Magnum Hunter Enters GOM Sale-Leaseback Deal
Magnum Hunter Resources, Inc. has entered into a sale-leaseback transaction on three newly constructed offshore production platforms and associated pipelines that were recently placed into service. The three platforms are located offshore Louisiana in federal waters and are located on OCS Lease Blocks South Timbalier 266, Main Pass 164 and Main Pass 178.
The Company has received a total of $11.2 million in new funding which has been used for general corporate purposes including a voluntary reduction under the Company's corporate bank revolving credit facility. No reduction in the Company's existing bank revolving credit commitment resulted from these new lease transactions. The new production platforms are being leased from a syndicate group of lenders lead by General Electric Capital Corporation. These leases have a primary term of three years and based upon current interest rates, the cost of funds to Magnum Hunter is approximately 5.30% per annum.
Commenting on the closing of this new financing, Mr. Chris Tong, Magnum Hunter's Senior Vice President and Chief Financial Officer stated, "We are very pleased to have closed this somewhat unique financing transaction with a prominent lender like GE. The financing terms are very attractive to Magnum Hunter given today's low interest rate environment. With the funding received from the closing of this transaction, our Company can re-deploy capital back into our core business of drilling and developing some of our recent new oil and gas discoveries. This is our second significant transaction with GE. We look forward to developing more opportunities to conduct business with the premier financiers party to this transaction in the future."