Magnum Hunter Resources Reports Fourth Quarter and Full Year 2014 Financial and Operating Results

HOUSTON, TX--(Marketwired - Mar 2, 2015) - Magnum Hunter Resources Corporation (NYSE: MHR) (NYSE MKT: MHR.PRC) (NYSE MKT: MHR.PRD) (NYSE MKT: MHR.PRE) (the "Company" or "Magnum Hunter") announced today financial and operating results for the three months and twelve months ended December 31, 2014. The Company plans to file its Form 10-K for the year ended December 31, 2014 with the Securities and Exchange Commission later today, Monday, March 2, 2015. Highlights of the Company's financial and operating results include the following:

• Oil and gas revenue increased 21.7% to $268.5 million for the year ended 2014, compared with revenue of $220.7 million for the year ended 2013
• Adjusted EBITDAX^(a) for the fourth quarter of 2014 and full year 2014 were $25.9 million and $150.5 million, respectively
• Adjusted net loss^(a) of ($0.24) and ($0.65) per diluted share is reported for the fourth quarter of 2014 and full-year 2014, respectively
• Net gain/(loss) of $0.21 and ($1.32) per diluted share is reported for the fourth quarter of 2014 and full-year 2014, respectively
• Reported production of 103.1 MMcfe/d (17,178 Boe/d) for the fourth quarter of 2014 and 101.3 MMcfe/d (16,879 Boe/d) for the full-year 2014
• Current record production of ~205.8 MMcfe/d (34,299 Boe/d), a 103% increase over 2014 average daily production
• Current production mix of 72% natural gas, 14% NGLs and 14% oil
• Reported 83.8 MMBoe of total proved reserves at year-end 2014, up 25% from year-end 2013 (as adjusted for reported asset sales during 2014)
• ~208,000 net acres in core plays, of which ~80,000 net acres in the Marcellus Shale and ~128,000 net acres in the Utica Shale currently under lease
• Current record throughput on Eureka Hunter Pipeline System of approximately 463,400 MMBtu/d
• The Company drilled and completed its first two Utica Shale dry gas wells, the Stalder #3UH (~47% working interest) and the Stewart Winland 1300U (~100% working interest), which tested at peak rates of 32.5 MMcf of natural gas per day and 46.5 MMcf of natural gas per day, respectively
• Closed on over $210 million of non-core asset sales in fiscal year 2014
• Raised ~$180 million of proceeds from sales of common stock at $7 per share in fiscal year 2014
• All previously reported material weaknesses in internal controls over financial reporting have been remediated as of year-end

(a) See Non-GAAP Financial Measures and Reconciliations below

Financial and Operating Results for the Twelve Months Ended December 31, 2014

Oil and gas production increased 43.9% for the twelve months ended December 31, 2014 to 6,161 MBoe or an average of 16,879 Boe/d (58.9% natural gas), compared with 4,281 MBoe or an average of 11,728 Boe/d for the twelve months ended December 31, 2013. The increase in production was attributable primarily to the Company's expanded drilling program in its core areas of operations in the Marcellus Shale and Utica Shale.

Magnum Hunter reported an increase in oil and gas revenues of 21.7% to $268.5 million for the twelve months ended December 31, 2014, compared with $220.7 million for the twelve months ended December 31, 2013. The increase in oil and gas revenues resulted principally from increases in the Company's oil and natural gas production as a result of its expanded drilling operations in its unconventional resources plays in the Marcellus Shale and Utica Shale throughout 2014.

The Company reported a net loss of ($249.9) million attributable to common shareholders, or ($1.32) per basic and diluted common shares outstanding, for the twelve months ended December 31, 2014, compared with a net loss of ($278.9) million, or ($1.64) per basic and diluted common shares outstanding, for the twelve months ended December 31, 2013. When adjusted for non-cash expenses and non-recurring gains on asset sales, the Company's adjusted net loss attributable to common shareholders for the twelve months ended December 31, 2014 was ($0.65) per basic and diluted common shares outstanding (see Non-GAAP Financial Measures and Reconciliations below).

For the twelve months ended December 31, 2014, Magnum Hunter's Adjusted Earnings Before Interest, Income Taxes, Depreciation, Amortization and Exploration ("Adjusted EBITDAX") was $150.5 million, compared with $120.4 million for the twelve months ended December 31, 2013 (See Non-GAAP Financial Measures and Reconciliations below). The 25.0% increase in Adjusted EBITDAX was primarily due to (i) an overall production increase as a result of our expanded drilling operations in the Marcellus Shale and Utica Shale and (ii) higher average realized natural gas prices during the period. Natural gas production shut-ins, increased transportation and processing costs and higher non-recurring cash general and administrative costs (see Non-GAAP Financial Measures and Reconciliations below) per Boe, partially offset the increase. Production costs per Boe decreased in fiscal year 2014, compared with fiscal year 2013, due primarily to (i) lower recurring costs in the Appalachian Basin and Williston Basin, (ii) lower non-recurring workover expenses primarily in the Williston Basin and (iii) the sale of certain assets in the Williston Basin that historically carried a higher lifting cost. General and administrative expenses increased overall during the twelve months ended December 31, 2014 due primarily to a one-time, non-cash charge of $32.6 million resulting from a reallocation of midstream capital expenditures between the Company and its principal co-owner in Eureka Hunter Holdings. Excluding this one-time charge, general and administrative expenses decreased $6.4 million, or 7.8%, to $76.1 million for fiscal year 2014 compared with fiscal year 2013. The decrease resulted primarily from (i) lower share-based compensation and 401K plan matching expense and (ii) lower professional services fees related to accounting and auditing services. The Company anticipates that its reliance on third-party consultants will continue to substantially decrease, which, combined with reductions in corporate offices and headcount, will further reduce its recurring general and administrative expenses per Boe in fiscal year 2015.

