad, a wholly-owned subsidiary of Magnum Hunter. Management reviews accounts receivable periodically and reduces the carrying amounts by a valuation allowance that reflects the best estimate of the amount that may not be collectible. The Company did not record an allowance at December 31, 2014 for accounts receivable - related party balances. See Note 9 - “Related Party Transactions” for more information.

Inventory

Inventory is comprised of $1.0 million of materials and supplies as of December 31, 2014. The Company’s materials and supplies inventory is primarily comprised of parts used in servicing leased equipment and is carried at the lower of cost or net realizable value, on a first-in, first-out cost basis. Valuation reserve allowances for materials and supplies inventories are recorded as reductions

to the carrying values of the materials and supply inventories in the Company’s consolidated balance sheet and as equipment rental and service expense in the accompanying consolidated statement of operations.

Property and Equipment

The Company’s property and equipment consist primarily of pipeline gas gathering equipment, which comprise the Eureka Hunter Pipeline Gathering System, and the gas treating and processing equipment of TransTex.

Property and equipment are carried at historical cost. Depreciation on property and equipment is recorded on a straight-line basis for groups of property having similar economic characteristics over the estimated useful lives (primarily 5 to 40 years). Uncertainties that may impact these estimates include, but are not limited to, changes in laws and regulations relating to environmental matters, including air and water quality, restoration and abandonment requirements, economic conditions and supply and demand in the area. When assets are placed into service, management makes estimates with respect to useful lives. However, subsequent events could cause a change in estimates, thereby impacting future depreciation amounts.

The Company capitalizes all construction-related direct labor and material costs, as well as indirect construction costs. Indirect construction costs include general engineering, insurance, taxes and the cost of funds used during construction. The Company capitalizes interest as a component of significant pipeline construction projects that last more than six months while activities are in progress to bring the assets to their intended use. Interest of $1.9 million was capitalized during the year ended December 31, 2014. After major construction projects are completed, the associated capitalized costs including interest are depreciated over the estimated useful life of the related asset.

Costs, including complete asset replacements and enhancements or upgrades that increase the original efficiency, productivity or capacity of property and equipment, are also capitalized. The costs of repairs, minor replacements and maintenance projects which do not increase the original efficiency, productivity or capacity of property and equipment, are expensed as incurred.

When items of property and equipment are sold or otherwise disposed of, gains or losses are recorded in the statement of operations in the period of disposition.

Long-lived assets are reviewed for impairment when facts and circumstances indicate that the net book values may not be recoverable. At December 31, 2014, the Company’s pipeline gas gathering equipment was not impaired. Due to changes in management's plans regarding certain processing plant and equipment, impairment charges of $0.8 million were recorded during the year ended December 31, 2014.

Asset Retirement Obligations

The Company’s operating assets generally consist of underground pipelines and related components along rights-of-way, above ground storage tanks and related facilities, and gas treating and processing equipment. The Company’s right-of-way agreements, and the laws of the states in which the Company operate, typically do not require the dismantling, removal and reclamation of the right-of-way upon permanent removal of the pipelines and related facilities from service. Additionally, management is unable to predict when, or if, the Company's pipelines, related facilities and gas treating and processing equipment would become completely obsolete and require decommissioning. Accordingly, the Company has not recorded a liability or corresponding asset as an asset retirement obligation as both the amounts and timing of such potential future costs are indeterminable.

In connection with the Company's ownership of a cryogenic gas treating plant (“Rogersville”), the Company recorded an asset retirement obligation of $0.1 million related to estimated future retirement costs. The liability was subsequently transferred to Magnum Hunter on December 12, 2014, in connection with the transfer of the Company's ownership interest in the Rogersville facility. See Note 9 - “Related Party Transactions” for more information.

Revenue Recognition

The Company’s revenues are derived from the gathering and transportation of natural gas through the Eureka Hunter Pipeline Gathering System and the leasing, servicing, and sale of gas treating and processing equipment related to TransTex. Revenues are recognized by the Company using the following criteria: (1) persuasive evidence of an exchange arrangement exists, (2) delivery has occurred or services have been rendered, (3) the buyer’s price is fixed or determinable and (4) collection is reasonably assured. Utilizing these criteria, revenues are recognized when the natural gas is delivered at the destination point or services are rendered in accordance with the contract agreements and leases.

At December 31, 2014, the majority of the Company's gas gathering agreements include firm commitments with remaining terms extending eight to twelve years. See Note 9 - “Related Party Transactions” for further discussion.

The Company records deferred revenue related to the TransTex business when it receives consideration from a counterparty before meeting the criteria for revenue to be recognized. Deferred revenue includes unearned service revenue such as the installation of gas treating and processing equipment, unearned monthly rental revenue charged to customers in advance, and deposits on hand. Such deferred revenue is classified as short term or long term, depending on the remaining months of the related contract.

Deferred Financing Costs

In connection with debt financing arrangements, the Company may incur issuance costs. Costs incurred to issue debt are deferred and amortized over the life of the associated debt instrument using the straight-line method for debt in the form of a line of credit and the effective interest method for term loans. In connection with debt financings, the Company paid $2.2 million in fees during the year ended December 31, 2014 and expensed $2.8 million of unamortized deferred financing costs during the year ended December 31, 2014, which is included in interest expense on the statement of operations. Deferred financing costs, net of accumulated amortization, were $1.7 million as of December 31, 2014. Amortization of deferred financing costs is included in interest expense on the statement of operations as a result of borrowing. Amortization expense for the year ended December 31, 2014 was $0.4 million.

Investments

The Company has an equity method investment representing 25% ownership interest in a privately held limited liability company in the business of leasing gas processing equipment. The Company's proportionate share of earnings and losses from equity method investments are reported separately in the consolidated statement of operations. During the year ended December 31, 2014, the Company recorded losses on the equity method investment of $0.1 million. No distributions were received by the Company during the year ended December 31, 2014.

Equity method investments are recorded at historical cost, adjusted for the Company's proportionate share of earnings and losses of the investee, distributions, and impairments. The Company evaluates its equity method investment for impairment when events or changes in circumstances indicate, in management’s judgment, that the carrying value of such investment may have experienced an other-than-temporary decline in value. When evidence of loss in value has occurred, management compares the estimated fair value of the investment to the carrying value of the investment to determine whether an impairment has occurred. Management assesses the fair value of its equity method investment using commonly accepted techniques, and may use more than one method, including, but not limited to, recent third party comparable sales, internally developed discounted cash flow analysis and analysis from outside advisors. If the estimated fair value is less than the carrying value and management considers the decline in value to be other than temporary, the excess of the carrying value over the estimated fair value is recognized in the financial statements as an impairment.

Due to changes in the project plans of the investee, an other than temporary decrease in the fair value of the investment of $0.3 million was recorded during the year ended December 31, 2014, reducing the cost basis of the investment to zero. This impairment charge is included in loss on equity method investment on the statement of operations.

