Story by Columbus Business First
Magnum Hunter Resources Corp. has entered into a $430 million letter of intent for a Utica shale joint venture, continuing an eventful week for the Utica shale driller.
The company’s agreement with an unnamed private equity fund involves 28,500 undeveloped acres in eastern Ohio’s Monroe and Washington counties, the company (NYSE:MHR) said Tuesday in a federal filing.
A letter of intent is different from an agreement – Magnum Hunter says it expects a definitive agreement within 30 to 45 days, and a closing 15 to 30 days after that. And the terms could change.
Nonetheless, the announcement marks another notable event for the Appalachia-focused Texas shale driller that has spent 2015 finding ways to raise cash. Executives on Friday said two deals totaling around $1 billion– including the joint venture – were close to fruition. On Monday, the company’s depressed stock closed up 71 percent to $1.33 after cratering to as low as 70 cents this year.
A bigger deal still looms for the company’s Eureka Hunter pipeline system, which the company estimates could raise up to $600 million.
The joint venture would initially target 9,500 acres, but the filing did not disclose a specific location in the two-county area. Magnum Hunter has 200,000 acres under lease in the Marcellus and Utica shale region, but since January hasn’t drilled a well to preserve capital.
“I think that was a wise decision,” CEO Gary Evans said Friday. “You’re seeing more and more companies in our sector continuing to cut budgets because prices have not done what everybody expected.”
The company plans to restart some drilling after it gets its cash infusion.