Financial and Operating Results for the Three Months Ended December 31, 2014

Oil and gas production increased 34% for the three months ended December 31, 2014 to 1.6 million Boe or an average of 17,178 Boe per day (63% natural gas), compared with production of 1.2 million Boe or an average of 12,786 Boe per day for the three months ended December 31, 2013. The increase in production was attributable primarily to the Company's expanded drilling program in its core areas of operations. In addition, the Company's natural gas production mix increased to 63% of overall production in the fourth quarter of 2014, compared with 46% in the fourth quarter of 2013. These increases in production and natural gas mix are a result of last year's focus on capital expenditures to further develop the Company's Marcellus Shale and Utica Shale properties.

Magnum Hunter reported a decrease in oil and gas revenues of 27.7% to $46.3 million for the three months ended December 31, 2014, compared with $63.9 million for the three months ended December 31, 2013. Revenues decreased during the quarter ended December 31, 2014 due to (i) decreases in oil prices, (ii) decreased volumes due to the divestitures of certain non-core oil and gas properties located in Divide County, North Dakota during the fourth quarter and (iii) shut-ins of certain Marcellus Shale and Utica Shale wells due to pad drilling, all of which wells are now producing.

The Company reported net income of $42.8 million attributable to common shareholders, or $0.21 per basic and diluted common shares outstanding, for the three months ended December 31, 2014, compared with a net loss of ($61.2) million, or ($0.36) per basic and diluted common shares outstanding, for the three months ended December 31, 2013. When adjusted for a combination of non-cash expenses and non-recurring gains on asset sales, the Company's adjusted net loss attributable to common shareholders for the three months ended December 31, 2014 was ($0.24) per basic and diluted common shares outstanding (see Non-GAAP Financial Measures and Reconciliations below).

For the three months ended December 31, 2014, Magnum Hunter's Adjusted EBITDAX was $25.9 million, compared with $35.8 million for the three months ended December 31, 2013 (See Non-GAAP Financial Measures and Reconciliations below), a decrease of 27.6%. The decrease in Adjusted EBITDAX was due primarily to the decrease in revenues during the quarter ended December 31, 2014 referred to above. Recurring general and administrative expenses per Boe for the three months ended December 31, 2014 decreased 49% to $3.72 per Boe from $7.24 per Boe for the three months ended December 31, 2013, due primarily to (i) production increases during the period and (ii) less reliance on third-party consultants (See Non-GAAP Financial Measures and Reconciliations below). The Company anticipates that its reliance on third-party consultants will continue to substantially decrease, which, combined with reductions in corporate offices and headcount, will further reduce its recurring general and administrative expenses per Boe in fiscal year 2015.

In the fourth quarter of 2014, the Company's production was impacted by production shut-ins in the Appalachian region due primarily to the previously reported wells that were shut-in due to multi-well pad development.

2014 Significant Divestitures

During 2014, Magnum Hunter completed a number of divestitures resulting in proceeds in excess of $210 million, before purchase price adjustments. The Company successfully divested its remaining Eagle Ford Shale assets in Atascosa County, in South Texas, for $24.9 million ($15.5 million in cash and $9.4 million in stock), various properties in Alberta, Canada for $8.7 million, all of the Company's assets located in Saskatchewan, Canada for $68.8 million, certain non-core, non-operated properties in North Dakota for $23.5 million, the former Baytex operated properties in Divide County, North Dakota for $84.8 million and legacy waterfloods in West Virginia for $1.2 million.

Capital Expenditures and Liquidity

For the twelve months ended December 31, 2014, total upstream capital expenditures were $470.5 million, consisting of $80.8 million for the Williston Basin and $389.7 million for the Appalachian Basin. Leasehold acquisition expenditures for the twelve months ended December 31, 2014, were $146.2 million, with a primary emphasis in the Utica Shale and Marcellus Shale plays. Total midstream capital expenditures for such period were $221.5 million.

For the three months ended December 31, 2014, total upstream capital expenditures were $150.7 million, consisting of $13.9 million for the Williston Basin and $136.8 million for the Appalachian Basin. Leasehold acquisition expenditures for the three months ended December 31, 2014, were $46.9 million, with a primary emphasis in the Utica Shale and Marcellus Shale plays. Total midstream capital expenditures for such period were $50.2 million.

Magnum Hunter believes that its internally generated cash flows, anticipated increased borrowing availability under its senior revolving credit facility, and additional liquidity sources, including but not limited to proceeds from non-core asset sales, potential capital markets transactions and planned strategic initiatives that the Company is actively pursuing, will provide it with sufficient liquidity to fund its fiscal 2015 capital expenditure budget. As of December 31, 2014, the Company had total liquidity of approximately $63.9 million, comprised of approximately $53.2 million of cash and $10.7 million of borrowing availability under its senior revolving credit facility.

The Company's upstream capital expenditure budget for fiscal year 2015 is $100 million, but it intends to reevaluate this budget on a quarterly basis. The Company's upstream capital expenditure budget may be reduced or increased depending on realized prices for our natural gas, natural gas liquids and oil, investment opportunities, continued effective implementation of cost reduction initiatives, including reduction of oil and gas field service costs, and funding allocations. The Company has allocated approximately $70 million of its upstream capital expenditure budget to its Marcellus Shale and Utica Shale exploration and development drilling program in West Virginia and Ohio, approximately $10 million to its properties in the Williston Basin/Bakken Shale in North Dakota (substantially all of which are non-operated) and approximately $20 million for additional leasehold acreage acquisitions in the Marcellus Shale and Utica Shale plays.