Intangible Assets

During 2012, the Company recorded intangible assets consisting primarily of the fair value of gas treating equipment lease agreements and customer relationships acquired in connection with the acquisition of TransTex Gas Services, LP in 2012. The intangible assets were initially recorded at fair value using a discounted cash flow model with a discount rate of 13% and are being amortized over finite terms. Customer relationships are amortized using an accelerated method and lease agreements and other intangible assets are amortized using a straight-line method. The Company assesses the carrying amount of its intangible assets for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. At December 31, 2014, the Company’s intangible assets were not impaired. See Note 4 - “Intangible Assets” for more information.

Income and State Sales Taxes

The Company is a limited liability company treated as a partnership for federal income tax purposes, in which income tax liabilities and/or benefits of the Company are passed through to its members. Accordingly, no recognition has been given to federal or state income taxes in the accompanying financial statements.

Based on management’s analysis, the Company did not have any uncertain tax positions as of December 31, 2014. At December 31, 2014 there were no material income tax interest or penalty items recorded in the statement of operations or as a liability on the balance sheet.

The Company incurs sales tax for the state of Ohio for purchases of capital items and certain gas gathering and general and administrative expenses. Sales tax incurred on purchases of capital items is capitalized as part of the cost of equipment. Sales tax incurred on gas gathering and general and administrative expense is expensed as incurred. As of December 31, 2014, the Company had recorded total liabilities due to the state of Ohio of $11.7 million.

Recent Accounting Pronouncements

Accounting standards-setting organizations frequently issue new or revised accounting rules. The Company regularly reviews all new pronouncements to determine their impact, if any, on its financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the ASC. The core principle of the revised standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. To achieve that core principle, an entity should apply the following steps: identify the contract(s) with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 requires entities to disclose both quantitative and qualitative information that enables users of financial statements to understand the nature, amount, timing, and uncertainty of revenues and cash flows arising from contracts with customers. This amendment is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those reporting periods. The guidance allows for either a "full retrospective" adoption or a "modified retrospective" adoption, however early application is not permitted. The Company is currently evaluating the adoption methods and the impact of this ASU on its consolidated financial statements and financial statement disclosures.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern: Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. This update requires an entity’s management to evaluate for each annual and interim reporting period whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued or available to be issued. The update further requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, and requires an express statement and other disclosures when substantial doubt is not alleviated. This amendment is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and financial statement disclosures.

NOTE 3 - FAIR VALUE OF FINANCIAL INSTRUMENTS

Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standards also establish a framework for measuring fair value and a valuation hierarchy based upon the transparency of inputs used in the valuation of an asset or liability. Classification within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The valuation hierarchy contains three levels:

• Level 1 - Quoted prices (unadjusted) for identical assets or liabilities in active markets;


•	Level 2 - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs or significant value drivers are observable;

• Level 3 - Significant inputs to the valuation model are unobservable.

Fair Value on a Recurring Basis:

Preferred Stock Embedded Derivative

At January 1, 2014, the Company had a preferred stock derivative liability resulting from certain conversion features, redemption options, and other features of the Company’s Series A Convertible Preferred Units.

The fair value of the bifurcated conversion feature was valued using the “with and without” analysis in a simulation model based upon management’s estimate of the expected life of the conversion feature. The key inputs used in the model to determine fair value were estimated volatility, credit spread, and the estimated enterprise value of the Company. Since the significant inputs to the valuation model are unobservable, the value of the embedded derivative is classified as Level 3.

The selection of initial assumptions for expected term and total enterprise value were made based on a weighting of possible outcomes at the date the conversion feature became effective. These assumptions are reviewed by management and modified periodically based on any changes in expectations. The term of the conversion feature, which was linked to the terms of the Eureka Hunter Holdings Amended and Restated Limited Liability Company Agreement ("Eureka Hunter Holdings LLC Agreement"), was estimated to range from zero to 6 years. During 2014, the Company changed the estimated term to 1-2 years due to changes in the Company's expectation of when the conversion feature with respect to the Series A Preferred Units would be exercised. During September 2014, MSIP II Buffalo Holdings LLC, an affiliate of Morgan Stanley Infrastructure, Inc. (“MSI”) entered into an agreement to purchase all of the issued and outstanding Series A Preferred Units and Class A Common Units held by Ridgeline Midstream Holdings, LLC ("Ridgeline"), an affiliate of ArcLight Capital Partners, LLC ("ArcLight"), which constituted all of the issued and outstanding Series A Preferred Units. In making the determination of the total enterprise value of the Company, management considered the purchase price associated with MSI's purchase of the Series A Preferred Units, and its implied value to the enterprise as a whole. The issued and outstanding Series A Preferred Units were converted at fair value to a new class of preferred equity of the Company on October 3, 2014, pursuant to the provisions of the Second Amended and Restated Limited Liability Company Agreement of Eureka Holdings (the “New LLC Agreement”), which became effective October 3, 2014. See Note 7 - "Redeemable Preferred Units".

The fair value calculation is sensitive to movements in volatility, estimated remaining term, and the total enterprise value of the Company. A decrease in the estimated term of the conversion feature results in a higher fair value of the conversion feature. As the implied volatility of the instruments increases so too does the fair value of the derivative liability arising from the conversion and redemption features. Similarly, as the total enterprise value of the Company increases, the fair value of the derivative liability increases. Decreases in volatility and total enterprise value would result in a reduction to the fair value of the derivative liability associated with these instruments.

The following table presents the changes in the fair value of the derivative assets and liabilities measured at fair value using significant unobservable inputs (Level 3) for the year ended December 31, 2014:



	(in thousands)
Fair value at beginning of period	$	(75,934	)
Issuance of redeemable preferred stock	(5,479		)
Increase in fair value recognized in loss on derivative contracts	(91,792		)
Extinguishment upon conversion of the Company's Series A Preferred Units to Series A-2 Units (see Note 7)	173,205
Fair value at end of period	$	—

During the year ended December 31, 2014, the valuation of the conversion feature embedded in the Series A Preferred Units increased the fair value of the embedded derivative liability by approximately $91.8 million as a result of changes in the total enterprise value of the Company and management's estimate of the expected remaining term of the conversion feature up to and prior to conversion. Management’s estimate of the expected remaining term of the conversion option shortened the time horizon previously estimated by management, resulting in a higher fair value of the conversion feature. Management’s estimates were based upon several factors, including market prices for like-kind transactions, an estimate of the likelihood of each of the possible settlement options, which included redemption through a call or put option, or a liquidity event that triggers conversion to Class A Common Units of the Company. As discussed in Note 7 - "Redeemable Preferred Units", the conversion of the Company's Series A Preferred Units to a new class of preferred equity resulted in an extinguishment of the Series A Preferred Units, an extinguishment of the preferred stock embedded derivative, and the issuance of a new class of preferred equity initially recorded at fair value.

