The unaudited all sources finding and development cost for total proved reserves added by the Company during fiscal 2002, based upon total capital expenditures of approximately $584 million, is $0.93 per Mcfe.
The most significant event for Magnum Hunter during 2002 was the successful merger with Prize Energy that closed on March 15, 2002. At the time, the Company added approximately 538 Bcfe of proved reserves at a cost of approximately $0.84 per Mcfe.
Magnum Hunter's average fully diluted share count during fiscal 2002 was 62.5 million shares, a 169% increase over the Company's fiscal 2001 average fully diluted share count of 37.1 million shares. The increase was principally due to new shares issued in conjunction with the Prize Energy merger. Based upon the Company's estimated proved reserves and oil and gas production estimates, Magnum Hunter increased total proved reserves per share by 31.4% and increased production per share by 25.9%.
Magnum Hunter's total proved reserves of 837.1 Bcfe at December 31, 2002 had a net present value (discounted at 10%) before federal income taxes, of $1.246 billion. The unescalated year-end 2002 commodity prices used for calculating this present value were $4.59 per MMbtu for natural gas and $31.23 per Bbl for crude oil, before adjustments for pertinent pricing and differentials.
Based upon the Company's present value of proved reserves at year-end 2002 of $1.246 billion, less year-end 2002 debt levels, and divided by the common share count as of December 31, 2002, a net asset value of $10.02 per share is implied. This NAV per share estimate does not take into account Magnum Hunter's substantial undeveloped leasehold mineral acreage position or the value of the Company's natural gas transmission, marketing and processing assets.
Commenting on Magnum Hunter's reserve numbers and finding costs for 2002, Mr. Gary C. Evans, Chairman, President and Chief Executive Officer stated, "The two most important measures of our operational accomplishments during 2002 are reserve growth per share and daily production growth per share, both of which far exceeded our peers. The Company drilled a total of 124 wells of which 29 were deemed exploratory. Magnum Hunter's high historical track record remained in tack with only eight dry holes drilled or a 94% overall drilling success rate. During this period, we were also successful at substantially reducing the Company's overall leverage. Now that commodity prices for both oil and natural gas have reached significantly higher levels, we are creating a much greater increase in cash flow per share from our asset base. The many successes that our management team were able to accomplish in 2002 on the operational front should be multiplied several times over with improved financial results for this new fiscal year. These fundamental improvements will ultimately be reflected in Magnum Hunter's common share price in 2003."
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