Magnum Hunter Resources Corporation (NYSE: MHR) (NYSE Amex:
MHR-PrC) (the "Company") announced today operational and financial
results for the three and twelve month periods ended December 31,
2010.
2010 Summary
- Substantial growth in reserves (+116%) and production
(+133%)
- Substantially expanded lease acreage positions in the Eagle
Ford and Marcellus shale plays
- Completed asset acquisition of Triad Energy for $81
million
- Agreed to acquire NGAS Resources in a stock and assumed debt
transaction valued at $98 million (Appalachia)
- Agreed to acquire NuLoch Resources in a stock transaction
valued at $327 million (Williston Basin)
- Divested non-core Cinco Terry asset for $21.5 million
- Issued $100 million in Perpetual Preferred Stock
(non-convertible)
- Successful results in the Marcellus and Eagle Ford drilling
programs
- Began trading on the NYSE
Operational Results for
the Three Months and Full Year Ended December
31, 2010
Production for the fourth quarter of 2010 was approximately 152
mboe (66% crude oil and NGLs), or 1,652 boe per day, representing a
125% increase compared with production of approximately 68 mboe
(71% crude oil and NGLs), or 736 boe per day, in the fourth quarter
of 2009. Fourth quarter 2010 production was negatively impacted by
the October 1, 2010 sale in the amount of $21.5 million of the
Company's 10% non-operated working interest in the Cinco Terry
field in West Texas, which accounted for approximately 470 boe per
day of production at the time of the sale. However, due to the
Company's successful drilling in both the oil leg of its Eagle Ford
Shale play of south central Texas and the liquids rich Marcellus
Shale play of northwest West Virginia, we were able to more than
replace this production by year end. Magnum Hunter's average daily
production rate as of December 31, 2010 was 2,732 Boe per day (55%
crude oil) and the Company is currently producing in excess of
3,000 boe per day (57% crude oil). Upon closing of the announced
acquisitions of NGAS Resources, Inc. (NASDAQ: NGAS) ("NGAS") and
NuLoch Resources, Inc. (TSX: NLR) (OTCQY: NULCF) ("NuLoch"), Magnum
Hunter expects daily production to increase to over 6,000 boe per
day (56% crude oil) and anticipates an exit rate in 2011 exceeding
10,000 boe per day.
The Company's fiscal year ended December 31, 2010 production
increased 133% to 597 mboe from 257 mboe for the year ended
December 31, 2009. Production for 2010 was approximately 64% oil
and NGLs compared to 70% oil and NGLs for 2009. The change in the
percent of oil and gas produced was primarily due to the
acquisition of the assets of Triad Energy, which closed in February
2010. Our average daily production on an equivalent basis was 1,636
boe per day during 2010 compared to 703 boe per day for 2009,
representing an overall increase of 133%, or 933 boe per day.
We anticipate our fiscal year 2011 capital expenditure budget to
be approximately $150 million for Magnum Hunter with the capital
being predominantly allocated to the Company's drilling in
unconventional resource plays, including the oil leg of the Eagle
Ford Shale play of central and south Texas ($65 million to drill 7
net wells) and the liquids rich portion of the Marcellus Shale play
in northwest West Virginia ($60 million and 12.5 net wells). The
Company intends to expand its overall capital budget once the
acquisition of NGAS and NuLoch are ultimately completed.
Financial Results for
the Three Months Ended December 31,
2010
Magnum Hunter reported a net loss of $1.9 million, or ($0.03)
per basic and diluted share outstanding, for the fourth quarter of
2010, as compared to 2009's fourth quarter net loss of $7.3
million, or ($0.16) per basic and diluted share outstanding.
Adjusting for non-recurring and non-cash charges, Magnum Hunter's
fourth quarter 2010 net loss was approximately $2.7 million, or
($0.04) per basic and diluted common share. The Company's fourth
quarter 2010 net loss included the following non-recurring and
non-cash charges: (i) non-cash general and administrative expenses
associated with employee compensation for a total of $2.4 million;
(ii) non-recurring general and administrative charges related to
employee severance compensation of $0.3 million; (iii) non-cash
exploration and impairment expense of $0.5 million; (iv) unrealized
loss on derivative contracts in the amount of $1.9 million; (v)
non-recurring acquisition expenses of $0.8 million; and (vi) a gain
on the sale of the Cinco Terry property of $6.7 million.