Fair Value on a Non-Recurring Basis

The Company follows the provision of ASC Topic 820, Fair Value Measurement, for non-financial assets and liabilities measured at fair value on a non-recurring basis. As is relates to Eureka Holdings, ASC Topic 820 applies to measurements of the fair value of the Series A-2 Units issued to MSI on October 3, 2014, discussed above. As there is no corroborating market activity to support the assumptions used, the Company has designated this measurement as Level 3.

Fair value measurements made on a non-recurring basis during the year ended December 31, 2014 consist of the following:



	(Level 1)		(Level 2)		(Level 3)
	(in thousands)
Fair value of Long-lived assets of TransTex	$	—	$	—	$	315
Fair value of equity-method investments impaired	—		—		—
Series A-2 Units	—		—		389,236
Total during the year ended December 31, 2014	$	—	$	—	$	389,551

Impairment of Long-lived assets of TransTex

During the year ended December 31, 2014, the Company measured the fair value of certain long-lived assets of TransTex as compared to its carrying value due to the identification of potential impairment triggers. The fair value of these assets was derived using a variety of assumptions including market transactions for similar assets and discounted cash flow analyses utilizing risk-adjusted discount rates. The Company has designated these valuations as Level 3.

Impairment of equity-method investments

As of December 31, 2014, the Company measured the fair value of its equity investment as compared to its carrying value in connection with changes in circumstances that indicated a possible impairment (see Note 2). The fair value of this equity investment was derived using a variety of assumptions including an income approach of estimating a risk adjusted discounted future cash flows forecast for the investment and outside advisors. The Company has designated these valuations as Level 3.

Series A-2 Units

The fair value of the Series A-2 Units issued to MSI upon extinguishment of the Series A Preferred Units was determined by utilizing a hybrid of a probability-weighted expected return model and an option pricing model. This methodology involves estimating the value of various securities based upon an analysis of future values for the enterprise, assuming various future outcomes. The key assumptions used in the model to determine fair value upon conversion on October 3, 2014 were as follows: i) the rate of return expected to be achieved upon a liquidating event or initial public offering and ii) the probability of an initial public offering as contemplated in the New LLC Agreement of Eureka Holdings at discreet points in time. The Company has designated these valuations as Level 3.

The carrying amounts of financial instruments including cash and cash equivalents, accounts receivable, inventory, accounts payable, and accrued liabilities approximate fair value as of December 31, 2014 due to their short maturities. The carrying amounts of long-term debt approximate fair value as of December 31, 2014 as they are subject to short-term floating interest rates that approximate the rates available to the Company.

NOTE 4 - INTANGIBLE ASSETS

The following table summarizes the Company's net intangible assets as of December 31, 2014:



	Amortization Period	December 31, 2014
		(in thousands)
Customer relationships		$	5,434
Trademark		859
Existing contracts		4,199
Total intangible assets		10,492
Accumulated amortization:
Customer relationships	12.5 years	(1,880		)
Trademark	11.0 years	(215		)
Existing contracts	3.0 years	(3,873		)
Intangible assets, net of accumulated amortization		$	4,524

There were no additions to intangible assets during the year ended December 31, 2014. Amortization expense for the year ended December 31, 2014 was $2.0 million and is included in depreciation and amortization in the consolidated statement of operations. The following table summarizes the aggregate amortization of intangible assets over the next five years:



	(in thousands)
2015	$	981
2016	586
2017	519
2018	457
2019	404
Thereafter	1,577
	$	4,524

NOTE 5 - PROPERTY AND EQUIPMENT

Property and equipment, net as of December 31, 2014 are composed of the following:



	Estimated Useful Life (Years)	2014
In thousands
Pipeline gas gathering equipment	5 - 40	$	203,111
Processing plant and equipment	5 - 20	25,580
Land and rights of way	—	33,235
Construction in progress	—	203,697
Buildings	40	1,412
Other	5 - 10	2,293
Total		469,328
Accumulated depreciation		(30,282		)
Property and equipment, net		$	439,046

Pipeline Gas Gathering Equipment

The Company’s pipeline gas gathering equipment consists of natural gas gathering pipelines and compression and related equipment. These assets, which comprise the Eureka Hunter Pipeline Gathering System, are carried at historical cost.

Depreciation of equipment is provided using the straight line method over an estimated useful life of 5 to 40 years. Depreciation expense for pipeline gas gathering equipment was $12.0 million for the year ended December 31, 2014.

The cost of property and equipment classified as “Construction in progress” is excluded from costs being depreciated. These amounts represent property that is not yet suitable to be placed into productive service as of December 31, 2014.

Processing Plant and Equipment

The Company’s processing plant and equipment is comprised primarily of the gas treating and processing equipment of TransTex. The Company carries this equipment at historical cost. Depreciation of the processing plant and equipment is provided using the straight line method over estimated useful lives of 5 to 20 years. Depreciation expense for processing plant and equipment was $2.4 million for the year ended December 31, 2014.

TransTex leases and sells gas treating and processing equipment, most of which is leased to third party operators for treating gas at the wellhead. The leases generally have a term of three years or less. The equipment under leases in place at December 31, 2014 has a net carrying value of $11.7 million, with accumulated depreciation of $3.9 million, and had terms for future payments extending as far as December of 2016. TransTex has non-cancelable leases to third parties in place as of December 31, 2014, with future rental payments of $3.4 million and $0.9 million in 2015 and 2016, respectively. Revenues and costs associated with equipment sold are not significant to the overall operations of the Company.

NOTE 6 - CREDIT FACILITIES

On March 28, 2014, Eureka Pipeline entered into a Credit Agreement by and among Eureka Pipeline, as borrower, ABN AMRO Capital USA, LLC, as a lender and as administrative agent, and the other lenders party thereto (hereafter referred to as the “Credit Agreement”).

The Credit Agreement, which has a maturity date of March 28, 2018, provides for a revolving credit facility in an aggregate principal amount of up to $117.0 million (with the potential to increase the aggregate commitment under the credit agreement to an aggregate principal amount of up to $150.0 million, subject to the consent of the lender parties and the satisfaction of certain conditions), secured by a first lien on substantially all of the assets of Eureka Pipeline and its subsidiaries, which include TransTex, as well as by Eureka Pipeline’s pledge of the equity in its subsidiaries. The subsidiaries of Eureka Pipeline also guarantee Eureka Pipeline’s obligations under the Credit Agreement. The Credit Agreement is non-recourse to Magnum Hunter. The Company incurred deferred financing costs directly associated with entering into the Credit Agreement in the amount of $1.4 million which will be amortized straight-line over the term of the Credit Agreement.

