Magnum Hunter's Proved Reserves Up 99%
Magnum Hunter Resources Corporation announced a 98.9% increase in the quantity of the Company's Proved Reserves at year-end 2009 versus year-end 2008. The Company's present value of future cash flows before income taxes and asset retirement obligations as of December 31, 2009, discounted at 10% ("PV-10"), increased 212% as compared to year-end 2008. PV-10 is a non-GAAP financial measure and should not be considered as an alternative to standardized measure of discounted future net cash flows as defined under GAAP.
Proved Reserves increased 99% to 6,203 MBoe, an increase of 3,118 MBoe (74% crude oil and NGLs, 43% Proved Developed Producing) as of December 31, 2009 when compared to 3,085 MBoe as of December 31, 2008 (77% crude oil and NGLs, 47% Proved Developed Producing). The Company's reserve life (R/P ratio) was 14 years at December 31, 2009.
Magnum Hunter's December 31, 2009 PV-10 increased 212% to $65.6 Million, or an increase of $44.5 Million, from the December 31, 2008 value of $21.0 Million. Under new SEC guidelines, the commodity prices used in the December 31, 2009 estimate were based on the 12-month unweighted arithmetic average of the first-day-of-the-month price for the period January 2009 through December 2009. For crude oil and NGL volumes, the average West Texas Intermediate posted price of $61.18 per barrel, was up 37% from $44.60 per barrel at December 31, 2008. For gas volumes, the average Henry Hub spot price of $3.87 per million British thermal units ("MMBTU") was down 32% from $5.71 per MMBTU on December 31, 2008. All prices were held constant throughout the lives of the properties. Commodity prices for the December 31, 2008 estimates were year-end prices as required by the then-applicable SEC rules.
Using NYMEX futures strip prices as of December 31, 2009, Proved Reserves totaled 6,571 Mboe (75% crude oil and NGLs, 44% Proved Developed Producing) with a PV-10 of $125.6 million.
Since the closing of the acquisition of privately-held Triad Energy Corporation ("Triad") and certain of its affiliates did not occur until February 16, 2010, no value for the Triad proved reserves are included in the above December 31, 2009 reserve estimates for Magnum Hunter.
The Company's Proved Reserves as of December 31, 2009 were prepared by third party engineering consultants, Cawley, Gillespie & Associates, Inc. and DeGolyer and MacNaughton.
Mr. Gary C. Evans, Chairman of the Board and Chief Executive Officer of the Company, commented, "Our Company's reserve growth in calendar 2009 was predominately from organic growth activity, rather from acquisitions. In an uncertain natural gas environment like the industry is experiencing today, we are uniquely levered to crude oil which represents approximately three quarters of our proved reserves. We believe we have positioned the Company to double our reserve growth again during fiscal 2010 with the recent successful closing on the acquisition of the assets of Triad Energy. While this transaction exposes our Company to significant future Marcellus natural gas opportunities covering over 50,000 net mineral acres, the current production profile remains predominately oil."
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