Financial Results for
the Twelve Months Ended December 31,
2010
Magnum Hunter reported a net loss of $16.3 million, or ($0.25)
per basic and diluted share outstanding for the full fiscal year
2010, as compared to the net loss of $15.2 million for the full
fiscal year 2009, or ($0.39) per basic and diluted share
outstanding. Adjusting for non-recurring and non-cash charges,
Magnum Hunter's fiscal year 2010 net loss was approximately $3.9
million, or ($0.06) per basic and diluted common share. The
Company's fiscal year 2010 net loss included the following
non-recurring and non-cash charges: (i) non-cash general and
administrative expenses associated with employee compensation for a
total of $11.3 million; (ii) non-recurring general and
administrative charges of $0.8 million; (iii) non-cash exploration
expense of $1.6 million; (iv) unrealized loss on derivative
contracts in the amount of $3.0 million; (v) non-recurring
acquisition expenses of $2.2 million; and (vi) a gain on the sale
of the Cinco Terry property of $6.7 million.
Capital Expenditures and Liquidity
Magnum Hunter's liquidity position continues to improve through
a combination of increased cash flow, expansion of our senior
commercial bank facility, completion of the full funding ($100
million) of our Series C Perpetual Preferred Stock (non-convertible
into common), and the sale of certain non-core assets. Following
the anticipated closing of the NGAS and NuLoch transactions, we
anticipate the Company's borrowing base on its senior commercial
bank facility to be approximately $145 million. After funding its
fiscal year 2011 capital program to date, the Company's liquidity
continues to be approximately $45 million as of February 16, 2011.
Magnum Hunter believes it has adequate resources to meet its
planned expenditures under its capital budget for fiscal year 2011.
The Company has continued to strengthen its capital structure as
its net debt/capitalization ratio declined to 16% as of December
31, 2010.
Management Comments
Mr. Ronald D. Ormand, Executive Vice President and Chief
Financial Officer of Magnum Hunter Resources Corporation,
commented, "We are very pleased with the significant financial and
operational progress made in 2010. Our focused strategy of
targeting three of the highest rate of return unconventional shale
plays in the United States has positioned the Company for sustained
growth and ultimate profitability. The Company was able to
substantially increase reserves and cash flow, without the full
impact of our drilling program which did not begin to affect our
results until the fourth quarter of 2010. However, we will have the
benefit of a full year of our drilling program in 2011. Since we
have built the Company to operate as a much larger entity, we have
completed substantially all of our additions to general and
administrative costs; thus, our increasing revenue from production
growth will allow us to substantially improve operating margins and
profitability as we move through 2011. The increasing scale of our
operations has also led to an improved cost of capital, a much
stronger balance sheet and improved liquidity. Our existing
liquidity, as well as our ability to access lower cost capital,
will allow us to sufficiently fund our capital expenditure program
budgeted for 2011. Going forward, Magnum Hunter is well positioned
to benefit from the growth foundation our management team has
established over the last eighteen months. We are most anxious to
begin the integration of the assets and people from both the NGAS
and NuLoch acquisitions currently pending."
Production and Commodity Pricing
Years Ended
Quarter Ended December 31,
------------------- -------------------
4Q 2010 4Q 2009 2010 2009
-------------------------------- -------- -------- -------- --------
Production(1,2)
Oil (mbbls) 95 40 346 140
Gas (mmcfs) 312 116 1,276 458
NGL (mbbls) 5 9 38 40
Total (mboe) 152 68 597 257
Total (boe/d) 1,652 736 1,636 703
Average Prices
Oil (per bbl) $85.16 $67.91 $72.53 $53.61
Gas (per mcf) $4.41 $3.66 $4.85 $3.01
Total average price (per boe) $60.10 $51.24 $55.30 $37.98
(1) Includes Cinco Terry production of 153 boe/d and 313 boe/d for 4Q 2010
and Year Ended 2010 respectively.
(2) Pro forma for Post Rock Acquisition; production from effective date
(11/1/2010) to year end of 134 boe/d.