The terms of the Credit Agreement provide that the borrowings thereunder may be used, among other specified purposes, (1) to refinance existing indebtedness of Eureka Pipeline outstanding on the credit agreement closing date, including the term loan of $50.0 million in principal amount owed under the Second Lien Term Loan Agreement, dated August 16, 2011, by and among Eureka Pipeline and Pennant Park Investment Corporation, as a lender, the other lenders party thereto and U.S. Bank National Association, as collateral agent, (2) to finance future expansion activities related to Eureka Pipeline’s gathering system in West Virginia and Ohio, (3) to finance acquisitions by Eureka Pipeline and its subsidiaries permitted under the terms of the credit agreement, (4) to refinance from time to time certain letters of credit of Eureka Pipeline and its subsidiaries, (5) to provide working capital for their operations, and (6) for their other general business purposes.

The Credit Agreement provides for a commitment fee based on the unused portion of the commitment under the credit agreement of 0.50% per annum when the consolidated leverage ratio is greater than or equal to 3.0 to1.0 and a commitment fee of 0.375% when the consolidated leverage ratio is less than 3.0 to 1.0.

In general terms, borrowings under the credit agreement will, at Eureka Pipeline’s election, bear interest:

•

on base rate loans, at the per annum rate equal to the sum of (A) the base rate (defined as the highest of (i) the per annum rate of interest established by JPMorgan Chase Bank, N.A. as its prime rate for U.S. dollar loans, (ii) the Adjusted Eurodollar Rate (as defined in the credit agreement) for an interest period of one-month, plus 1.0%, or (iii) the federal funds rate, plus 0.50% per annum), and (B) a margin of 1.0% to 2.50% per annum; or


•	on Eurodollar Loans, at the per annum rate equal to the sum of (A) the Eurodollar Rate (as defined in the credit agreement) adjusted for certain statutory reserve requirements for Eurocurrency liabilities, and (B) a margin of 2.0% to 3.50% per annum.

If an event of default occurs under the credit agreement, generally, the applicable lenders may increase the interest rate then in effect by an additional 2.0% per annum for the period that the default exists.

The Credit Agreement contains customary affirmative covenants and negative covenants that, among other things, restrict the ability of each of Eureka Pipeline and its subsidiaries to, with certain exceptions: (1) incur indebtedness; (2) grant liens; (3) enter into hedging transactions; (4) enter into a merger or consolidation or sell, lease, transfer or otherwise dispose of all or substantially all of its assets or the stock of any of its subsidiaries; (5) issue equity; (6) dispose of any material assets or properties; (7) pay or declare dividends or make certain distributions; (8) invest in, extend credit to or make advances or loans to any person or entity; (9) engage in material transactions with any affiliate; (10) enter into any agreement that restricts or imposes any condition upon the ability of (a) any of Eureka Pipeline or its subsidiaries to create, incur or permit any lien upon any of its assets or properties, or (b) any such subsidiary to pay dividends or other distributions, to make or repay loans or advances, to guarantee indebtedness or to transfer any of its property or assets to Eureka Pipeline or its subsidiaries; (11) change the nature of its business; (12) amend its organizational documents or material agreements; (13) change its fiscal year; (14) enter into sale and leaseback transactions; (15) make acquisitions; (16) make certain capital expenditures; or (17) take any action that could result in regulation as a utility.

The Credit Agreement requires Eureka Pipeline to satisfy certain financial covenants, including maintaining:


•	a maximum leverage ratio (defined as the ratio of (i) consolidated funded debt to (ii) annualized consolidated EBITDA), as of the end of each fiscal quarter, not greater than (A) 4.75 to 1.00 for the fiscal quarters ending March 31, 2014 through September 30, 2014, and (B) 4.50 to 1.00 for the fiscal quarter ending December 31, 2014 and each fiscal quarter ending thereafter; and

•

a minimum interest coverage ratio (defined as the ratio of (i) annualized consolidated EBITDA to (ii) annualized consolidated interest charges for such period), as of the end of each fiscal quarter, not less than (A) 2.75 to 1.00 for the fiscal quarters ending March 31, 2014 through September 30, 2014, and (B) 2.50 to 1.00 for the fiscal quarter ending December 31, 2014 and each fiscal quarter ending thereafter.

The obligations of Eureka Pipeline under the Credit Agreement may be accelerated upon the occurrence of an event of default. Events of default include customary events for these types of financings, including, among other things, payment defaults, defaults in the performance of affirmative or negative covenants, the inaccuracy of representations or warranties, material defaults under or termination of certain material contracts, defaults relating to judgments, certain bankruptcy proceedings, a change in control and any material adverse change.

Upon executing the Credit Agreement on March 28, 2014, Eureka Pipeline terminated its revolving credit agreement with SunTrust Bank and the term loan agreement with Pennant Park (the "Original Eureka Hunter Credit Facilities"). Eureka Hunter Pipeline used proceeds from the Credit Agreement to pay in full all outstanding obligations related to the termination of the Original Eureka Hunter Credit Facilities, which included the principal outstanding amount of $50.0 million and accrued, unpaid interest of $1.5 million. In addition, $2.6 million unamortized deferred financing costs associated with the Original Eureka Hunter Credit Facilities were expensed.

On November 19, 2014, Eureka Pipeline entered into an amendment of the Credit Agreement by and among Eureka Pipeline, as borrower, ABN AMRO Capital USA, LLC, as a lender and as administrative agent, and the other lenders party thereto (hereafter referred to as the “First Amended Credit Agreement”). Pursuant to the First Amended Credit Agreement, the aggregate loan commitments available to Eureka Pipeline increased from an available capacity of $117.0 million to $225.0 million. Commitment fees were lowered to 0.50% per annum when the consolidated leverage ratio is greater than or equal to 3.5 to1.0 and 0.375% when the consolidated leverage ratio is less than 3.5 to 1.0. The applicable margin for base rate loans and Eurodollar loans was also revised to a range of 0.75% to 2.00% and 1.75% to 3.00%, respectively, depending on the Company’s leverage ratio.

The Company incurred deferred financing costs directly associated with entering into the First Amended Credit Agreement in the amount of $0.8 million which is amortized straight-line over the remaining term of the Credit Agreement, which was not modified by the First Amended Credit Agreement. The straight-line method of amortization results in substantially the same periodic amortization as the effective interest method. In addition, $0.2 million unamortized deferred financing costs associated with the Credit Agreement were expensed.

As of December 31, 2014 the maximum amount available under the First Amended Credit Agreement was $125.0 million, and the Company had $100.0 million in borrowings outstanding. The borrowing capacity is subject to certain upward or downward reductions during the term of the First Amended Credit Agreement. The interest rate was 2.67% at December 31, 2014.

As of December 31, 2014, Eureka Pipeline was in compliance with all of its covenants contained in the Credit Agreement.

