This Permian Basin has been a core area of geographic focus for Magnum Hunter for the last 15 years. At year-end 2003, the Permian Basin represented approximately 52% of Magnum Hunter's proved reserves (38% natural gas). On a pro-forma basis, including the effects of the earlier acquisition of properties purchased from Tom Brown, Inc., a subsidiary of EnCana Corporation, the Permian Basin assets now represent approximately 44% of our current net daily production and approximately 37% of our current net daily natural gas production.
The Company estimates that the properties acquired represent approximately 51 Bcfe of proved reserves (59% natural gas and 71% proved undeveloped) and include approximately 100 proved undeveloped locations in the Canyon, Clearfork, Spraberry and Wolfcamp formations. DeGolyer and MacNaughton, an independent reservoir engineering firm, has completed a study on the properties and concurs with our reserve estimates.
Magnum Hunter acquired 170 producing wells that are 100% operated and currently producing approximately 3.4 Mmcfe per day (58% natural gas). With the addition of these properties to Magnum Hunter's existing proved reserve base, the Company's total proved reserves has grown to approximately one trillion cubic feet equivalent.
The Company will have operational control over the entire 31,000 gross and 26,000 net mineral acres acquired. As Magnum Hunter has significant ongoing field operations in the immediate vicinity of the properties acquired, no additional general and administrative expenses are anticipated.
Magnum Hunter financed the acquisition through borrowings under its recently increased $525 million senior bank credit facility. The Company's September 30, 2004 pro-forma outstandings under the senior bank credit facility is $380 million with approximately $145 million in unutilized borrowing capacity.
In conjunction with the announcement of this property acquisition on August 30, 2004, Magnum Hunter, at that time, entered into approximately 1,000 Bbls per day of 2005 crude oil cost-less collars with a floor of $35.00 per barrel and a ceiling price of $55.00 per barrel.
Mr. Dick Frazier, Executive Vice President and COO of Magnum Hunter stated, "In today's commodity price environment, when record purchase prices are being paid for proved oil and gas properties at more than twice the price paid here, we believe this add-on property acquisition was extremely well negotiated at a purchase price of $0.78 per Mcfe on proved reserves only. Magnum Hunter's company-wide production is currently in the 250 Mmcfe per day range with the closing of this latest transaction and the return of predominately all of our Gulf of Mexico properties to production after the latest storms."
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