MAGNUM HUNTER RESOURCES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31,
2010 2009
------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 554,186 $ 2,281,568
Accounts receivable 11,705,046 2,706,086
Derivative assets - 1,261,534
Prepaids and other current assets 867,013 94,113
Assets held for sale -- current - 529,957
------------- -------------
Total current assets 13,126,245 6,873,258
------------- -------------
PROPERTY AND EQUIPMENT:
Oil and natural gas properties, successful
efforts accounting 189,911,500 46,229,171
Gas gathering and other equipment 42,689,125 180,878
------------- -------------
Total property and equipment 232,600,625 46,410,049
OTHER ASSETS:
Assets held for sale -- long term - 11,128,583
Derivative assets - 1,092,152
Deferred financing costs, net of
amortization of $1,236,664 and $35,831,
respectively 2,678,244 1,012,756
Other assets 561,711 67,253
------------- -------------
Total Assets $ 248,966,825 $ 66,584,051
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of notes payable $ 7,132,455 $ 44,157
Accounts payable 29,839,557 3,813,623
Accrued liabilities 3,914,136 885,622
Revenue payable 2,629,999 342,585
Dividend payable - 25,654
Derivative liability 718,771 69,136
Liabilities associated with assets held for
sale -- current - 1,038,598
------------- -------------
Total current liabilities 44,234,918 6,219,375
Payable on sale of partnership 640,695 640,695
Notes payable, less current portion 26,018,615 13,000,000
Derivative payable 59,181 -
Asset retirement obligation 4,455,327 1,964,749
Liabilities associated with assets held for
sale -- long term - 67,557
------------- -------------
Total liabilities 75,408,736 21,892,376
------------- -------------
COMMITMENTS AND CONTINGENCIES (Note 14)
REDEEMABLE PREFERRED STOCK:
Series C Cumulative Perpetual Preferred
Stock, cumulative dividend rate 10.25% per
annum, 4,000,000 authorized, 2,809,456 and
214,950 issued & outstanding as of December
31, 2010 and 2009, respectively, with
liquidation preference of $25.00 per share 70,236,400 5,373,750
------------- -------------
SHAREHOLDERS' EQUITY:
Preferred stock, 6,000,000 shares
authorized, none issued and outstanding - -
Common stock, $0.01 par value; 150,000,000
shares authorized, 74,863,135 and
50,591,610 shares issued and outstanding as
of December 31, 2010 and 2009, respectively 748,631 505,916
Additional paid in capital 152,438,989 71,936,306
Accumulated deficit (49,402,300) (33,135,693)
Treasury Stock, previously deposit on Triad,
at cost, 761,652 shares (1,310,357) (1,310,357)
Unearned common stock in KSOP, at cost (603,613) -
------------- -------------
Total Magnum Hunter Resources Corporation
shareholders' equity 101,871,350 37,996,172
Noncontrolling interest 1,450,339 1,321,753
------------- -------------
Total Shareholders' Equity 103,321,689 39,317,925
------------- -------------
Total Liabilities and Shareholders' Equity $ 248,966,825 $ 66,584,051
============= =============
MAGNUM HUNTER RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Quarter Ended Year Ended
December 31, December 31,
2010 2009 2010 2009
------------ ------------ ------------ ------------
REVENUE:
Oil and gas sales $ 8,067,823 $ 2,407,097 $ 27,714,542 $ 6,606,901
Field operations 1,411,876 - 4,741,889 -
Gain on sale of
assets 71,069 14,000 71,069 14,000
Other income 196,173 22,668 196,173 222,668
------------ ------------ ------------ ------------
Total revenue 9,746,941 2,443,765 32,723,673 6,843,569
------------ ------------ ------------ ------------
EXPENSES:
Lease operating
expenses 2,485,474 758,842 10,399,323 3,878,512
Severance taxes and
marketing 426,649 358,711 2,304,570 499,523
Exploration 238,928 398,204 936,371 790,569
Field Operations 1,345,434 - 4,362,618 -
Impairment of oil &
gas properties 285,795 633,953 305,786 633,953
Depreciation,
depletion and
accretion 3,037,951 1,096,303 8,923,202 3,167,839
General and
administrative 6,997,752 3,969,288 24,900,996 8,490,364
------------ ------------ ------------ ------------
Total expenses 14,817,984 7,215,302 52,132,866 17,460,760
------------ ------------ ------------ ------------
OPERATING LOSS (5,071,043) (4,771,536) (19,409,193) (10,617,191)
OTHER INCOME
(EXPENSE):
Interest income 5,948 35 60,526 959
Interest expense (918,345) (1,308,378) (3,593,524) (2,691,097)
Gain (loss) on
derivative
contracts (1,533,771) (1,297,784) 814,037 (2,325,251)
------------ ------------ ------------ ------------
Loss from continuing
operations before
non-controlling
interest (7,517,211) (7,377,663) (22,128,154) (15,632,580)
Net (income) loss
attributable to
non-controlling
interest (37,363) (66,820) (128,586) 63,156
------------ ------------ ------------ ------------
Net loss
attributable to