Interest Expense

A reconciliation of total interest cost incurred to "interest expense, net of amounts capitalized" as reported in the consolidated statement of operations for the year ended December 31, 2014 is as follows:



In thousands	2014
Interest expense on long-term debt	6,057
Interest expense from amortization of deferred financing costs	426
Interest expense from write-off of unamortized deferred financing costs	2,814
Less: interest expense capitalized	(1,938	)
Total interest expense, net of amounts capitalized	7,359

NOTE 7 - REDEEMABLE PREFERRED UNITS

On March 21, 2012, the Company entered into a Series A Convertible Preferred Unit Purchase Agreement (the “Unit Purchase Agreement”) with Magnum Hunter and Ridgeline Midstream Holdings, LLC (“Ridgeline”), an affiliate of ArcLight Capital Partners, LLC. Pursuant to this Unit Purchase Agreement, Ridgeline committed, subject to certain conditions, to purchase up to $200.0 million of Series A Convertible Preferred Units representing membership interests of the Company (the “Series A Preferred Units”). $200.0 million had been purchased through October 3, 2014, at which point the outstanding Series A Preferred Units were purchased from Ridgeline by MSI and converted into Series A-2 Units of Eureka Holdings.

The following table summarizes the changes in the redeemable preferred units during the year ended December 31, 2014:



	Series A Preferred Units		Series A Preferred Units
			(in thousands)
Balance at December 31, 2013	9,885,048		$	136,675
Issued Series A Preferred Units in payment of preferred distributions paid-in-kind	97,492		1,208
Issued Series A Preferred Units for cash, net of costs	610,000		7,219
Accretion on Series A Preferred Units	—		6,583
Conversion of Series A Preferred Units to Series A-2 Units	(10,592,540	)	(151,685		)
Balance at December 31, 2014	—		$	—

During the year ended December 31, 2014, the Company issued 610,000 Series A Preferred Units to Ridgeline for proceeds of $12.0 million, net of issuance costs of $0.2 million. Under the terms of the Eureka Hunter Holdings LLC Agreement, any issuances of Series A Preferred Units resulted in a unit-for-unit reduction in the Class A Common Units. The Company paid cumulative distributions quarterly on the Series A Preferred Units at a fixed rate of 8% per annum of the initial liquidation preference. The distribution rate was increased to 10% if any distribution is not paid when due. The board of directors of the Company had the option of paying up to 75% of the distributions owed for the period from March 21, 2012 through March 31, 2013 in the form of “paid-in-kind” units and had the option of paying up to 50% of the distributions owed for the period from April 1, 2013 through March 31, 2014 in such units. During the year ended December 31, 2014, the Company paid cash distributions of $10.2 million and paid in-kind distributions of $1.9 million to the holder of the Series A Preferred Units through the issuance of 97,492 Series A Preferred Units. Preferred dividends included accretion on the Series A Preferred Units of $6.6 million for the year ended December 31, 2014.

On September 16, 2014, the Company, Magnum Hunter, and MSI entered into an agreement (the "Transaction Agreement") relating to a separate purchase agreement between MSI and Ridgeline providing for the purchase by MSI of all convertible preferred and common equity interests in the Company owned by Ridgeline.

The Transaction Agreement provided for the execution of the New LLC Agreement of the Company to be entered into by Magnum Hunter, MSI and the minority interest members of the Company contingent upon and contemporaneously with the closing of MSI's purchase of Ridgeline's equity interests in the Company, which occurred on October 3, 2014. In connection with the first closing on October 3, 2014, all of the Company’s Series A Preferred Units and Class A Common Units acquired by MSI from Ridgeline were converted into a new class of preferred equity interests of Eureka Holdings, and all equity interests owned by MSI will have a liquidation preference under certain circumstances. The conversion of the Company’s Series A Preferred Units to a new class of preferred equity resulted in an extinguishment of the Series A Preferred Units, an extinguishment of the preferred stock embedded derivative, and the issuance of a new class of preferred equity initially recorded at fair value (the "Series A-2 Units"). Accordingly, the Company recorded a loss of $51.7 million within members' equity equal to the difference between the fair value of the new Series A-2 Units issued and the carrying amount of the old Series A Preferred Units extinguished including the embedded derivative and accrued dividends. The fair value of the Series A-2 Units on the date of conversion was determined primarily from the transaction between MSI and Ridgeline which was an orderly market transaction between a willing buyer and seller. See Note 8 - “Members’ Equity" for additional information.

NOTE 8 - MEMBERS’ EQUITY

Series A Common Units

During the year ended December 31, 2014, the Company issued 2,755,976 Class A Common Units with a value of $55.1 million to Magnum Hunter upon cash contributions of $55.1 million. During the year ended December 31, 2014, the Company issued 409,024 Class A Common Units with a value of $8.2 million to Ridgeline upon a cash contribution of $8.2 million. These units were subsequently converted to new classes of equity as discussed below.

Second Amended and Restated Limited Liability Company Agreement of Eureka Holdings

On September 16, 2014, Magnum Hunter entered into a Transaction Agreement with MSI, a non-related party, relating to a separate purchase agreement between MSI and Ridgeline providing for the purchase by MSI of all the Company’s Series A Preferred Units and Class A Common Units owned by Ridgeline. On October 3, 2014, the first closing contemplated in the Transaction Agreement, which consisted of the purchase by MSI of Ridgeline’s equity interests in the Company and the execution of the Second Amended and Restated Limited Liability Company Agreement of Eureka Hunter Holdings, was consummated between MSI and Ridgeline.

In accordance with the terms of the New LLC Agreement, all of the Company’s Series A Preferred Units and Class A Common Units acquired by MSI from Ridgeline were converted into a new class of preferred equity interests of the Company, the Series A-2 Units. Magnum Hunter’s Class A Common Units held on the date of the first closing were also converted into a new class of common equity (the “Series A-1 Units”). The Series A-2 Units will have a preferential distribution rights over the Series A-1 Units in the event a Sale Transaction or Initial Public Offering (both as defined in the New LLC Agreement) occurs subsequent to January 1, 2017. The Series A-2 Units also include certain veto rights with regards to a Sale Transaction or Initial Public Offering prior to January 1, 2017 unless certain thresholds are achieved (as provided in the New LLC Agreement). The preference on distribution rights available to the Series A-2 Unit members provides a specified minimum Internal Rate of Return (as defined in the New LLC Agreement), depending upon the proceeds available for distribution upon a Sale Transaction or an Initial Public Offering. Once the minimum Internal Rate of Return applicable to Series A-2 Units members is achieved, Series A-2 Unit members and Series A-1 Unit members will participate in remaining distributions according to their Upside Sharing Percentages (as defined in the New LLC Agreement). Series A-2 Unit members also hold certain veto and approval rights that Series A-1 Unit members do not.