The Company is working on several transactions and strategic initiatives to improve current liquidity. These transactions may include (i) entry into asset management agreements whereby a third party agrees to provide credit support to the interstate pipeline companies in replacement of the Company's firm transportation letters of credit (an "AMA"), resulting in the cancellation of the Company's firm transportation letters of credit and a corresponding increase in the borrowing capacity under its revolving credit facility, (ii) conducting sales of assets, including selling a portion of the Company's equity interest in Eureka Hunter Holdings, and/or (iii) entering into a joint venture under which the Company would sell or contribute all or a portion of its undeveloped leasehold acreage in Ohio to fund capital expenditures and provide working capital.

The Company is currently engaged in discussions with several third parties relating to a proposed AMA whereby the Company would enter into a natural gas marketing agreement with such third party during the first quarter of 2015 and, in connection therewith, the third party would substitute its credit support for the Company's outstanding firm transportation letters of credit of $39.3 million, which would then be canceled, resulting in an increase in borrowing capacity under the Company's revolving credit facility.

Magnum Hunter has also initiated discussions to sell a portion of its equity interest in Eureka Hunter Holdings by the end of the second quarter of 2015, with such portion representing less than 8% of the outstanding common units of Eureka Hunter Holdings. Based on the Company's current ownership interest in Eureka Hunter Holdings of approximately 48%, the Company anticipates that this transaction, if completed, could provide up to $75 million in additional liquidity.

The Company has also commenced marketing activities to form a joint venture with a third-party investor for the further development of the Company's undeveloped leasehold acreage in Ohio. The Company anticipates that a joint venture agreement will be reached by the second quarter of 2015 providing for a third-party investor commitment of up to a total of $500 million, which would consist of an upfront cash payment by the investor and the remainder as a capital expenditure carry, whereby the investor would fund the Company's pro rata part of the capital expenditures required to develop the acreage sold or contributed to the joint venture. The Company anticipates that the joint venture will be comprised of approximately 93,000 undeveloped net acres, all located within the State of Ohio.

Operations

During the quarter ended December 31, 2014, the Company had a 100% success rate on the 15 wells in which it had a working interest that were completed in the fourth quarter of 2014.

The table below summarizes the Company's gross drilling activities by area for the fourth quarter of 2014 and full-year 2014:

	Total Drilled Wells				Operated Wells				Completed Wells				Awaiting Frac
	4Q2014		FY 2014		4Q2014		FY 2014		4Q2014		FY 2014		4Q2014		FY 2014
Marcellus Shale	4		10		4		13		6		17		0		0
Utica Shale	0		5		0		5		3		6		0		0
Williston Basin	3		38		0		1		6		18		3		3
Total	7		53		4		19		15		41		3		3

Currently, the Company is not running any drilling rigs in any of its basins where it has ownership interests in properties, as it awaits further reductions in oil and gas field service costs.

Marcellus and Utica Shale

During the fourth quarter of 2014, the Company completed the drilling of 4 gross (4 net) wells and completed 9 gross (7.5 net) wells in the Marcellus Shale and Utica Shale plays. All wells that are currently online are flowing to sales via the Eureka Hunter Pipeline System. The Company's net production in the fourth quarter of 2014 attributable to Triad Hunter, LLC's operations was approximately 73.84 MMcfe/d (75% natural gas, 18% NGLs and 7% condensate).

On the WVDNR Pad in Wetzel County, West Virginia, the Company's WVDNR #1207, #1208 and #1209 wells (~100% working interest) began flowing to sales on April 2, 2014. The wells were shut-in on May 31, 2014 to prepare the WVDNR Pad for drilling four additional down-dip laterals off the same pad site. The Company's WVDNR #1410, #1411, #1412 and #1413 wells (~100% working interest) have been drilled with an approximate true vertical depth of 7,500 feet. The WVDNR #1410 well was drilled and cased with a 4,350 foot horizontal lateral, and successfully fraced with 23 stages. The well tested at a peak rate of 12,966 Mcfe (17% NGLs and 3% condensate) per day on an adjustable choke. The WVDNR #1411 well was drilled and cased with a 4,048 foot horizontal lateral, and successfully fraced with 21 stages. The well tested at a peak rate of 10,761 Mcfe (18% NGLs and 1% condensate) per day on an adjustable choke. The WVDNR #1412 well was drilled and cased with a 4,842 foot horizontal lateral, and successfully fraced with 24 stages. The well tested at a peak rate of 12,992 Mcfe (17% NGLs and 3% condensate) per day on an adjustable choke. The WVDNR #1413 well was drilled and cased with a 5,807 foot horizontal lateral, and successfully fraced with 29 stages. The well tested at a peak rate of 13,321 Mcfe (17% NGLs and 3% condensate) per day on an adjustable choke. All wells on the WVDNR Pad in Wetzel County, West Virginia are currently flowing to sales.

On the Stewart Winland Pad in Tyler County, West Virginia, the Company's first Utica Shale well (the Stewart Winland #1300U) (100% working interest) drilled and completed in the State of West Virginia, and the most southeastern well in the entire play, was drilled to a true vertical depth of 10,825 feet with a 5,289 foot horizontal lateral, and was successfully fraced with 22 stages. The Stewart Winland #1300U tested at a peak rate of 46.5 MMcf of natural gas per day (~7,750 Boe per day) on an adjustable rate choke with 7,810 psi FCP. The Company has drilled and cased three ~100% owned Marcellus Shale wells on the Stewart Winland Pad, the Stewart Winland #1301M, #1302M and #1303M. The Stewart Winland #1301M was drilled and cased to a true vertical depth of 6,155 feet with a 5,762 foot horizontal lateral, and successfully fraced with 27 stages. The well tested at a peak rate of 17.0 MMcfe of natural gas per day (~23% condensate and ~25% NGLs) on an adjustable rate choke. The Stewart Winland #1302M was drilled and cased to a true vertical depth of 6,147 feet with a 5,676 foot horizontal lateral, and successfully fraced with 29 stages. The well tested at a peak rate of 17.1 MMcfe of natural gas per day (~19% condensate and ~26% NGLs) on an adjustable rate choke. The Stewart Winland #1303M was drilled and cased to a true vertical depth of 6,149 feet with a 5,762 foot horizontal lateral, and successfully fraced with 29 stages. The well tested at a peak rate of 16.8 MMcfe of natural gas per day (~20% condensate and ~26% NGLs) on an adjustable rate choke. All four wells (3 Marcellus Shale and 1 Utica Shale) on the Stewart Winland Pad have been flowing to sales through the Eureka Hunter Pipeline System commencing prior to year-end.

