Magnum Hunter is in ‘hunker down’ mode, working to boost liquidity

By Lisa Kerner

Charlotte, N.C., May 11 – Magnum Hunter Resources Corp. is in “hunker down” mode, working to enhance its liquidity position in 2015, according to chairman and chief executive officer Gary C. Evans.

Strategic initiatives include negotiating an asset management agreement for third-party marketing of the company’s natural gas production and negotiating the sale of acreage for proceeds of between $45 million and $60 million.

Magnum Hunter also engaged an investment bank to market a portion of its existing equity ownership interest in Eureka Hunter Holdings, LLC for roughly $50 million, according to the company’s first-quarter earnings news release.

While the company’s upstream capital budget for fiscal 2015 is $100 million, it may be reduced or increased “depending on realized prices for its natural gas, natural gas liquids and oil, investment opportunities, continued effective implementation of cost reduction initiatives, including reduction of oil and gas field service costs, and funding allocations,” the release stated.

Upstream capital expenditures for the quarter ended March 31 totaled $47.2 million.

Cash and liquidity

As of May 8, Magnum Hunter had total liquidity of about $20 million, comprised of about $14 million of cash and $6 million of borrowing availability under its senior revolving credit facility.

The company believes it has adequate liquidity to fund its fiscal 2015 capital expenditure budget.

Magnum Hunter expects to realize up to $11.8 million in cash on or before May 12 from the termination of its open in-the-money commodity derivatives positions on May 7.

The company is a Dallas-based independent oil and gas exploration and production company.

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