MAGNUM HUNTER RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2010 2009 2010 2009
------------ ------------ ------------ ------------
REVENUE:
Oil and gas sales $ 8,281,723 $ 2,320,514 $ 23,920,482 $ 6,566,441
Field operations
and other 1,341,715 - 3,330,013 200,000
------------ ------------ ------------ ------------
Total revenue 9,623,438 2,320,514 27,250,495 6,766,441
------------ ------------ ------------ ------------
EXPENSES:
Lease operating
expenses 2,897,910 1,288,850 8,153,941 3,806,617
Severance taxes and
marketing 820,511 - 2,167,359 -
Exploration 250,534 278,689 1,075,643 392,365
Field operations 1,300,192 - 3,143,255 -
Impairment of oil &
gas properties 19,991 - 19,991 -
Depreciation,
depletion and
accretion 2,289,425 993,380 7,138,488 3,100,242
General and
administrative 4,633,767 2,329,401 17,903,244 4,521,076
------------ ------------ ------------ ------------
Total expenses 12,212,330 4,890,320 39,601,921 11,820,300
------------ ------------ ------------ ------------
LOSS FROM
OPERATIONS (2,588,892) (2,569,806) (12,351,426) (5,053,859)
OTHER INCOME AND
(EXPENSE):
Interest income 50,351 72 54,578 924
Interest expense (1,096,545) (688,469) (3,016,429) (1,866,655)
Gain (Loss) on
derivative
contracts (61,552) 190,637 2,347,808 (1,027,467)
------------ ------------ ------------ ------------
Net loss (3,696,638) (3,067,566) (12,965,469) (7,947,057)
Net (income) loss
attributable to
non-controlling
interest (25,888) 15,344 (91,223) 129,976
------------ ------------ ------------ ------------
Net loss
attributable to
Magnum Hunter
Resources
Corporation (3,722,526) (3,052,222) (13,056,692) (7,817,081)
Dividend on
Preferred Stock (601,131) - (1,309,527) -
------------ ------------ ------------ ------------
Net loss
attributable to
common
shareholders $ (4,323,657) $ (3,052,222) $(14,366,219) $ (7,817,081)
============ ============ ============ ============
Loss per common
share
Basic and diluted $ (0.06) $ (0.08) $ (0.23) $ (0.21)
============ ============ ============ ============
Weighted average
number of common
shares outstanding
Basic and diluted 67,996,180 37,012,912 62,010,895 36,863,881
============ ============ ============ ============
MAGNUM HUNTER RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
2010 2009
------------- -------------
Cash flows from operating activities
Net loss attributable to Magnum Hunter
Resources Corporation $ (13,056,691) $ (7,947,057)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Non-controlling Interest 91,223 -
Depletion, depreciation, and accretion 7,138,488 3,100,242
Amortization of deferred financing costs
included in interest expense 861,086 310,136
Dry hole cost - 282,056
Share based compensation 5,151,351 1,762,176
Unrealized (gain) loss on derivative
contracts 1,181,057 3,513,709
Gain on sale of assets (46,784) -
Asset impairment 19,991 -
Changes in operating assets and liabilities:
Accounts receivable 1,157,016 (216,497)
Inventory 69,624 -
Prepaid expenses (501,569) (76,509)
Accounts payable (1,574,837) 249,403
Revenue payable 137,606 212,911
Accrued liabilities 3,018,315 62,746
------------- -------------
Net cash provided by operating activities 3,645,876 1,253,316
------------- -------------
Cash flows from investing activities
Capital expenditures (28,122,799) (10,753,268)
Advances 1,432,613 -
Cash received in purchase of Sharon
Resources, Inc. - 235,023
Cash paid in acquisition of Triad, net of
cash acquired of $3,710,000 (59,500,299) -
Proceeds from sale of assets 49,670 -
Deposits (979,858) -
------------- -------------
Net cash used in investing activities (87,120,673) (10,518,245)
------------- -------------
Cash flows from financing activities
Proceeds from sale of common stock 24,422,951 -
Issue Series C Cumulative Perpetual Preferred
Stock shares, net of costs 22,878,851 -
Proceeds from exercise of warrants 13,790,459 -
Cash paid upon conversion of Series B
Preferred Stock (11,250,000) -
Loan KSOP shares (542,366) -
Options exercised 8,775 -
Options surrendered for cash (115,500) -
Preferred stock dividend paid (1,335,181) -
Proceeds from revolving credit borrowings 72,000,000 5,500,000
Principal payment on revolving credit (35,000,000) -
Proceeds from loan 580,459 217,336
Principal payment on loan (778,547) (127,122)
Payment on payable on sale of partnership - (113,560)
Payment of deferred financing costs (2,630,071) -
------------- -------------
Net cash provided by financing activities 82,029,830 5,476,654
------------- -------------
Net increase (decrease) in cash and cash
equivalents (1,444,967) (3,788,275)
Cash and cash equivalents, beginning of
period 2,281,568 6,120,402
------------- -------------
Cash and cash equivalents, end of period $ 836,601 $ 2,332,127