Magnum Hunter
Resources from
continuing
operations (7,554,574) (7,444,483) (22,256,740) (15,569,424)
------------ ------------ ------------ ------------
Income from
discontinued
operations 6,811,337 137,355 8,456,811 445,215
------------ ------------ ------------ ------------
Net loss (743,237) (7,307,128) (13,799,929) (15,124,209)
Dividends on
Preferred Stock (1,157,152) (25,654) (2,466,679) (25,654)
------------ ------------ ------------ ------------
Net loss
attributable to
common shareholders $ (1,900,389) $ (7,332,782) $(16,266,608) $(15,149,863)
============ ============ ============ ============
Weighted average
number of common
shares outstanding,
basic and diluted 69,591,110 45,281,529 63,921,525 38,953,834
============ ============ ============ ============
Net loss from
continuing
operations $ (0.13) $ (0.16) $ (0.38) $ (0.40)
Net income from
discontinued
operations $ 0.10 $ 0.00 $ 0.13 $ 0.01
------------ ------------ ------------ ------------
Net loss per common
share, basic and
diluted $ (0.03) $ (0.16) $ (0.25) $ (0.39)
============ ============ ============ ============
MAGNUM HUNTER RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
2010 2009 2010 2009
------------- ------------- ------------- -------------
Cash flows from
operating
activities
Net loss $ (743,237) $ (7,307,128) $ (13,799,928) $ (15,124,209)
Adjustments to
reconcile net
income to net
cash provided
by operating
activities:
Non-controlling
interest 37,363 66,820 128,586 (63,156)
Depletion,
depreciation,
and accretion 3,207,210 1,399,369 10,345,698 4,499,611
Stock-based
compensation 1,229,061 1,329,158 6,380,412 3,091,334
Impairment 285,794 633,953 305,785 633,953
Exploratory
costs - 364,945 - 647,001
Gain on sale of
assets (6,683,896) (14,000) (6,730,680) (14,000)
Unrealized
(gain) loss on
derivative
contracts 1,881,445 4,186,420 3,062,502 7,700,129
Amortization of
deferred
financing cost
included in
interest
expense 339,747 923,475 1,200,833 1,233,611
Accounts
receivable
and accrued
revenue (4,106,229) (1,692,448) (2,949,213) (1,908,945)
Prepaid
expenses and
other current
assets 566,222 60,196 134,277 (16,313)
Accounts
payable 10,440,459 1,321,705 8,865,622 1,571,108
Revenue
payable 221,870 129,674 359,476 342,585
Accrued
liabilities (11,488,552) 716,284 (8,470,237) 779,030
------------- ------------- ------------- -------------
Net cash
provided by
(used in)
operating
activities (4,812,743) 2,118,423 (1,166,867) 3,371,739
------------- ------------- ------------- -------------
Cash flows from
investing
activities
Capital
expenditures (53,719,490) (2,521,387) (81,842,289) (13,274,656)
Change in
advances 332,239 (1,326,889) 1,764,852 (1,326,889)
Cash received in
purchase of
Sharon
Resources, Inc. - - - 235,023
Net cash paid in
acquisition of
Triad - - (59,500,299) -
Proceeds from
sale of assets 21,188,652 500,000 21,238,322 500,000
Purchase of
derivatives - (2,700,850) - (2,700,850)
Change in
deposits 1,038,539 (56,246) 58,681 (56,246)
------------- ------------- ------------- -------------
Net cash used in
investing
activities (31,160,060) (6,105,372) (118,280,733) (16,623,618)
------------- ------------- ------------- -------------
Cash flows from
financing
activities
Net proceeds
from sale of
common stock
and warrants 14,255,368 14,095,017 38,678,319 14,095,017
Net proceeds
from sale of
preferred
shares 40,564,830 4,955,545 63,443,681 4,955,545
Proceeds from
exercise of
warrants 2,315,601 - 16,106,060 -
Loan KSOP shares (61,247) - (603,613) -
Options
exercised 116,053 - 124,828 -
Options
surrendered for
cash - - (115,500) -
Preferred stock
dividend paid (1,157,152) - (2,492,333) -
Principal
payments on
debt (49,107,101) (34,066,444) (84,885,648) (34,193,566)
Proceeds from
debt borrowings 29,000,286 20,000,860 101,580,745 25,718,196
Payment on
payable on sale
of partnership - (113,560)
Payment of
deferred
financing costs (236,250) (1,048,587) (2,866,321) (1,048,587)
Redemption of
preferred stock - - (11,250,000) -
------------- ------------- ------------- -------------
Net cash
provided by
(used in)
financing
activities 35,690,388 3,936,391 117,720,218 9,413,045
------------- ------------- ------------- -------------
Net decrease in
cash and cash
equivalents (282,415) (50,558) (1,727,382) (3,838,834)
Cash and cash
equivalents,
beginning of
period 836,601 2,332,126 2,281,568 6,120,402
------------- ------------- ------------- -------------
Cash and cash
equivalents,
end of period $ 554,186 $ 2,281,568 $ 554,186 $ 2,281,568
============= ============= ============= =============
Magnum Hunter will host a conference call at 9:00 AM (Central
Time) on Friday, February 18, 2011, to discuss the fourth quarter
2010 and fiscal year 2010 financial results and other related
matters.