On the Stalder Pad in Monroe County, Ohio, the Company drilled and completed its first dry gas well, the Stalder #3UH (47% working interest), and placed it on production in February 2014. Initial flow tests peaked at a rate of 32.5 MMcf (approximately 5.4 MBoe) of natural gas per day on an adjustable rate choke with 4,300 psi FCP. The Stalder #3UH was drilled to a true vertical depth of 10,653 feet with a 5,050 foot horizontal lateral, and successfully fraced with 20 stages. The Stalder #6UH, #7UH and #8UH have been drilled and cased to total depth, and the Company commenced flowback operations on the wells over the last several weeks. The Stalder #6UH was drilled to a true vertical depth of 10,660 and a 5,746 foot lateral with 24 frac stages and the well is currently flowing back and still cleaning up. The Stalder #7UH was drilled to a true vertical depth of 10,660 and a 6,053 foot lateral with 25 frac stages and tested at a peak rate of 33.1 MMcfe/d. The Stalder #8UH was drilled to a true vertical depth of 10,660 and a 6,228 foot lateral with 26 frac stages and tested at a peak rate of 33.5 MMcfe/d.

Williston Basin

During 2014, the Company drilled a total of 38 gross (11.4 net) wells in the Bakken/Three Forks Sanish formations in North Dakota. In the Company's operated areas, the Company drilled 1 gross (1 net) well, and in the Company's non-operated areas, 37 gross (10.4 net) wells were drilled. At the end of the fourth quarter of 2014, 3 gross (1.4 net) Company wells were drilling or waiting on fracture stimulation in the Williston Basin of North Dakota.

Eureka Hunter

As of February 28, 2015, Eureka Hunter Pipeline was gathering approximately 463,400 MMBtu per day. The Company expects continued increases in throughput volumes as new customers bring gas to the Eureka Hunter Pipeline System due to the recent completions of new interconnects with major interstate pipelines. The midstream capital expenditure budget has been completed and is waiting on formal approval from the Eureka Hunter Holdings board. Eureka Hunter Pipeline has recently completed several key projects. Eureka Hunter Pipeline's operational focus has been centered on finishing up critical interconnections into Rockies Express Pipeline ("REX"), Texas Eastern ("TETCO") and Columbia Pipeline. Recently, Eureka Hunter Pipeline completed a new gathering pipeline that takes Utica Shale dry gas to interconnects with REX, TETCO, Dominion Transmission and Blue Racer. Eureka Hunter Pipeline's new Ormet wet and dry natural gas gathering extensions were also completed, and can now deliver dry gas to Clarington and wet gas to the Blue Racer Natrium plant.

Management Comments

Mr. Gary C. Evans, Chairman of the Board and Chief Executive Officer of Magnum Hunter, commented, "Calendar year 2014 was a transformational year at Magnum Hunter to say the least. We completed six divestitures that were predominately oil related for proceeds exceeding $210 million. We raised $180 million of new common equity at $7 per share. We replaced our previous minority equity partner in our midstream division with a new more strategic one and at the same time sold an interest to this new partner valuing our midstream division at $1 billion. We acquired ~16,456 net leasehold acres associated with the MNW transaction for ~$67.3 million and purchased ~1,700 net mineral acres related to Ormet for ~$22.7 million, all in the heart of the Marcellus Shale and Utica Shale plays in southeastern Ohio and northwestern West Virginia. We drilled some of the most prolific wells in the entire Utica Shale play proving that the southern acreage may in fact hold the best rock characteristics. We significantly reduced our financial exposure to potential borrowing base reductions caused by the recent drop in commodity prices by putting in place a second lien term loan last October that provides a five-year maturity with minimal financial covenants. Most importantly, we reported today record current production results as well as record current midstream volume throughputs that exceeded prior management estimates. For 2015, Magnum Hunter is in a very unique position of spending a limited amount of capital and reporting anticipated production growth rates exceeding 100% compared to prior year results. While our 2015 capital expenditure budget has been dramatically reduced, we remain flexible with the potential to add a large number of new completions on wells already drilled. These new production results announced today give us confidence to now increase our production guidance for calendar year 2015 to 180 - 204 MMcfe per day (30,000 - 34,000 Boe per day). Management is also continuing down the path of improving our balance sheet with several strategic initiatives that in total could exceed $200 million in liquidity enhancements over the next few months. We have our core Appalachian leasehold position that we have been acquiring over the past four years now in place. With the ultimate completion of our Ohio Utica joint venture currently in progress, we will be well positioned to begin further delineating our 208,000 net acres in the Marcellus Shale and Utica Shale plays. Having experienced four of these commodity price downturns in my 30 plus year career in this industry, we have always come out in the past a stronger company on the other side when prices improve. I expect nothing different this time around."

Non-GAAP Financial Measures

This release contains certain financial measures that are non-GAAP measures. We have provided reconciliations within this release of the non-GAAP financial measures to the most directly comparable GAAP financial measures. These non-GAAP financial measures should be considered in addition to, but not as a substitute for, measures for financial performance prepared in accordance with GAAP that are presented in this release.