As a result of the conversion of the Company’s Series A Preferred Units into Series A-2 Units, the features, terms, and cash flows associated with the Series A-2 Units are substantially different than those of the former Series A Preferred Units. Consequently, the conversion was treated as an extinguishment of a class of equity, and an issuance of a new class of equity that was recorded initially at fair value. Additionally, the accrued and unpaid dividends outstanding on the Company’s Series A Preferred Units and the fair value associated with the embedded derivative attached to the Series A Preferred Units, which was previously accounted for as a liability in the consolidated financial statements, was included in determining the total carrying value of the equity to be extinguished. The fair value of the new preferred Series A-2 Units upon conversion was $389.2 million. The difference between the fair value of the Series A-2 Units and the carrying value of the extinguished Series A Preferred Units, including the embedded derivative and accrued dividends, was recorded as an adjustment to members' equity.

On November 18, 2014, the Company, Magnum Hunter and MSI entered into a letter agreement (the “Letter Agreement”) amending certain provisions of the Transaction Agreement entered into on September 16, 2014, pursuant to which the Company, Magnum Hunter, and MSI agreed to reduce Magnum Hunter’s capital account in the Company by 1,227,182 Series A-1 Units, effective as of the date of the New LLC Agreement, to take into account certain excess capital expenditures incurred by the Company in

connection with certain of Eureka Pipeline’s fiscal year 2014 pipeline construction projects and planned fiscal year 2015 pipeline construction projects. The adjustment resulted in a reduction of the Company's issued and outstanding units as of December 31, 2014. In executing the Letter Agreement, the Company, Magnum Hunter and MSI also agreed to adjust the amount and timing of (a) certain capital contributions by Magnum Hunter and MSI to the Company and b) MSI’s purchase of a portion of Magnum Hunter’s equity interests in the Company pursuant to the second closing as follows:


i.	In connection with certain of the Company’s capital projects for fiscal year 2014, on November 20, 2014, MSI made a $30.0 million capital contribution in cash to the Company in exchange for additional Series A-2 Units.


ii.	On November 20, 2014, Magnum Hunter made a $20.0 million capital contribution in cash to the Company in exchange for additional Series A-1 Units.


iii.	In addition, in connection with a closing that occurred on December 18, 2014, MSI made a $10.0 million capital contribution in cash to the Company in exchange for additional Series A-2 Units.

iv.

The Second Closing was accelerated to the date of closing of MSI’s capital contribution referred to in item (iii) above, and, pursuant to the accelerated closing, Magnum Hunter sold to MSI 5.5% of its Series A-1 Units (reduced from the amount originally provided to be sold to MSI at the Second Closing under the Transaction Agreement) for $55.0 million in cash (correspondingly reduced from the amount originally provided to be received by Magnum Hunter from MSI at the Second Closing). The Series A-1 Units sold to MSI by Magnum Hunter were converted into Series A-2 Units upon receipt by MSI on a one-for-one basis, as provided in the Transaction Agreement and the New LLC Agreement.

Magnum Hunter has also agreed to make a $13.3 million capital contribution in cash to the Company on or before March 31, 2015 in exchange for additional Series A-1 Units. However, Magnum Hunter and MSI subsequently entered into discussions regarding the Company's 2015 capital expenditure budget, including the amount, timing and expected funding of the various anticipated capital expenditures. Magnum Hunter anticipates that, as a result of these discussions, the parties will determine the priority, timing and (to the extent not funded by operating cash flows or borrowings) allocation between the parties of the funding of the anticipated expenditures that will most effectively serve the 2015 project plans of the Company. Magnum Hunter also anticipates that, as part of these determinations, MSI will make the $13.3 million cash capital contribution referred to above in exchange for additional Series A-2 Units under the terms of the carried interest provisions discussed below.

At December 31, 2014, Magnum Hunter and MSI owned 48.60% and 49.84%, respectively, of the Company.

In accordance with the terms and conditions of the New LLC Agreement, as amended by the Letter Agreement above, Magnum Hunter has the right, under certain circumstances, to not make its portion of certain required future capital contributions to the Company, and, if Magnum Hunter validly exercises its right to do so, MSI would make the capital contributions which otherwise would be made by Magnum Hunter, with Magnum Hunter having the right to make catchup capital contributions before the earlier of one year from the date of the capital contribution or an MLP IPO (as defined in New LLC Agreement) that would bring Magnum Hunter's ownership interest back to the level prior to the capital call. We refer to this as the “carried interest” provided by MSI. This carried interest is at no cost to Magnum Hunter but is subject to a maximum limit of $60.0 million. As of December 31, 2014, Magnum Hunter had deferred capital contributions of $30.0 million, for which it has the right to make future catch-up contributions.

The Transaction Agreement also provided MSI with certain substantive participation rights which allow MSI to participate in the management and operation of the Company. As a result of MSI acquiring additional Series A-2 Units, which brought their total equity interest in the Company to 49.84% as of December 18, 2014, the board of managers of the Company was expanded from five to six members and MSI appointed the sixth manager, so that currently the board of managers of the Company consists of three representatives of Magnum Hunter and three representatives of MSI. Pursuant to the terms of the New LLC Agreement, the number and composition of the board of managers may change over time based on MSI’s percentage ownership interest in the Company (after taking into account any additional purchases of preferred units) or the failure of Eureka Holdings to satisfy certain performance goals by December 31, 2018 (or as of any quarter after such date).

The board of managers shall have the exclusive and complete discretion to manage and conduct the business and affairs of the Company, to make all decisions affecting the business and affairs of the Company, and to take all such actions as it deems necessary, advisable or appropriate to accomplish the purposes and direct the actions of the Company, except as otherwise expressly set forth in the New LLC Agreement. Board approval is required for the following: (i) all capital or operating budget for any fiscal year, (ii) the incurrence of any capital expenditure meeting certain threshold requirements, (iii) calls for capital contributions, (iv) all distributions, (v) the incurrence of debt (other than indebtedness pursuant to borrowings under the existing First Amended Credit

Agreement in the ordinary course of business), (vi) the modification, amendment, replacement, or termination of any insurance policy, (vii) any voluntary change in accounting policies or tax classification, (viii) the formation of any subsidiary of the Company, and (ix) the entry into or modification, waiver, amendment of termination of any affiliate agreement. In the event of a board deadlock decision, the issue will be referred to a non-binding mediation or arbitration process. The board of managers will hold regular meetings, no less frequently than quarterly. Each manager shall serve in such capacity until such manager's successor has been elected and qualified or until such individual's death, resignation, or removal. In the even that a vacancy is created, such vacancy shall be filled only by consent of the manager or managers designated pursuant to the New LLC Agreement.

Class B Common Units

On May 12, 2014, the Board of Directors of Eureka Holdings approved the Eureka Hunter Holdings, LLC Management Incentive Compensation Plan ("Eureka Holdings Plan") to provide long-term incentive compensation to attract and retain officers and employees of the Company and its affiliates and allow such individuals to participate in the economic success of the Company and its affiliates.

