SOURCE: Magnum Hunter Resources Corporation

Magnum Hunter Resources Corporation

August 14, 2009 09:00 ET

Magnum Hunter Resources Corporation Reports Second Quarter 2009 Financial Results

HOUSTON, TX--(Marketwire - August 14, 2009) - Magnum Hunter Resources Corporation (NYSE Amex: MHR) (the "Company") announced today financial and operating results for the three months and six months ended June 30, 2009.

Financial and Operating Results for the Three Months and Six Months Ended June 30, 2009

Magnum Hunter reported a net loss of $3.4 million, or ($0.09) per basic and fully diluted shares outstanding for the second quarter of 2009, as compared to 2008's second quarter net loss of $1.9 million, or ($0.05) per basic and fully diluted shares outstanding. The loss in the second quarter of 2009 is attributable to the substantial decline in the realized price for crude oil (down 54% from $113.58 per Bbl. to $51.95 per Bbl.) and realized natural gas prices (down 68%, from $7.91 per Mcf to $2.55 per Mcf) when compared to the second quarter of 2008. Also contributing to the second quarter 2009 net loss was a 62% increase in general and administrative expenses, a substantial portion of which is associated with recognizing non-cash stock compensation expenses as a result of the appointments of Mr. Gary C. Evans as Chairman of the Board and Mr. Ronald D. Ormand as Executive Vice President and Chief Financial Officer of Magnum Hunter previously announced on May 22, 2009.

The Company's production in the second quarter of 2009 increased 42% or 20,426 Boe to 69,224 Boe from 48,798 Boe produced during the second quarter of 2008. Also during the second quarter of 2009, Magnum Hunter's lease operating expense per Boe of production decreased 33%, from $27.60 per Boe produced during the second quarter of 2008 to $18.39 per Boe.

Magnum Hunter reported a net loss of $4.8 million, or ($0.13) per basic and fully diluted shares outstanding for the first six months of 2009 as compared to a net loss of $3.5 million, or ($0.10) per basic and fully diluted shares outstanding in the first six months of 2008. The loss for the first half of 2009 is also attributable to the aforementioned substantial decline in crude oil and natural gas prices and the non-cash charges which increased general and administrative expenses.

Operating cash flow (before changes in working capital accounts) generated by Magnum Hunter during the first six months of 2009 decreased $927.3 thousand from $2.1 million for the first six months of 2008 to $1.2 million for the first six months of 2009.

Along with cash currently on hand and the Company's anticipated cash flow from operations through year-end 2009, Magnum Hunter believes it has adequate cash liquidity more than sufficient to meet all of the Company's existing capital expenditure and other capital requirements through the balance of fiscal year 2009 and into fiscal year 2010.

Management Comments

Mr. Gary C. Evans, Chairman of the Company, commented, "Our reported financial and operating results for the three months and six months ended June 30, 2009 reflect the tremendous year-over-year downward volatility in world crude oil and North American natural gas commodity prices. With the Company's new management team firmly in place as of the beginning of the third quarter 2009, we expect our future financial and operational results to be reflective of our efforts to create incrementally increasing values for our shareholders. Our vision for Magnum Hunter remains firm on committing our resources to focusing on operations and strategic property acquisitions in known geologic regions of the oil patch with an emphasis on certain shale resource plays. Low finding and development costs, reduced operating costs and low corporate overhead are all necessary in an effort to generate superior returns to shareholders. The merger and acquisition markets continue to show a tremendous amount of deal flow, particularly in the distressed asset arena, and we continue to be optimistic that the Company will have the opportunity to announce specific transactions related to these activities in the near future."

About Magnum Hunter Resources

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.

For more information, please view our website at www.magnumhunterresources.com.

