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Current MHR Stock Info

Magnum Hunter Resources (ticker: MHR) is an oil and natural gas exploration and production company active in three shale resource plays in North America: the Marcellus Shale, Utica Shale and the Williston Basin/Bakken Shale. The company’s growth platform is supported with approximately 350,000 net acres spread across its core operating regions.

On December 20, 2013, Magnum Hunter Resources provided an operations update to set the stage for fiscal 2014. The company drilled and completed five new wells in the Appalachian Basin, with three off of its Ormet pad (100% approximate ownership) and two on the Collins pad (100% ownership). The five wells combined for a total of 31,519 Mcf/d and 2,730 BOPD, an average of 6,303 Mcf/d and 546 BOPD.

Pad Well Number Mcf/d Test BOPD Test
Ormet 1-9H 2,676 216
Ormet 2-9H 5,117 816
Ormet 3-9H 3,876 756
Collins 1118H 10,000 472
Collins 1119H 9,850 470

In addition, MHR has drilled and completed two more Collins wells (1116H and 1117H) and will begin testing within the next week.

Eureka Hunter, MHR’s wholly owned midstream subsidiary, is installing gathering systems to the wells. The Ormet pad is roughly 80% complete and the delivery of surface liquids handling equipment is scheduled for March 2014. The Collins and Spencer pads are receiving operations upgrades due to their high liquid content. Eureka Hunter says its construction has been delayed due to tremendous activity in the plays, resulting in long lead items.

Additional Marcellus/Utica Acreage Acquired, Two Other Pads in Early Stages on Completion

To date, the company has now accumulated 89,000 gross (83,000 net) Marcellus Shale acres and 105,000 gross (97,000 net) Utica Shale acres through mineral leases. An estimated 38,000 net acres (21%) overlap, allowing for potential drilling in both shales through dual pad sites.

On the Stalder Pad, MHR recently hit total depth on its first Utica Shale well and anticipates test results in January 2014. The first Marcellus well has been drilled but the company is planning to delay its completion until the Utica well flows back sales, which is expected to be late Q1’14.

MHR is drilling its second well at the Farley Pad and anticipates total depth to reach 7,600’ horizontally by December 20, 2013. The first well has been completed in spite of a controlled blow-out.

Eureka Hunter Connections

Eureka Hunter’s connections are increasing due to new production from Triad Hunter, another MHR subsidiary, and third parties. Triad’s Utica wells in particular are significantly boosting flow, and its volumes of rich gas are resulting in liquid fallout. MHR is addressing the issues by upgrading its collection systems which include new mainline compressions, liquids stabilization operations and loading equipment.

The inclement weather has caused delays but will not disrupt Eureka’s build out plans. The company has already completed an 11-mile extension from the Stalder Pad to a property operated by privately held Eclipse Resources. The line is ready to gather dry gas production from the Utica. A second line for the Ormet pad is expected to be operational by mid-March 2013.

2014 Capital Expenditures Target Marcellus/Utica

MHR announced $350 million, or 87.5%, of its $400 million capital expenditures program in 2014 will be allocated to development in the Marcellus/Utica. Roughly $260 will involve upstream development as MHR continues to delineate its properties. The company expects to drill 23 to 25 gross horizontal wells in 2014 while running five rigs (operating two to three).

Another $90 million is intended for construction on Eureka Hunter projects. The company expects its pipelines to increase in value as regional production continues its upward trend.

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.