============= =============
MAGNUM HUNTER RESOURCES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2010 2009
------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 836,601 $ 2,281,568
Accounts receivable 7,002,332 3,236,043
Derivative assets 1,433,235 94,113
Prepaids and other current assets 573,657 1,261,534
------------- -------------
Total current assets 9,845,825 6,873,258
------------- -------------
PROPERTY AND EQUIPMENT (Net of Accumulated
Depletion and Depreciation):
Oil and natural gas properties, successful
efforts accounting
Unproved 48,169,404 11,887,483
Proved properties 104,232,733 43,995,567
Equipment and other fixed assets 15,065,160 1,655,582
------------- -------------
Total property and equipment, net 167,467,297 57,538,632
------------- -------------
OTHERS ASSETS:
Derivative and other assets 2,130,086 1,159,405
Deferred financing costs, net of amortization
of $861,086 and $35,831 respectively 2,781,741 1,012,756
------------- -------------
Total assets $ 182,224,949 $ 66,584,051
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 17,105,988 $ 4,852,221
Accrued liabilities 4,269,193 885,622
Revenue payable 2,408,129 342,585
Dividend payable - 25,654
Current portion of notes payable 568,562 44,157
Derivative liability - 69,136
------------- -------------
Total current liabilities 24,351,872 6,219,375
------------- -------------
Payable on sale of partnership 640,695 640,695
Notes payable, less current portion 52,689,323 13,000,000
Asset retirement obligation 4,634,858 2,032,306
------------- -------------
Total liabilities 82,316,748 21,892,376
------------- -------------
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK:
Series C Cumulative Perpetual Preferred
Stock, cumulative dividend rate 10.25% per
annum, 4,000,000 authorized, 1,153,741 and
214,950 issued & outstanding as of September
30, 2010 and December 31, 2009, respectively,
with liquidation preference of $25.00 per
share 28,843,525 5,373,750
SHAREHOLDERS' EQUITY:
Preferred stock, 9,250,000 shares authorized,
none issued and outstanding - -
Common stock, $0.01 par value; 100,000,000
shares authorized, 68,885,661 and 50,591,610
shares issued and outstanding as of September
30, 2010 and December 31, 2009, respectively 688,857 505,916
Additional paid in capital 118,317,477 71,936,306
Accumulated deficit (47,501,911) (33,135,693)
Treasury Stock, previous deposit on Triad,
at cost, 761,652 shares (1,310,357) (1,310,357)
Unearned common stock in KSOP, at cost,
137,900 shares (542,366) -
------------- -------------
Total Magnum Hunter Resources Corporation
shareholders' equity 70,194,066 37,996,172
Non-controlling interest 1,412,976 1,321,753
------------- -------------
Total Equity 71,064,676 39,317,925
------------- -------------
Total liabilities and shareholders' equity $ 182,224,949 $ 66,584,051
============= =============
Forward-looking Statements
This press release contains statements concerning Magnum Hunter Resources
Corporation's expectations, beliefs, plans, intentions, objectives, goals,
strategies, future events or performance and underlying assumptions and
other statements that are not historical facts. These statements and others
contained in this presentation 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"), Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the Private
Securities Litigation Reform Act of 1995 (the "Litigation Reform Act").
Actual results may differ materially from those expressed or implied by
these statements. You can generally identify our forward-looking statements
by the words "anticipate", "believe" ,"continue", "could", "estimate",
"expect", "forecast", "goal", "intend", "may", "objective", "plan",
"potential", "predict", "projection", "should", "will", or other similar
words. Such forward-looking statements 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, (3) the general risks associated with oil and
gas exploration, development and operations, 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 for
the period ended December 31, 2009 filed on March 31, 2010, and the
Company's Quarterly Reports on Form 10-Q for the quarters ending, March 31,
2010 and June 30, 2010, filed on, May 17, 2010 and August 12,2010,
respectively. Magnum Hunter Resources Corporation cautions readers not to
place undue reliance on any forward-looking statements. Magnum Hunter
Resources Corporation does not undertake, and specifically disclaims any
obligation, to update or revise such statements to reflect new
circumstances or unanticipated events as they occur.
Contact Information: Contact: M. Bradley Davis Senior Vice President of Capital Markets bdavis@magnumhunterresources.com (832) 203-4545