Magnum Hunter defines adjusted income (loss) as reported net income (loss) attributable to common shareholders, plus non-recurring and non-cash items which include (1) exploration expense, (2) impairment of proved oil and gas properties, (3) impairment of other operating assets, (4) non-cash stock compensation expense, (5) non-cash 401k matching expense, (6) non-recurring transaction and other expense, (7) unrealized (gain) loss on investments, (8) interest expense - fees, (9) unrealized (gain) loss on derivatives, (10) (gain) loss on sale of assets, (11) income tax expense (benefit), (12) non-recurring charge for reduction of capital account in Eureka Hunter Holdings, (13) gain on deconsolidation of Eureka Hunter Holdings, (14) loss on extinguishment of Eureka Hunter Holdings Series A Preferred Units, (15) (gain) loss from sale of discontinued operations and (16) income from discontinued operations.

Magnum Hunter defines Adjusted EBITDAX as net income (loss) from continuing operations before (1) net interest expense, (2) (gain) loss on sale of assets, (3) depletion, depreciation, amortization and accretion, (4) impairment of proved oil and gas properties, (5) impairment of other operating assets, (6) non-cash stock compensation expense, (7) non-cash 401k matching expense, (8) non-recurring transaction and other expense, (9) unrealized (gain) loss on investments, (10) interest expense -- fees, (11) unrealized (gain) loss on derivatives, (12) (gain) loss on sale of assets, (13) income tax expense (benefit), (14) non-recurring charge for reduction of capital account in Eureka Hunter Holdings, (15) gain on deconsolidation of Eureka Hunter Holdings, (16) loss on extinguishment of Eureka Hunter Holdings Series A Preferred Units, (17) (gain) loss from sale of discontinued operations and (18) income from discontinued operations. Adjusted EBITDAX is not a measure of net income or cash flows as determined by GAAP.

Magnum Hunter defines recurring cash G&A as total general and administrative expenses before (1) non-cash stock compensation, (2) acquisition and other non-recurring expense and (3) non-recurring charge for reduction of capital account in Eureka Hunter Holdings.

Management believes these non-GAAP financial measures facilitate evaluation of the Company's business on a "normalized" or recurring basis and without giving effect to certain non-cash expenses and other items, thereby providing management, investors and analysts with comparative information for evaluating the Company in relation to other oil and gas companies providing corresponding non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, but not as a substitute for, measures for financial performance prepared in accordance with GAAP, and that the reconciliations to the closest corresponding GAAP measure should be reviewed carefully.

About Magnum Hunter Resources Corporation

Magnum Hunter Resources Corporation and subsidiaries are a Houston, Texas based independent exploration and production company engaged in the acquisition, development and production of crude oil, natural gas and natural gas liquids, primarily in the states of West Virginia and Ohio. The Company is presently active in two of the most prolific unconventional shale resource plays in North America, the Marcellus Shale and Utica Shale located in Northwest West Virginia and Southeast Ohio.

Availability of Information on the Company's Website

Magnum Hunter is providing a reminder that it makes available on its website (at www.magnumhunterresources.com) a variety of information for investors, analysts and the media, including the following:

• annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports as soon as reasonably practicable after the material is electronically filed with or furnished to the Securities and Exchange Commission;
• the most recent version of the Company's Investor Presentation slide deck;
• announcements of conference calls, webcasts, investor conferences, speeches and other events at which Company executives may discuss the Company and its business and archives or transcripts of such events;
• press releases regarding annual and quarterly earnings, operational developments, legal developments and other matters; and
• corporate governance information, including the Company's corporate governance guidelines, committee charters, code of conduct and other governance-related matters.

Magnum Hunter's goal is to maintain its website as the authoritative portal through which visitors can easily access current information about the Company. Over time, the Company intends for its website to become a primary channel for public dissemination of important information about the Company. Investors, analysts, media and other interested persons are encouraged to visit the Company's website frequently.

Certain information included on the Company's website constitutes forward-looking statements and is subject to the qualifications under the heading "Forward-Looking Statements" below and in the Company's Investor Presentation slide deck.

Forward-Looking Statements

This press release includes "forward-looking statements." All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Actual results could vary significantly from those expressed or implied in such statements and are subject to a number of risks and uncertainties. Although Magnum Hunter believes that the expectations reflected in the forward-looking statements are reasonable, Magnum Hunter can give no assurance that such expectations will prove to be correct. The forward-looking statements involve risks and uncertainties that affect operations, financial performance, and other factors as discussed in filings made by Magnum Hunter with the Securities and Exchange Commission (SEC). Among the factors that could cause results to differ materially are those risks discussed in the periodic reports filed by Magnum Hunter with the SEC, including Magnum Hunter's Annual Report on Form 10-K for the fiscal year ended December 31, 2013, its to be filed Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and its Quarterly Reports on Form 10-Q for the fiscal quarters ended after such fiscal year. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, specifically those under the heading "Risk Factors." Forward-looking statements speak only as of the date of the document in which they are contained, and Magnum Hunter does not undertake any duty to update any forward-looking statements except as may be required by law.

MAGNUM HUNTER RESOURCES CORPORATION UNAUDITED RESULTS OF OPERATIONS
(Continuting Operations)
(in thousands, except per unit data)
			Year Ended December 31,
			2014			2013			2012
Oil and natural gas revenue and production
Revenues (in thousands, U.S. Dollars)
	Oil		$	131,109		$	147,798		$	82,225
	Natural gas			91,277			53,821			45,825
	NGL			46,115			19,080			5,678
		Total oil and natural gas sales		268,501			220,699			133,728
Production
	Oil (MBbl)			1,570			1,641			993
	Natural gas (MMcf)			21,788			13,212			14,289
	NGL (MBoe)			960			438			154
		Total (MBoe)		6,161			4,281			3,529
	Boe/d			16,879			11,728			9,643
Average prices (U.S. Dollars)
	Oil (per Bbl)		$	83.53		$	90.04		$	82.77
	Natural gas (per Mcf)		$	4.19		$	4.07		$	3.21
	NGL (per Boe)		$	48.04		$	43.61		$	36.79
		Total average price (per Boe)	$	43.58		$	51.55		$	37.89
Costs and expenses (per Boe)
	Production costs		$	7.77		$	10.91		$	8.54
	Severance tax and marketing		$	2.82		$	4.27		$	2.28
	Transportation, processing, and other related costs		$	7.03		$	5.27		$	3.05
	Exploration		$	19.24		$	23.45		$	22.78
	Impairment of proved oil and natural gas property		$	48.90		$	11.68		$	1.09
	General and administrative expense		$	17.64		$	19.26		$	17.67
	Depletion, depreciation and accretion		$	23.84		$	25.08		$	20.53
Other segments (in thousands)
	Midstream natural gas gathering, processing and marketing revenues		$	97,916		$	61,178		$	13,040
	Midstream natural gas gathering, processing and marketing revenues		$	84,764		$	52,099		$	8,028
	Oilfield services revenues		$	23,134		$	18,431		$	12,333
	Oilfield services expenses		$	15,686		$	14,825		$	10,037

