Magnum Hunter Resources Reports Proved, Probable and Possible Reserves (3P) and Contingent Resources of 848 MMBoe

Magnum Hunter Resources Reports Proved, Probable and Possible Reserves (3P) and 
Contingent Resources of 848 MMBoe 
HOUSTON, TX -- (Marketwired) -- 08/21/13 --  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 that
its combined estimated proved, probable and possible reserves ("3P
Reserves") were 119.3 MMBoe and its estimated contingent resources
were an additional 728.9 MMBoe as of June 30, 2013. Magnum Hunter's
3P Reserves at June 30, 2013 were prepared by a third-party
engineering consultant, Cawley Gillespie & Associates, Inc.
("Cawley"), and include the Marcellus and Williston
Basin/Bakken/Sanish Shale reserves, however, no Utica Shale reserves
were included. The contingent resource estimate is an internal
analysis prepared by Magnum Hunter that includes the Company's Utica
Shale potential on its vast lease acreage holdings. 
The Williston Basin/Bakken/Sanish Shale and Marcellus Shale probable
and possible reserves were estimated at 49.8 MMBoe and 11.7 MMBoe,
respectively, as of June 30, 2013. The contingent resources based on
Magnum Hunter's internal analysis as of June 30, 2013 were comprised
of 44.4 MMBoe in the Williston Basin/Bakken/Sanish Shale, 142.9 MMBoe
in the Marcellus Shale, 496.2 MMBoe in the Utica Shale, and 45.4
MMBoe in the Devonian Shale.  
The table below summarizes Magnum Hunter's estimated 3P Reserves
using SEC pricing and estimated internally generated contingent
resources, broken out by operating area: 


 
                                                                            
                                                                            
June 30, 2013 3P Reserves and Contingent Resources                          
                                                                  Contingent
                                 Total Proved   Total Prob/Poss    Resources
    Area          Reservoir         (MMBoe)         (MMBoe)         (MMBoe) 
                                                                            
Williston    Bakken/Sanish/Other                                            
 Hunter                                                                     
  USA                                    17.2              47.5         44.4
  Canada                                  2.3               2.3            0
Triad Hunter Marcellus/Other             30.6              11.7        142.9
             Utica                          0               0.0        496.2
Shale Hunter Eagle Ford/Wilcox            0.5               0.0            0
MH           Devonian                                                       
 Production   Shale/Other                 7.2               0.0         45.4
                                 ------------   ---------------   ----------
Total                                    57.8              61.5        728.9
                                 ------------   ---------------   ----------
 
                                                                            
                                                                                
                      
                                                      3P Reserves/Contingent
                                 # Potential Drilling        Resources      
    Area          Reservoir            Locations            (MMBoe)(1)      
                                   Gross       Net                          
Williston    Bakken/Sanish/Other                                            
 Hunter                                                                     
  USA                              1,732.0      376.7                  109.1
  Canada                              20.0       17.3                    4.6
Triad Hunter Marcellus/Other         363.0      329.1                  185.2
             Utica                   302.0      267.0                  496.2
Shale Hunter Eagle Ford/Wilcox         2.0        1.4                    0.5
MH           Devonian                                                       
 Production   Shale/Other            587.0      586.2                   52.6
                                 ---------  --------- ----------------------
Total                              3,006.0    1,577.7                  848.2
                                 ---------  --------- ----------------------