The Eureka Holdings Plan consists of (i) 2,336,905 Class B Common Units representing membership interests in Eureka Holdings ("Class B Common Units"), and (ii) 2,336,905 Incentive Plan Units issuable pursuant to a management incentive compensation plan, which represent the right to receive a dollar value up to the baseline value of a corresponding Class B Common Unit ("Incentive Plan Units"). The Eureka Holdings Plan is administered by the board of managers of Eureka Holdings, and, as administrator of the Eureka Holdings Plan, the board will from time to time make awards under the Eureka Holdings Plan to selected officers and employees of the Company or its affiliates ("Award Recipients").

The Class B Common Units are profits interest awards that carry the right to share in the appreciation in the value of the aggregate common equity in Eureka Holdings over and above a baseline value that is determined on the date of grant of the Class B Common Units. The Class B Common Units vest in five substantially equal annual installments on each of the first five anniversaries of the date of grant, subject to the Award Recipient's continued employment, and automatically vest in full upon the occurrence of a liquidity event (as defined in the Eureka Holdings Plan) (including if the Award Recipient's employment is terminated by the Company or an affiliate without cause or due to the Award Recipient's death or disability, in each case, within six months prior to the occurrence of a liquidity event).

If an Award Recipient’s employment is terminated under any other circumstances, all unvested Class B Common Units and Incentive Plan Units will be forfeited immediately upon the Award Recipient’s termination of employment. In addition, vested Class B Common Units will be forfeited if an Award Recipient’s employment is terminated prior to the occurrence of a liquidity event by the Company or an affiliate for cause or due to the Award Recipient’s resignation. If, following a termination of his or her employment by the Company or an affiliate without cause or due to the Award Recipient’s death or disability, an Award Recipient retains vested Class B Common Units, the Company will have the right, but not the obligation, to repurchase such vested Class B Common Units at fair market value.

Distributions, if any, with respect to the Class B Common Units issued pursuant to the Class B Common Unit Agreement will be made in accordance with, and subject to, the New LLC Agreement, provided, that, no distributions shall be made with respect to any vested or unvested Class B Common Units unless and until a liquidity event has occurred (other than tax distributions that may be made in accordance with the New LLC Agreement). Payment in respect of vested Class B Common Units and Incentive Plan Units will become due upon the occurrence of a liquidity event and are expected to be settled in cash upon the occurrence of a liquidity event, except in the case of a qualified public offering (as defined in the Eureka Holdings Plan), in which case settlement will occur partially in cash and partially in shares of the resulting public entity, with the cash portion not to exceed the amount necessary to cover minimum statutory tax withholdings.

Upon approval of the plan on May 12, 2014, the Board of Directors of the Company granted 894,102 Class B Common Units and 894,102 Incentive Plan Units to key employees of the Company and its subsidiaries. During the fourth quarter of 2014, the board of managers granted an additional 413,110 Class B Common Units and 413,110 Incentive Plan Units to key employees of the Company and its subsidiaries. The Class B Common Units and Incentive Plan Units are accounted for in accordance with ASC 718, Compensation - Stock Compensation. In accordance with ASC 718, compensation cost is accrued when the performance condition (i.e. the liquidity event) is probable of being achieved. As of December 31, 2014, a liquidity event, as defined, was not probable, and therefore, no compensation cost has been recognized.

NOTE 9- RELATED PARTY TRANSACTIONS

From time to time, the Company enters into transactions with Magnum Hunter or related affiliates that have a common owner with the Company in order to reduce risk and create strategic alliances. These transactions include revenue earned by the Company

for providing natural gas gathering services to Triad and certain gas gathering expenses paid to Triad and other related parties. Triad and the Company are parties to an Amended and Restated Gas Gathering Services Agreement, which was executed on March 21, 2012, and amended on October 3, 2014 in contemplation of the New LLC Agreement. Under the terms of the gathering agreement, Triad Hunter committed to the payment of monthly reservation fees for certain maximum daily quantities of gas delivered each day for transportation under various individual transaction confirmations. As of December 31, 2014, Triad Hunter and the Company were parties to six individual transaction confirmations with terms ranging from eight to fourteen years. Triad Hunter’s maximum daily quantity committed was 135,000 MMBtu per day at an aggregate reservation fee of $0.75 per MMBtu. Triad Hunter’s remaining obligation under the contract was $98.0 million as of December 31, 2014. During the year ended December 31, 2014, the Company recorded gas gathering revenue - related party of $14.2 million related to Triad.

The Company also recorded $2.4 million of gas gathering expense for the reimbursement to Triad of liquids produced from our gas gathering facilities. The Company pays GreenHunter Water, LLC ("GreenHunter"), an affilate of Magnum Hunter, for the trucking of liquids produced at certain of the Company's gas gathering facilities. In addition, the Company pays Magnum Hunter and affiliates primarily for marketing services related to the natural gas gathered by the Company. During the year ended December 31, 2014, the Company recorded gas gathering expense of $0.6 million for services performed by GreenHunter, and gas gathering expense of $0.3 million for services provided by Magnum Hunter and affiliates.

Magnum Hunter has incurred various corporate overhead expenses on behalf of the Company and has provided various shared services to the Company including general and administrative services, information services, human resources, and other support departments. The Company and Magnum Hunter entered into a Services Agreement on March 20, 2012, and amended on September 15, 2014, under which Magnum Hunter agreed to provide administrative services to the Company related to its operations. The terms of the Services Agreement provide that the Company will pay an administrative fee of $0.5 million per annum and a personnel services fee equal to Magnum Hunter's employee cost plus 1.5% subject to mutually agreed upon increases from time to time. These costs are included in general and administrative expense on the consolidated statement of operations. Under the terms of the New LLC Agreement, which was executed and became effective on October 3, 2014, certain specified employees of Magnum Hunter, for which the Company previously paid a personnel services fee, will become employees of the Company on or before March 31, 2015, unless otherwise modified or amended.

In addition to the costs provided for in the Services Agreement, allocations have been recorded by the Company for items such as executive oversight, accounting, treasury, tax and legal. Allocations to the Company were based on a proportional allocation methodology applied to relevant shared costs of Magnum Hunter and the Company, which the Company believes results in a reasonable allocation. These allocations are not necessarily indicative of the cost that the Company would have incurred had it operated as an independent stand-alone entity. As such, the consolidated financial statements do not fully reflect what the Company's financial position, results of operations and cash flows would have been had the Company operated as a stand-alone company during the period presented. During the year ended December 31, 2014, the Company recorded general and administrative expense of $8.2 million for such related party services, which includes an allocation of $6.6 million. The allocation is presented as a contribution to the Company in the consolidated statement of changes in members' equity (deficit).

As of December 31, 2014, the Company had accounts receivable due from related parties of $4.6 million, the majority of which related to gas gathering services for Triad.

As of December 31, 2014, the Company had accounts payable and accrued expenses to related parties of $3.4 million. Payables to related parties primarily consist of gas gathering related costs owed to Triad and GreenHunter and amounts due to Magnum Hunter for employee benefits and other corporate expenses.

