SOURCE: Magnum Hunter Resources

Magnum Hunter Resources

December 01, 2011 08:49 ET

Magnum Hunter Resources Provides Eagle Ford Shale Operations Update

Two New Discoveries on Production; Furrh #2H - 1,270 Boepd IP Rate; Kudu Hunter #1H - 1,590 Boepd IP Rate; Company Wide Current Daily Production - 9,500 Boepd

HOUSTON, TX--(Marketwire - Dec 1, 2011) - Magnum Hunter Resources Corporation (NYSE: MHR) (NYSE Amex: MHR-PrC) (NYSE Amex: MHR-PrD) (the "Company" or "Magnum Hunter") provided today a drilling, operational, and production update on the Company's activities in the oil-window of the Eagle Ford Shale unconventional resource play located across approximately 51,664 gross mineral acres predominately located in Gonzales and Lavaca Counties of South Texas.

Significant operational highlights during the first two months of the fourth quarter for the Company's Eagle Ford Shale activities include:

  • The Furrh #2H which was drilled to a measured depth of 15,876 feet (horizontal lateral length of 5,945 feet), was fraced with 20 stages and placed on production November 15, 2011. The 24 hour flowing initial production rate ("IP") was 1,270 Boepd on a 19/64" choke with 1,680 psi FCP. Magnum Hunter operates the Furrh #2H and owns a 42.1% net working interest.
  • The Kudu Hunter #1H was drilled and cased to a measured depth of 16,302 feet (horizontal lateral length of 5,751 feet), was fraced with 20 stages in mid-November. The 24 hour IP rate was 1,590 Boepd on a 22/64" choke with 2,200 psi FCP. Magnum Hunter operates the Kudu Hunter #1H and owns a 46.3% net working interest.
Eagle Ford Shale
New Location Activity
MHR Lateral Stages
Well County Operator Interest Length Fraced
Snipe Hunter #1H Lavaca MHR 50% 7,003 Drilling
Hawg Hunter #1H Lavaca MHR 25% 6,842 Drilling
Leopard Hunter #1H Lavaca MHR 50% 6,705 Drilling
JP Ranch #1H Gonzales Hunt 50% 5,900 Completed waiting on Frac
Gonzo North #2H Gonzales MHR 50% 6,300 Location Staged
Southern Hunter #2H Gonzales MHR 50% 5,900 Location Staged
Shiner Ranch #1H Lavaca MHR 100% 5,500 Location Staged
Oryx Hunter #2H Lavaca MHR 45% 6,300 Location Staged
Hippo Hunter #1H Lavaca MHR 100% 4,600 Location Staged
Leopard Hunter Lavaca MHR 50% 6,705 Location Staged

The capital expenditure budget for the Eagle Ford Division for fiscal 2011 remains at approximately $75 million (30% of the total company wide capex budget) to drill 16 gross wells (8.4 net wells). Magnum Hunter's spudded its first Eagle Ford Shale horizontal well in June 2010 and to-date, the Company has drilled and completed 13 gross wells (7.8 net wells), all of which are on production.

The Snipe Hunter #1H and Leopard Hunter #1H wells (50% working interest each) are located in Lavaca County, Texas and are both currently drilling. Each of these wells will have an approximate 25 stage frac job beginning in mid-December. Eagle Ford Hunter has an additional two gross wells (1.0 net wells) planned for spudding before year-end 2011. The Company anticipates having a total of an additional 2 gross wells (1 net well) on production and flowing to sales on or before December 31, 2011. A new gas gathering system went operational in June with all of Magnum Hunter's existing wells connected and selling wet gas into this new gas gathering system.

Management Comments

Mr. H.C. "Kip" Ferguson, President of Eagle Ford Hunter, LLC, commented, "Since the end of the third quarter, our Eagle Ford Division has put on production and sales two additional wells located on the Company's lease acreage position in the black oil window, the Furrh #2H and the Kudu Hunter #1H. The respective IP rates in excess of 1,200 Boepd are representative of the continued success we are having as a result of our increasing knowledge, improved fracing techniques in combination with longer laterals and more frac stages per lateral. We are fortunate to hold some of the better mineral lease acreage positions in the entire Eagle Ford play when comparing rates of return on capital deployed. We have substantial inventory with 198 drilling locations currently identified across our 52,000 gross leasehold acreage position. Our Company's in-house reservoir engineers have identified net unrisked resource potential of 39 million Boe over our current acreage.

Mr. Gary C. Evans, Chairman of the Board and Chief Executive Officer of Magnum Hunter Resources stated, "As of November 30th, Magnum Hunter's total company wide production level is approximately 9,500 Boe per day. Our previously stated production exit rate goal for year-end 2011 of 10,000 Boepd appears to be on track and within budget."

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, development and production of oil and natural gas, primarily in the states of West Virginia, Kentucky, Ohio, Texas, and North Dakota and in Saskatchewan, Canada. The Company is presently active in three of the most prolific shale resource plays in North America, namely the Marcellus Shale, Eagle Ford Shale and Williston Basin/Bakken Shale.

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. 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. 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, as amended, for the year ended December 31, 2010 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2011, June 30, 2011 and September 30, 2011. All forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements.

The U.S. Securities and Exchange Commission ("SEC") requires oil and natural gas companies, in filings made with the SEC, to disclose proved reserves, which are those quantities of oil and natural gas that by analysis of geoscience and engineering data can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations. In this press release, we disclose certain "contingent resources", which represent the Company's internal estimates of volumes of oil and natural gas that are not classified as proved reserves but are potentially recoverable through exploratory drilling or additional drilling or recovery techniques. The term "contingent resources" is a broader description of potentially recoverable volumes than probable and possible reserves, as defined by SEC regulations. Estimates of unproved resources are by their nature more speculative than estimates of proved reserves and accordingly are subject to substantially greater risk of actually being realized by the Company. We believe our estimates of unproved resources and future drillsites are reasonable, but such estimates have not been reviewed by independent engineers. Estimates of unproved resources may change significantly as development provides additional data, and actual quantities that are ultimately recovered may differ substantially from prior estimates.

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