MAGNUM HUNTER RESOURCES CORPORATION
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
			December 31,
			2014			2013
ASSETS
CURRENT ASSETS
	Cash and cash equivalents		$	53,180		$	41,713
	Restricted cash			-			5,000
	Accounts receivable:
		Oil and natural gas sales		16,319			25,099
		Joint interests and other, net of allowance for doubtful accounts of $308 and $196 at December 31, 2014 and 2013, respectively		23,888			30,582
	Derivative assets			16,586			608
	Inventory			2,268			7,158
	Investments			3,864			2,262
	Prepaid expenses and other assets			4,091			2,938
	Assets held for sale			-			5,366
		Total current assets		120,196			120,726
PROPERTY, PLANT AND EQUIPMENT
	Oil and natural gas properties, successful efforts method of accounting, net			1,098,235			1,224,659
	Gas transportation, gathering and processing equipment and other, net			77,423			289,420
		Total property, plant and equipment, net		1,175,658			1,514,079
OTHER ASSETS
	Deferred financing costs, net of amortization of $15,099 and $9,735 as of December 31, 2014 and 2013, respectively			22,856			20,008
	Derivative assets, long-term			-			25
	Intangible assets, net			-			6,530
	Goodwill			-			30,602
	Assets held for sale			-			162,687
	Investment in affiliates, equity method			347,191			350
	Other assets			3,928			1,644
		Total assets	$	1,669,829		$	1,856,651

MAGNUM HUNTER RESOURCES CORPORATION
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
				December 31,
				2014				2013
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
	Current portion of notes payable			$	10,770			$	3,804
	Accounts payable				130,502				107,837
	Accounts payable to related parties				90				23
	Accrued liabilities				20,277				44,629
	Revenue payable				5,450				6,313
	Derivative liabilities				-				1,903
	Liabilities associated with assets held for sale				-				12,865
	Other liabilities				1,356				6,491
		Total current liabilities			168,445				183,865
NONCURRENT LIABILITIES
	Long-term debt				937,963				876,106
	Asset retirement obligations				26,229				16,163
	Derivative liabilities, long-term				-				76,310
	Other long-term liabilities				5,337				2,279
	Long-term liabilities associated with assets held for sale				-				14,523
		Total liabilities			1,137,974				1,169,246
COMMITMENTS AND CONTINGENCIES (Note 16)
REDEEMABLE PREFERRED STOCK
	Series C Cumulative Perpetual Preferred Stock ("Series C Preferred Stock"), cumulative dividend rate 10.25% per annum, 4,000,000 authorized, 4,000,000 issued and outstanding as of December 31, 2014 and 2013, with a liquidation preference of $25.00 per share				100,000				100,000
	Series A Convertible Preferred Units of Eureka Hunter Holdings, LLC (the "Eureka Hunter Holdings Series A Preferred Units"), cumulative distribution rate of 8.0% per annum, 9,885,048 issued and outstanding as of December 31, 2014 and 2013, with a liquidation preference of $200,620 as of December 31, 2013				-				136,675
					100,000				236,675
SHAREHOLDERS' EQUITY
	Preferred stock of Magnum Hunter Resources Corporation, 10,000,000 shares authorized, including authorized shares of Series C Preferred Stock
	Series D Cumulative Preferred Stock ("Series D Preferred Stock"), cumulative dividend rate 8.0% per annum, 5,750,000 authorized, 4,424,889 issued and outstanding as of December 31, 2014 and 2013, with a liquidation preference of $50.00 per share				221,244				221,244
	Series E Cumulative Convertible Preferred Stock ("Series E Preferred Stock"), cumulative dividend rate 8.0% per annum, 12,000 authorized, 3,803 issued and 3,722 outstanding as of December 31, 2014 and 2013, with a liquidation preference of $25,000 per share				95,069				95,069
	Common stock, $0.01 par value per share, 350,000,000 shares authorized, and 201,420,701 and 172,409,023 issued, and 200,505,749 and 171,494,071 outstanding as of December 31, 2014 and 2013, respectively				2,014				1,724
	Additional paid in capital				909,783				733,753
	Accumulated deficit				(784,546	)			(586,365	)
	Accumulated other comprehensive loss				(7,765	)			(19,901	)
	Treasury stock, at cost:
		Series E Preferred Stock, 81 shares as of December 31, 2014 and 2013			(2,030	)			(2,030	)
		Common stock, 914,952 shares as of December 31, 2014 and 2013			(1,914	)			(1,914	)
	Total Magnum Hunter Resources Corporation shareholders' equity				431,855				441,580
	Non-controlling interest				-				9,150
		Total shareholders' equity			431,855				450,730
		Total liabilities and shareholders' equity		$	1,669,829			$	1,856,651