Forward-looking Statements

The statements contained in this press release that are not historical are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including statements, without limitation, regarding the Company's expectations, beliefs, intentions or strategies regarding the future. Such forward-looking statements may relate to, among other things: (1) the Company's proposed exploration and drilling operations on its various properties, (2) the expected production and revenue from its various properties, (3) the Company's proposed redirection as an operator of certain properties and (4) estimates regarding the reserve potential of its various properties. These statements are qualified by important factors that could cause the Company's actual results to differ materially from those reflected by the forward-looking statements. Such factors include but are not limited to: (1) the Company's ability to finance the continued exploration, drilling and operation of its various properties, (2) positive confirmation of the reserves, production and operating expenses associated with its various properties; and (3) the general risks associated with oil and gas exploration, development and operation, including those risks and factors described from time to time in the Company's reports and registration statements filed with the Securities and Exchange Commission, including but not limited to the Company's Annual Report on Form 10-K and Form 10-K/A for the year ended December 31, 2008 filed with the Securities and Exchange Commission on March 31, 2009 and April 29, 2009, respectively, and our subsequently filed reports. The Company cautions readers not to place undue reliance on any forward-looking statements. The Company does not undertake, and specifically disclaims any obligation, to update or revise such statements to reflect new circumstances or unanticipated events as they occur.


                    MAGNUM HUNTER RESOURCES CORPORATION
                  (FORMERLY PETRO RESOURCES CORPORATION)
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                                (Unaudited)


                        Three Months Ended           Six Months Ended
                             June 30,                    June 30,
                        2009          2008          2009          2008
                    ------------  ------------  ------------  ------------
Revenue
Oil and gas sales   $  2,428,891  $  4,368,442  $  4,245,927  $  7,426,443
Other income             100,000             -       200,000       100,000
                    ------------  ------------  ------------  ------------
Total revenue          2,528,891     4,368,442     4,445,927     7,526,443

Expenses
Lease operating
 expenses              1,273,205     1,346,708     2,517,767     2,569,106
Exploration               19,201        37,654       113,676       610,164
Depreciation,
 depletion and
 accretion               799,335       612,021     2,106,862     1,137,193
General and
 administrative        1,445,062       894,329     2,191,675     2,187,772
                    ------------  ------------  ------------  ------------

Total expenses         3,536,803     2,890,712     6,929,980     6,504,235
                    ------------  ------------  ------------  ------------

Income (loss) from
 operations           (1,007,912)    1,477,730    (2,484,053)    1,022,208

Other income and
 (expense)
Interest income              251        63,147           852       139,002
Interest expense        (607,509)     (590,819)   (1,178,186)   (1,105,780)
Loss on derivative
 contracts            (1,774,419)   (2,778,056)   (1,218,104)   (3,463,650)
                    ------------  ------------  ------------  ------------

Net loss              (3,389,589)   (1,827,998)   (4,879,491)   (3,408,220)

Less: Net loss
 attributable to
 noncontrolling
 interest                 (3,987)      223,165       114,632       349,990

Net loss
 attributable to
 Magnum Hunter
 Resources
 Corporation          (3,393,576)   (1,604,833)   (4,764,859)   (3,058,230)

Dividend on Series
 A Convertible
 Preferred                     -      (277,993)            -      (458,801)

Net loss
 attibutable to
 common
 stockholders       $ (3,393,576) $ (1,882,826) $ (4,764,859) $ (3,517,031)
                    ============  ============  ============  ============

Earnings per common
 share
Basic and diluted   $      (0.09) $      (0.05) $      (0.13) $      (0.10)

Weighted average
 number of common
 shares outstanding
Basic and diluted     36,797,771    36,718,186    36,788,129    36,685,504





                    MAGNUM HUNTER RESOURCES CORPORATION
                  UNAUDITED SELECTED BALANCE SHEET DATA


                                         June 30, 2009    December 31, 2008
                                       -----------------  -----------------
Cash, cash equivalents, and
 restricted cash                       $         677,500  $       6,120,402
Total current assets                           4,084,788         10,179,778
Total property and equipment                  49,403,045         45,938,221
Total assets                                  56,913,540         61,664,868
Total current liabilities                      1,819,143          3,497,408
Total long-term liabilities                   24,183,352         23,089,197
Total shareholder's equity                    29,640,768         33,693,354

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