To access the conference call, please go to:
http://us.meeting-stream.com/magnumhunterresources_021811 for a
live web cast or dial 866-348-0480 (international dial-in use
706-643-5340) and provide the access code #45156977 when
prompted.
A transcript of this conference call will be available on
Monday, February 21, 2011 on the Company's website,
www.magnumhunterresources.com, under Investors. The transcript will
be available for 12 months. Our annual report on Form 10-K for the
year ended December 31, 2010, to be filed with the Securities and
Exchange Commission ("SEC"), will also be available on our website
under Investors, upon filing with the SEC.
About Magnum Hunter Resources
Corporation
Magnum Hunter Resources Corporation and subsidiaries are a
Houston, Texas based independent exploration and production company
engaged in the acquisition of exploratory leases and producing
properties, secondary enhanced oil recovery projects, exploratory
drilling, and production of oil and natural gas in the United
States. The Company is presently active in three of the highest
rate of return unconventional shale plays in the United States
today.
For more information, please view our website at
http://www.magnumhunterresources.com/
Forward-Looking Statements
The statements and information contained in this press release
that are not statements of historical fact, including all estimates
and assumptions contained herein, are "forward looking statements"
as defined in Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward looking statements include, among others,
statements, estimates and assumptions relating to our business and
growth strategies, our oil and gas reserve estimates, our ability
to successfully and economically explore for and develop oil and
gas resources, our exploration and development prospects, future
inventories, projects and programs, expectations relating to
availability and costs of drilling rigs and field services,
anticipated trends in our business or industry, our future results
of operations, our liquidity and ability to finance our exploration
and development activities, market conditions in the oil and gas
industry and the impact of environmental and other governmental
regulation. In addition, with respect to our pending acquisitions
of NGAS Resources, Inc. and NuLoch Resources Inc., forward-looking
statements include, but are not limited to, statements regarding
the expected timing of the completion of the proposed transactions;
the ability to complete the proposed transactions considering the
various closing conditions; the benefits of such transactions and
their impact on the Company's business; and any statements of
assumptions underlying any of the foregoing. In addition, if and
when either proposed transaction is consummated, there will be
risks and uncertainties related to the Company's ability to
successfully integrate the operations and employees of the Company
and the acquired business. Forward-looking statements generally can
be identified by the use of forward-looking terminology such as
"may", "will", "could", "should", "expect", "intend", "estimate",
"anticipate", "believe", "project", "pursue", "plan" or "continue"
or the negative thereof or variations thereon or similar
terminology. These forward-looking statements are subject to
numerous assumptions, risks, and uncertainties. Factors that may
cause our actual results, performance, or achievements to be
materially different from those anticipated in forward-looking
statements include, among other, the following: adverse economic
conditions in the United States and globally; difficult and adverse
conditions in the domestic and global capital and credit markets;
changes in domestic and global demand for oil and natural gas;
volatility in the prices we receive for our oil and natural gas;
the effects of government regulation, permitting, and other legal
requirements; future developments with respect to the quality of
our properties, including, among other things, the existence of
reserves in economic quantities; uncertainties about the estimates
of our oil and natural gas reserves; our ability to increase our
production and oil and natural gas income through exploration and
development; our ability to successfully apply horizontal drilling
techniques and tertiary recovery methods; the number of well
locations to be drilled, the cost to drill, and the time frame
within which they will be drilled; drilling and operating risks;
the availability of equipment, such as drilling rigs and
transportation pipelines; changes in our drilling plans and related
budgets; and the adequacy of our capital resources and liquidity
including, but not limited to, access to additional borrowing
capacity.