Mr. Gary Evans, our Chief Executive Officer, was a 4.0% limited partner in TransTex, which limited partnership received total consideration of 622,641 Class A Common Units of Eureka Holdings and cash of $46.0 million upon the Company’s acquisition of certain of its assets. This includes units issued in accordance with the agreement of Eureka Holdings and TransTex to provide the limited partners of TransTex the opportunity to purchase additional Class A Common Units of Eureka Holdings in lieu of a portion of the cash distribution they would otherwise receive. Certain limited partners purchased such units, including Mr. Evans, who purchased 27,641 Class A Common Units of Eureka Holdings for $0.6 million at the same purchase price offered to all TransTex investors.

Effective November 26, 2014, Don Kirkendall, Senior Vice President, resigned from his position with the Company. The Class B Units granted to Mr. Kirkendall were forfeited upon resignation.

On December 12, 2014, the Company transferred its 50% ownership interest in a cryogenic gas treating plant (“Rogersville”) located in Hawkins County, Tennessee, to Magnum Hunter in accordance with the New LLC Agreement. Eureka Holdings was party to a joint ownership agreement with an unrelated gas processor regarding the construction, ownership and operation of the

Rogersville facility. Based on the terms of the joint venture agreement, each party owned 50% of the ownership interest in the facility. The third party gas processor was designated as the manager of the facility with full control of all operations. Revenue generated from and capital expenditures and operating expenses incurred in connection with the operation of the facility were allocated on a pro-rata basis in proportion to each owner’s ownership interest. The Company recorded its proportional cost of the Rogersville facility and its share of revenues and expenses in the consolidated financial statements, as earned and incurred prior to the transfer of its ownership interest to Magnum Hunter. The transfer of interest to Magnum Hunter was recorded as a distribution of $2.8 million. In conjunction with the transfer of ownership interest, the Company's rights and obligations under the joint venture agreement were legally transferred to Magnum Hunter.

For the year ended December 31, 2014, the Company recorded revenue of $1.5 million, and recorded expenses of $0.7 million, attributable to the Rogersville facility. During the year ended December 31, 2014, the Company paid a capital call of $0.7 million to the third party gas processor.

NOTE 10 - COMMITMENTS AND CONTINGENCIES

The following table presents our contractual obligations as of December 31, 2014:



(in thousands)	2015		2016		2017		2018		Total
Long-term debt (1)	$	—	$	—	$	—	100,000		100,000
Interest on long-term debt (2)	2,670		2,670		2,670		645		8,655
Gas compression agreements (3)	2,038		1,527		83		—		3,648
Total	$	4,708	$	4,197	$	2,753	$	100,645	$	112,303
(1) See Note 6 - "Credit Facilities" to the Company's consolidated financial statements.
(2) Interest payments have been calculated by applying the interest rate in effect as of December 31, 2014 to the outstanding debt balance as of December 31, 2014.
(3) Amounts relate to the rental of multiple compressor units by the Company, which are accounted for as operating leases. On June 27, 2012, the Company entered into a master services agreement allowing for the rental of individual compressors with varying monthly payments and lease terms.

Legal Proceedings

On April 11, 2013, a flash fire occurred at the Company's Twin Hickory site located in Tyler County, West Virginia. The incident occurred during a pigging operation at a natural gas receiving station. Two employees of third-party contractors received fatal injuries. Another employee of a third-party contractor was injured.

In mid-February 2014, the estate of one of the deceased third-party contractor employees sued Eureka Pipeline and certain other parties in a case styled Karen S. Phipps v. Eureka Hunter Pipeline, LLC et al., Civil Action No. 14-C-41, in the Circuit Court of Ohio County, West Virginia. In October 2014, in a case styled Exterran Energy Solutions, LP v. Eureka Hunter Pipeline, LLC and Magnum Hunter Resources Corporation, Civil Action No. 2014-63353, in the District Court of Harris County, Texas, Exterran Energy Solutions, LP, one of the co-defendants in the Phipps lawsuit, filed suit against MHR and Eureka Pipeline seeking a declaratory judgment that Eureka Pipeline is obligated to indemnify Exterran with respect to claims arising out of the incident. In April 2014, the estate of the other deceased third-party contractor employee sued MHR, Eureka Pipeline and certain other parties in a case styled Antoinette M. Miller v. Magnum Hunter Resources Corporation et al, Civil Action No. 14-C-111, in the Circuit Court of Ohio County, West Virginia. The plaintiffs allege that Eureka Pipeline and the other defendants engaged in certain negligent and reckless conduct which resulted in the wrongful death of the third-party contractor employees. The plaintiffs have demanded judgment for an unspecified amount of compensatory, general and punitive damages. Various cross-claims have been asserted. In May 2014, the injured third-party contractor employee sued MHR and certain other parties in a case styled Jonathan Whisenhunt v. Magnum Hunter Resources Corporation et al, Civil Action No. 14-C-135, in the Circuit Court of Ohio County, West Virginia. The claim filed by the injured third-party contractor employee, Jonathan Whisenhunt, has been resolved and dismissal of this case is anticipated in the near term. A portion of the settlement was paid by an insurer of Eureka Pipeline, and the remainder paid by the co-defendants or their insurers. The cross-claims among the defendants in the Whisenhunt litigation have not been resolved. Investigation regarding the incident is ongoing. It is not possible to predict at this juncture the extent to which, if at all, Eureka Pipeline or any related entities will incur liability or damages because of this incident. However, the Company believes that its insurance coverage will be sufficient to cover any losses or liabilities it may incur as a result of this incident.

Other

From time to time, the Company may be involved in legal, environmental, tax and regulatory proceedings in the ordinary course of business. In the opinion of management, the ultimate resolution of the potential or existing claims and complaints will not have a material adverse effect on the Company’s financial position, results or operations or cash flows.

NOTE 11 - CONCENTRATIONS OF CREDIT RISK

Substantially all of the Company's receivables are from companies in a similar industry and include independent exploration and production companies, pipeline companies and marketers. The industry concentration of these customers may impact the Company's overall exposure to credit risk, either positively or negatively, as its customers may be similarly affected by changes in commodity prices, regulation and other economic factors. The Company performs credit analysis in order to monitor its credit risks and ensure that its customers are creditworthy.

For the year ended December 31, 2014, revenue from Triad and one third-party customer constituted approximately 51% of the Company's total revenue. Although the Company is exposed to a concentration of credit risk, management believes the counterparties are credit worthy.

NOTE 12 - SUBSEQUENT EVENTS

Subsequent events have been evaluated for the period subsequent to December 31, 2014 through March 12, 2015, the date the financial statements were issued.

Subsequent to December 31, 2014, the Company borrowed $50.0 million under the First Amended Credit Agreement, increasing the Company's total outstanding debt to $150.0 million.

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