S&P: Magnum Hunter unaffected

Standard & Poor's said its ratings on Magnum Hunter Resources Inc. (BB-/stable/--) will not be affected by the company's announcement that it will acquire about 99 billion cubic feet of proved reserves from Tom Brown Inc., a subsidiary of EnCana Corp., for about $243 million.

S&P said this is because the transaction is in line with Magnum Hunter's strategy and will be funded with a balanced mix of equity and borrowings under the bank credit facility.

Given the currently favorable commodity price environment and the company's use of hedging to stabilize cash flows, S&P said it expects debt to EBITDA to remain below 3x and EBITDA interest coverage to stay above 5x, with excess cash flow and proceeds from asset sales to be used to further reduce debt in the near to intermediate term.

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