With respect to the Company's pending acquisitions, factors,
risks and uncertainties that may cause actual results, performance
or achievements to vary materially from those anticipated in
forward-looking statements include, but are not limited to, the
risk that either proposed transaction will not be consummated;
failure to satisfy any of the conditions to either proposed
transaction, such as in the case of the NGAS transaction the
inability to obtain the requisite approvals of the NGAS
shareholders and the Supreme Court of British Columbia, or in the
case of the NuLoch transaction the inability to obtain the
requisite approvals of NuLoch's shareholders, the Company's
shareholders and the Court of Queen's Bench of Alberta; adverse
effects on the market price of our common stock or on our operating
results because of a failure to complete either proposed
transaction; failure to realize the expected benefits of either
proposed transaction; negative effects of announcement or
consummation of either proposed transaction on the market price of
our common stock; significant transaction costs and/or unknown
liabilities; general economic and business conditions that affect
the companies following the proposed transaction; and other
factors. These factors are in addition to the risks described in
our public filings made from time to time with the Securities and
Exchange Commission. Most of these factors are difficult to
anticipate and beyond our control. Because forward-looking
statements are subject to risks and uncertainties, actual results
may differ materially from those expressed or implied by such
statements. Readers are cautioned not to place undue reliance on
forward-looking statements, contained herein, which speak only as
of the date of this document. Other unknown or unpredictable
factors may cause actual results to differ materially from those
projected by the forward-looking statements. Unless otherwise
required by law, we undertake no obligation to publicly update or
revise any forward-looking statements, including estimates, whether
as a result of new information, future events, or otherwise. We
urge readers to review and consider disclosures we make in our
public filings made from time to time with the Securities and
Exchange Commission that discuss factors germane to our business,
including our Annual Report on Form 10-K for the year ended
December 31, 2010. All forward-looking statements attributable to
us are expressly qualified in their entirety by these cautionary
statements.
Additional Information About the Proposed NuLoch Transaction
In connection with the proposed NuLoch transaction, the Company
will file a preliminary proxy statement and definitive proxy
statement with the Securities and Exchange Commission ("SEC"). The
information contained in the preliminary filing will not be
complete and may be changed. STOCKHOLDERS ARE
URGED TO READ THE DEFINITIVE PROXY STATEMENT WHEN IT BECOMES
AVAILABLE AND ANY OTHER RELEVANT MATERIALS FILED WITH THE SEC
CAREFULLY IN THEIR ENTIRETY BEFORE MAKING ANY VOTING OR INVESTMENT
DECISION WITH RESPECT TO THE PROPOSED TRANSACTION BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND
THE PARTIES THERETO.
The definitive proxy statement will be mailed to the Company's
stockholders seeking their approval of the issuance of the Magnum
Hunter shares as consideration for the proposed transaction,
including the Magnum Hunter shares issuable upon exchange of
certain exchangeable shares that may be issued in connection with
the transaction. The Company's stockholders may also obtain a copy
of the definitive proxy statement free of charge once it is
available by directing a request to: Magnum Hunter Resources
Corporation at 832-369-6986 or 777 Post Oak Boulevard, Suite 650,
Houston, Texas 77056 Attention: Investor Relations. In addition,
the preliminary proxy statement, definitive proxy statement and
other relevant materials filed with the SEC will be available free
of charge at the SEC's website at www.sec.gov or stockholders may
access copies of such documentation filed with the SEC by the
Company by visiting the Investors section of the Company's website
at www.magnumhunterresources.com.
