Magnum Hunter's Profits Speared by Downturn, But Production Up in 2Q
Magnum Hunter Resources has posted its financial and operating results for the three months and six months ended June 30, 2009.
Financial and Operating Results
Magnum Hunter reported a net loss of $3.4 million, or ($0.09) per basic and fully diluted shares outstanding for the second quarter of 2009, as compared to 2008's second quarter net loss of $1.9 million, or ($0.05) per basic and fully diluted shares outstanding. The loss in the second quarter of 2009 is attributable to the substantial decline in the realized price for crude oil (down 54% from $113.58 per Bbl. to $51.95 per Bbl.) and realized natural gas prices (down 68%, from $7.91 per Mcf to $2.55 per Mcf) when compared to the second quarter of 2008.
Also contributing to the second quarter 2009 net loss was a 62% increase in general and administrative expenses, a substantial portion of which is associated with recognizing non-cash stock compensation expenses as a result of the appointments of Mr. Gary C. Evans as Chairman of the Board and Mr. Ronald D. Ormand as Executive Vice President and Chief Financial Officer of Magnum Hunter previously announced on May 22, 2009.
The Company's production in the second quarter of 2009 increased 42% or 20,426 Boe to 69,224 Boe from 48,798 Boe produced during the second quarter of 2008. Also during the second quarter of 2009, Magnum Hunter's lease operating expense per Boe of production decreased 33%, from $27.60 per Boe produced during the second quarter of 2008 to $18.39 per Boe.
Magnum Hunter reported a net loss of $4.8 million, or ($0.13) per basic and fully diluted shares outstanding for the first six months of 2009 as compared to a net loss of $3.5 million, or ($0.10) per basic and fully diluted shares outstanding in the first six months of 2008. The loss for the first half of 2009 is also attributable to the aforementioned substantial decline in crude oil and natural gas prices and the non-cash charges which increased general and administrative expenses.
Operating cash flow (before changes in working capital accounts) generated by Magnum Hunter during the first six months of 2009 decreased $927.3 thousand from $2.1 million for the first six months of 2008 to $1.2 million for the first six months of 2009.
Along with cash currently on hand and the Company's anticipated cash flow from operations through year-end 2009, Magnum Hunter believes it has adequate cash liquidity more than sufficient to meet all of the Company's existing capital expenditure and other capital requirements through the balance of fiscal year 2009 and into fiscal year 2010.
Mr. Gary C. Evans, Chairman of the Company, commented, "Our reported financial and operating results for the three months and six months ended June 30, 2009 reflect the tremendous year-over-year downward volatility in world crude oil and North American natural gas commodity prices. With the Company's new management team firmly in place as of the beginning of the third quarter 2009, we expect our future financial and operational results to be reflective of our efforts to create incrementally increasing values for our shareholders. Our vision for Magnum Hunter remains firm on committing our resources to focusing on operations and strategic property acquisitions in known geologic regions of the oil patch with an emphasis on certain shale resource plays. Low finding and development costs, reduced operating costs and low corporate overhead are all necessary in an effort to generate superior returns to shareholders. The merger and acquisition markets continue to show a tremendous amount of deal flow, particularly in the distressed asset arena, and we continue to be optimistic that the Company will have the opportunity to announce specific transactions related to these activities in the near future."
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