MAGNUM HUNTER RESOURCES CORPORATION
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share and per share data)
			Year Ended December 31,
			2014				2013				2012
REVENUES AND OTHER
	Oil and natural gas sales		$	268,501			$	220,699			$	133,728
	Midstream natural gas gathering, processing, and marketing			97,916				61,178				13,040
	Oilfield services			23,134				18,431				12,333
	Other revenue			1,918				4,230				836
		Total revenue		391,469				304,538				159,937
OPERATING EXPENSES
	Production costs			47,857				46,689				30,119
	Severance taxes and marketing			17,344				18,282				8,043
	Transportation, processing, and other related costs			43,292				22,549				10,775
	Exploration			118,509				100,389				80,375
	Impairment of proved oil and gas properties			84,764				50,011				3,839
	Midstream natural gas gathering, processing, and marketing			15,686				52,099				8,028
	Oilfield services			301,276				14,825				10,037
	Depletion, depreciation, amortization and accretion			146,868				107,385				72,438
	(Gain) loss on sale of assets, net			(2,456	)			44,641				596
	General and administrative			108,687				82,461				62,347
		Total operating expenses		881,827				539,331				286,597
OPERATING LOSS				(490,358	)			(234,793	)			(126,660	)
OTHER INCOME (EXPENSE)
	Interest income			156				265				202
	Interest expense			(86,463	)			(72,621	)			(51,846	)
	(Gain) loss on derivative contracts, net			(72,254	)			(25,274	)			22,239
	Gain on deconsolidation of Eureka Hunter Holdings, LLC			509,563				-				-
	Loss from equity method investment			(1,038	)			(994	)			(1,971	)
	Other income			2,561				15,897				4,014
		Total other expense, net		352,525				(82,727	)			(27,362	)
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX				(137,833	)			(317,520	)			(154,022	)
	Income tax benefit			-				85,407				24,665
LOSS FROM CONTINUING OPERATIONS, NET OF TAX				(137,833	)			(232,113	)			(129,357	)
	Income (loss) from discontinued operations, net of tax			4,561				(62,561	)			(9,773	)
	Gain (loss) on disposal of discontinued operations, net of tax			(13,855	)			71,510				2,409
NET LOSS				(147,127	)			(223,164	)			(136,721	)
	Net loss attributed to non-controlling interests			3,653				988				4,013
LOSS ATTRIBUTABLE TO MAGNUM HUNTER RESOURCES CORPORATION				(143,474	)			(222,176	)			(132,708	)
	Dividends on preferred stock			(54,707	)			(56,705	)			(34,706	)
	Loss on extinguishment of Eureka Hunter Holdings Series A Preferred Units			(51,692	)			-				-
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS			$	(249,873	)		$	(278,881	)		$	(167,414	)
	Weighted average number of common shares outstanding, basic and diluted			189,135,500				170,088,108				155,743,418
	Loss from continuing operations per share, basic and diluted		$	(1.27	)		$	(1.69	)		$	(1.03	)
	Income (loss) from discontinued operations per share, basic and diluted			(0.05	)			0.05				(0.04	)
NET LOSS PER COMMON SHARE, BASIC AND DILUTED			$	(1.32	)		$	(1.64	)		$	(1.07	)
AMOUNTS ATTRIBUTABLE TO MAGNUM HUNTER RESOURCES CORPORATION
	Loss from continuing operations, net of tax		$	(134,180	)		$	(231,125	)		$	(125,344	)
	Income (loss) from discontinued operations, net of tax			(9,294	)			8,949				(7,364	)
		Net loss	$	(143,474	)		$	(222,176	)		$	(132,708	)

MAGNUM HUNTER RESOURCES CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
			Year Ended December 31,
			2014				2013				2012
CASH FLOWS FROM OPERATING ACTIVITIES
	Net loss		$	(147,127	)		$	(223,164	)		$	(136,721	)
	Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
		Depletion, depreciation, amortization and accretion		146,868				134,867				135,896
		Exploration		116,945				115,069				116,686
		Impairment of proved oil and gas properties		301,276				89,041				4,096
		Impairment of other operating assets		730				-				-
		Share-based compensation		12,469				13,624				15,696
		Cash paid for plugging wells		(107	)			(14	)			-
		Loss (gain) on sale of assets		11,399				(7,318	)			(3,074	)
		Gain on deconsolidation of Eureka Hunter Holdings		(509,563	)			-				-
		Loss from captial account adjustement of Eureka Hunter Holdings		32,569				-				-
		Loss from equity method investment		1,038				994				1,971
		Unrealized loss (gain) on open derivative contracts		(18,232	)			17,058				(10,945	)
		Loss on extinguished embedded derivative		91,792				-				-
		Unrealized loss (gain) on investments		-				(8,003	)			229
		Amortization and write-off of deferred financing costs and discount on Senior Notes included in interest expense		9,679				4,836				7,399
		Deferred tax benefit		-				(84,527	)			(21,595	)
	Changes in operating assets and liabilities:
		Accounts receivable, net		8,533				22,781				(73,549	)
		Inventory		4,381				4,658				(6,198	)
		Prepaid expenses and other current assets		(3,071	)			(1,073	)			(538	)
		Accounts payable		(51,930	)			42,050				16,390
		Revenue payable		(2,953	)			(11,589	)			8,776
		Accrued liabilities		(23,361	)			2,421				3,492
Net cash provided by operating activities				(18,665	)			111,711				58,011
CASH FLOWS FROM INVESTING ACTIVITIES
	Capital expenditures and advances			(562,324	)			(631,511	)			(568,610	)
	Change in restricted cash			5,000				(3,500	)			-
	Cash paid in acquisitions, net of cash received of $0; $0; and $34, respectively			-				-				(444,844	)
	Deconsolidation of the cash of Eureka Hunter Holdings			(6,380	)			-				-
	Proceeds from partial sale of equity interest in Eureka Hunter Holdings			55,000				-				-
	Change in deposits and other long-term assets			(2,554	)			854				89
	Proceeds from sales of assets			193,139				506,297				4,158
Net cash provided by (used in) investing activities				(318,119	)			(127,860	)			(1,009,207	)
CASH FLOWS FROM FINANCING ACTIVITIES
	Proceeds from issuing Senior Notes			-				-				596,907
	Proceeds from borrowings on debt			629,392				373,991				546,043
	Principal repayments of debt			(467,745	)			(380,923	)			(542,654	)
	Proceeds from sale of Eureka Hunter Holdings Series A Preferred Units			11,956				35,280				149,655
	Proceeds from sale of Eureka Hunter Holdings Series A Common Units			8,180				-				-
	Issue Series A-2 Units of Eureka Hunter Holdings, net of costs			40,000				-				-
	Net proceeds from sale of common stock			178,410				-				148,241
	Net proceeds from sale of preferred stock			-				10,072				144,635
	Repurchase noncontrolling interest			(2,875	)			-				-
	Proceeds from exercise of warrants and options			9,663				5,352				2,331
	Change in other long-term liabilities			1,023				(1,222	)			186
	Purchase of treasury shares			-				-				(1,750	)
	Payment of deferred financing costs			(14,208	)			(1,246	)			(20,313	)
	Preferred stock dividends paid			(45,601	)			(40,648	)			(26,839	)
Net cash provided by (used in) financing activities				348,195				656				996,442
Effect of changes in exchange rate on cash				56				(417	)			(2,474	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS				11,467				(15,910	)			42,772
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD				41,713				57,623				14,851
CASH AND CASH EQUIVALENTS, END OF PERIOD			$	53,180			$	41,713			$	57,623

