Magnum Hunter has entered into a definitive purchase and sale agreement with a subsidiary of Approach for the sale to Approach of Magnum Hunter's 10.0% non-operated working interest in the Cinco Terry property located in Crockett County, Texas. Total cash consideration of the sale to Approach is $21.5 million, subject to customary adjustments. The sale is deemed effective as of October 1, 2010 and final closing of the sale occurred on October 29, 2010.
As of June 30, 2010, Magnum Hunter's total proved reserves associated with Cinco Terry were 2.4 MMBoe (63% crude oil & ngl's; 48% proved developed producing). The Company's net daily production level attributable to this 10% non-operated working interest located in West Texas is approximately 470 Boe per day. Approach is the operator of the Cinco Terry property which includes approximately 5,033 net acres.
Mr. Gary C. Evans, Chairman and Chief Executive Officer of Magnum Hunter commented, "We are pleased to announce the divestiture of this conventional natural gas property. As a legacy asset of our Company, Cinco Terry simply no longer fits the Company's business strategy of focusing on unconventional resource plays (either oil or liquids rich) and this property is non-operated. We made the decision to divest all of our conventional oil and gas properties approximately thirty days ago and this transaction represents our first sale to meet that objective. The proceeds from this divestiture will immediately reduce our senior bank indebtedness and fund a portion of our anticipated 2011 capital expenditure program. Magnum Hunter anticipates reporting a capital gain on this sale in the fourth quarter of this year."
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