Participants in the Solicitation
The Company and its respective directors, executive officers and
other members of management and employees, under SEC rules, may be
deemed to be participants in the solicitation of proxies in
connection with the proposed transaction. Information regarding the
names, affiliations and interests of certain of the Company's
executive officers and directors in the solicitation is available
in the proxy statement for the Company's 2010 Annual Meeting of
Stockholders, which was filed with the SEC on September 3,
2010.
This document shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there by
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
The Magnum Hunter shares and the exchangeable shares to be issued
in the proposed transaction in exchange for NuLoch shares have not
been and will not be registered under the Securities Act of 1933,
as amended (the "Securities Act"), and may not be offered or sold
in the United States absent registration or an applicable exemption
from registration requirements. The Company intends to issue such
shares pursuant to the exemption from registration set forth in
Section 3(a)(10) of the Securities Act. The arrangement agreement
for the transaction contemplates that the issuance of the Magnum
Hunter shares upon exchange of the exchangeable shares will be
registered under the Securities Act.
Additional Information About the Proposed NGAS Transaction
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there by
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
In connection with the proposed NGAS transaction, NGAS Resources,
Inc. will file a proxy statement and NGAS Resources, Inc. and
Magnum Hunter will file other relevant materials with the SEC.
INVESTORS AND SECURITY HOLDERS OF NGAS RESOURCES,
INC. ARE URGED TO READ THE PROXY STATEMENT AND THE OTHER RELEVANT
MATERIALS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY
BECOME AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT DECISION
WITH RESPECT TO THE PROPOSED TRANSACTION BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE
PARTIES THERETO.
Investors and security holders may obtain a free copy of the
proxy statement and other relevant materials when they become
available and any other documents filed by Magnum Hunter and NGAS
Resources, Inc. with the SEC, at the SEC's website at www.sec.gov.
The proxy statement and such other documents filed by NGAS
Resources Inc. may also be obtained for free by contacting NGAS
Resources, Inc. at 959-263-3948 or 120 Prosperous Place, Suite 201,
Lexington, Kentucky 40509-1844 or visiting NGAS Resources, Inc.'s
website at www.ngas.com. Copies of any materials filed by Magnum
Hunter may also be obtained for free by contacting Magnum Hunter at
832-369-6986 or 777 Post Oak Boulevard, Suite 650, Houston, Texas
77056 Attention: Investor Relations or visiting Magnum Hunter's
website at www.magnumhunterresources.com.
Participants in the Solicitation
Magnum Hunter, NGAS Resources, Inc. and their respective
directors, executive officers and other members of management and
employees, under SEC rules, may be deemed to be participants in the
solicitation of proxies of NGAS Resources, Inc. shareholders in
connection with the proposed transaction. Investors and security
holders may obtain more detailed information regarding the names,
affiliations and interests of certain of Magnum Hunter's executive
officers and directors in the solicitation by reading the proxy
statement for Magnum Hunter's 2010 Annual Meeting of Shareholders,
which was filed with the SEC on September 3, 2010, and the proxy
statement of NGAS Resources, Inc. relating to the proposed
transaction and other relevant materials filed with the SEC when
they become available. Investors and security holders may obtain
more detailed information regarding the names, affiliations and
interests of NGAS Resources, Inc.'s executive officers and
directors in the solicitation by reading the proxy statement for
NGAS Resources, Inc.'s 2010 Annual Meeting of Shareholders, which
was filed with the SEC on April 29, 2010, and the NGAS Resources,
Inc.'s proxy statement relating to the proposed transaction and
other relevant materials to be filed with the SEC when they become
available. Certain executives and directors of NGAS Resources, Inc.
have interests in the proposed transaction that may differ from the
interests of NGAS Resources, Inc.'s shareholders generally,
including benefits conferred under severance, retention and change
of control arrangements and continuation of director and officer
insurance and indemnification. These interests and any additional
benefits in connection with the proposed transaction will be
described in the proxy statement when it becomes available.
Magnum Hunter Contact: M. Bradley Davis Senior Vice
President of Capital Markets bdavis@magnumhunterresources.com (832)
203-4545
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