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Sunday, November 27, 2022

What a Move on Magnum Hunter Resources Corp (OTCMKTS:MHRC)

Magnum Hunter Resources Corp (OTCMKTS:MHRC) is on the move again after some brief consolidation over $0.08. The stock has been on a fast rise since reversing off $0.016 lows after hitting the bb’s in recent weeks

The stock was de-listed from the NYSE in September for failing to meet the minimum $1 bid requirement; MHRC is another victim of the recent oil crisis that has fallen a long way since the $9 price it commanded back in 2014.

Magnum Hunter Resources Corp (OTCMKTS:MHRC) bills itself as an Irving, Texas based independent exploration and production company engaged in the acquisition, development and production of natural gas, natural gas liquids and crude oil, primarily in the States of West Virginia and Ohio. The Company is presently active in two of the most prolific unconventional shale resource plays in North America, the Marcellus Shale and Utica Shale located in Northwest West Virginia and Southeast Ohio.

According to MHRC the Company had total reserves of 801.8 Bcfe as of June 30 of this year, compared with estimated total proved reserves at year-end 2014 of 502.5 Bcfe, an increase of approximately 60%. The proved reserves growth was attributable primarily to an increase in proved undeveloped (“PUD”) reserves, resulting from the addition by the Company of 17 new Utica Shale PUD locations and 23 new Marcellus Shale PUD locations.

These new PUD locations were the result of recent significant production results from the Company’s Utica Shale and Marcellus Shale acreage positions in Ohio, completion of new drilling units offsetting existing proved developed producing (“PDP”) wells and additional locations within existing PDP units. The Company expects to continue to increase its proved reserves in the Utica Shale, where it presently owns ~125,000 net leasehold acres. The Company continues to work to complete the formation of approximately 54 additional drilling units within its core Utica Shale and Marcellus Shale acreage positions. At June 30, 2015, the

Appalachian Basin (including properties in the Marcellus Shale and Utica Shale in West Virginia and Ohio and properties in Kentucky) accounted for approximately 96% of Magnum Hunter’s total proved reserves volumes, and the Williston Basin in North Dakota accounted for the remaining approximately 4% of the Company’s total proved reserves volumes. The proved reserves information for the second quarter of 2015 contained in this press release is estimated based on evaluations conducted by the Company’s internal geological and engineering team, and such information has not been audited or reviewed by the Company’s third-party independent engineering consultants or any other third party.

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The Company is working hard behind the scenes for any alternatives; in October they hired PJT Partners LP as financial advisor, and Kirkland & Ellis LLP, as special legal advisor, to advise management and the Company’s Board of Directors regarding potential strategic alternatives to enhance liquidity and address the Company’s current capital structure. As previously disclosed, the Company has actively worked to manage its balance sheet, including potential consummation of certain asset sales. With the addition of these advisors, the Company will continue to develop and explore all potential strategic alternatives.

To preserve liquidity as the Company considers these strategic alternatives, the Board of Directors of the Company has suspended the monthly dividends on its 10.25% Series C Cumulative Perpetual Preferred Stock 8.0% Series D Cumulative Preferred Stock and 8.0% Series E Cumulative Convertible Preferred Stock.

On November 5 MHRC announced it has refinanced its existing senior secured revolving credit facility with certain banks and obtained additional liquidity through a new senior secured term loan in the aggregate principal amount of $60 million, which funded on November 5, 2015.

Approximately $44 million of proceeds from the new term loan credit facility were used to refinance existing loans outstanding and cash collateralize letters of credit outstanding under the prior revolving credit facility with certain banks. The remaining approximately $16 million of proceeds will be used for general corporate purposes of the Company and to pay certain transaction fees and expenses related to the new term loan credit facility. Furthermore, the new term loan facility includes an uncommitted incremental credit facility for up to an additional $10 million aggregate principal amount of term loans. The maturity date of the new term loan credit facility is December 30, 2015.

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Currently trading at a $22 million market valuation MHRC has a serious debt problem with just $6.6 million in cash and close to a billion in due payables; the Company cannot make the payment on pipeline they lease to move their product. At the same time the stock was trading over $9 just over a year ago and many are calling it ridiculously undervalued at current levels if they are able to hold of BK. We will be updating MHRC as events unfold so make sure you are subscribed to Microcapdaily so you know what is going on with MHRC.

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Disclosure: we hold no position in MHRC either long or short and we have not been compensated for this article.

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