Magnum Hunter Resources Reconciliations (Unaudited)
Adjusted Loss per Common Share Reconciliation			Three Months Ended								Twelve Months Ended
			December 31,								December 31,
($ in thousands)			2014				2013				2014				2013
Net income (loss) attributable to common shareholders - reported			$	42,767			$	(61,208	)		$	(249,873	)		$	(278,881	)
Non-recurring and non-cash items:
	Exploration expense			66,115				25,132				118,509				100,389
	Impairment of proved oil and gas properties			261,478				10,544				301,276				50,011
	Impairment of other operating assets			64				-				730				-
	Non-cash: stock compensation expense			5,689				1,790				11,363				13,624
	Non-cash: 401k matching expense			408				298				2,033				1,856
	Non-recurring transaction and other expense			8,527				8,487				26,147				29,807
	Unrealized (gain) loss on investments			534				(229	)			1,038				814
	Interest expense - fees			3,684				1,175				11,086				4,836
	Unrealized (gain) loss on derivatives			(14,491	)			(6,699	)			73,560				17,058
	(Gain) loss on sale of assets			2,156				2,527				(2,456	)			44,641
	Income tax (benefit)			-				(38,180	)			-				(85,407	)
	Non-recurring charge for reduction of capital account in Eureka Hunter Holdings			32,569				-				32,569				-
	Gain on deconsolidation of Eureka Hunter Holdings			(509,563	)			-				(509,563	)			-
	Loss on extinguishment of Eureka Hunter Holdings Series A Preferred Units			51,692				-				51,692				-
	(Gain) loss from sale of discontinued operations			(128	)			31,421				13,855				(71,510	)
	Income from discontinued operations			-				108				(4,561	)			62,561
Total non-recurring and non-cash items			$	(91,266	)		$	36,374			$	127,278			$	168,680
Net income (loss) attributable to common shareholders - as adjusted			$	(48,499	)		$	(24,834	)		$	(122,595	)		$	(110,201	)
Net income (loss) attributable to common shareholders - as adjusted			$	(0.24	)		$	(0.15	)		$	(0.65	)		$	(0.65	)
Weighted Average Shares				199,916,880				171,085,346				189,135,500				170,088,108

Adjusted EBITDAX Reconciliation
		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
($ in thousands)		2014				2013				2014				2013
Net income (loss) from continuing operations		$	103,320			$	(14,382	)		$	(137,833	)		$	(232,113	)
Net Interest expense			23,960				19,221				86,307				72,356
(Gain) loss on sale of assets			2,156				2,527				(2,456	)			44,641
Depletion, depreciation, amortization and accretion			45,135				27,244				146,868				107,385
Impairment of proved oil and gas properties			261,478				10,544				301,276				50,011
Impairment of other operating assets			64				-				730				-
Exploration expense			66,115				25,132				118,509				100,389
Non-cash stock compensation expense			5,689				1,790				11,363				13,624
Non-cash 401k matching expense			408				298				2,033				1,856
Non-recurring transaction and other expense			8,527				8,487				26,147				29,807
Unrealized (gain) loss on investments			534				(229	)			1,038				814
Income tax (benefit)			-				(38,180	)			-				(85,407	)
Unrealized (gain) loss on derivatives			(14,491	)			(6,699	)			73,560				17,058
Non-recurring charge for reduction of capital account in Eureka Hunter Holdings			32,569				-				32,569				-
Gain on deconsolidation of Eureka Hunter Holdings			(509,563	)			-				(509,563	)			-
Total Adjusted EBITDAX		$	25,901			$	35,753			$	150,548			$	120,421

Recurring Cash G&A Reconciliation
		Three Months Ended						Twelve Months Ended
		December 31,						December 31,
($ in thousands)		2014			2013			2014			2013
Total G&A		$	52,660		$	18,788		$	108,687		$	82,461
Adjustments:
	Non-cash stock compensation		5,689			1,790			11,363			13,624
	Acquisition and other non-recurring expense		8,527			8,487			26,147			29,807
	Non-recurring charge for reduction of capital account in Eureka Hunter Holdings		32,569			-			32,569			-
Recurring Cash G&A		$	5,875		$	8,511		$	38,608		$	39,030
Recurring Cash G&A Per BOE		$	3.72		$	7.24		$	6.27		$	9.12