 
(1) The 3P Reserves and contingent resources have not been adjusted to
reflect any risks associated with achieving commerciality of
production.  
Proved Reserves Overview 
As previously reported, Magnum Hunter's total proved reserves,
excluding the Eagle Ford Shale properties divestment which occurred
in April 2013, decreased by 6% to 57.8 MMBoe (51% crude oil and NGLs;
61% proved developed producing) at June 30, 2013 as compared to 61.6
MMBoe (57% crude oil and NGLs; 56% proved developed producing) at
December 31, 2012(a). This decline was primarily due to higher lease
operating expenses ("LOE") in the Williston Basin which moved certain
proved undeveloped reserves into the probable category. Proved
developed reserves increased by 3% from year-end 2012 to 35.4 MMBoe
as of June 30, 2013 as a result of the Company's continued execution
of its development drilling program. Aggregate proved undeveloped
reserves decreased slightly primarily due to higher LOE costs related
to rental equipment, manpower and field fuel use. The Company
anticipates LOE costs in the Williston Basin to decrease over time
due to increased efficiencies at the field level, including
electrification of certain fields.  
As of June 30, 2013, no proved reserves had been booked in Magnum
Hunter's significant leasehold acreage position owned in the Utica
Shale in the Appalachian Basin (80,000+ net acres) where the Company
has initiated an active drilling program. The Company also expects a
significant increase in reserves during the second half of the year
due to "pad" related drilling in Appalachia for both the Utica and
Marcellus Shales. Given the Company's successful drilling results
to-date, as well as those of other operators in the vicinity of its
leasehold acreage, Magnum Hunter believes that a substantial portion
of its Utica Shale acreage will be added to proved reserves over time
as more wells are drilled and delineated in this region. The
Appalachian Basin accounted for 65% of Magnum Hunter's proved reserve
volumes at June 30, 2013, the Williston Basin accounted for 34% and
other legacy assets, including our remaining assets in South Texas,
accounted for the remaining 1%. At mid-year 2013, 50% of the
Company's proved reserves by volume were natural gas, 38% were crude
oil and 12% were NGLs.  
The present value of estimated future cash flows discounted at an
annual rate of 10% ("PV-10") of the Company's proved reserves at June
30, 2013 decreased to $666.4 million from $753.4 million at December
31, 2012, excluding the Eagle Ford Shale divestment (See Non-GAAP
Financial Measures and Reconciliations below)(a). Under the
Securities and Exchange Commission ("SEC") guidelines, the commodity
prices used in the June 30, 2013 and December 31, 2012 PV-10
estimates were based on the 12-month un-weighted arithmetic average
of the first day of the month prices for the period July 1, 2012
through June 1, 2013 and for the period December 30, 2011 through
November 30, 2012, respectively, adjusted by lease for transportation
fees and regional price differentials. For crude oil and NGL volumes,
the average West Texas Intermediate posted price of $91.60 per barrel
was used to calculate PV-10 at June 30, 2013, which was down 3.3%
from the average price of $94.71 per barrel used to calculate PV-10
at December 31, 2012. For natural gas volumes, the average Henry Hub
spot price of $3.46 per million British thermal units ("MMBTU") was
used to calculate PV-10 at June 30, 2013, which was up 26% from the
average price of $2.75 per MMBTU used to calculate PV-10 at December
31, 2012. All prices were held constant throughout the estimated
economic life of the properties. 
(a) The December 31, 2012 and June 30, 2013 proved reserves and
related PV-10 value exclude the proved reserves and related PV-10
value associated with the Eagle Ford Hunter, Inc. properties sale,
which closed on April 24, 2013.  
Non-GAAP Financial Measures and Reconciliations 
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. 
PV-10 is the present value of the estimated future cash flows from
estimated total proved reserves after deducting estimated production
and ad valorem taxes, future capital costs and operating expenses,
but before deducting any estimates of future income taxes. The
estimated future cash flows are discounted at an annual rate of 10%
to determine their "present value." We believe PV-10 to be an
important measure for evaluating the relative significance of our oil
and gas properties and that the presentation of the non-GAAP
financial measure of PV-10 provides useful information to investors
because it is widely used by professional analysts and investors in
evaluating oil and gas companies. Because there are many unique
factors that can impact an individual company when estimating the
amount of future income taxes to be paid, we believe the use of a
pre-tax measure is valuable for evaluating the Company. We believe
that PV-10 is a financial measure routinely used and calculated
similarly by other companies in the oil and gas industry. However,
PV-10 should not be considered as an alternative to the standardized
measure as computed under GAAP. 
The standardized measure of discounted future net cash flows relating
to Magnum Hunter's total proved oil and gas reserves is as follows: 


 
                                                                            
                                                                            
                                                             As of June 30, 
                                                                2013(1)     
                                                            --------------- 
Future cash inflows                                         $     2,768,997 
Future production costs                                          (1,199,407)
Future development costs                                           (285,526)
Future income tax expense                                                 - 
Future net cash flows                                             1,284,064 
10% annual discount for estimated                                           
timing of cash flows                                               (617,695)
Standardized measure of discounted future                                   
net cash flows related to proved reserves                   $       666,369 
                                                            --------------- 
                                                                            
Reconciliation of Non-GAAP Measure                                          
PV-10                                                       $       666,369 
Less: Income taxes                                                          
  Undiscounted future income taxes                                        - 
  10% discount factor                                                     - 
                                                            --------------- 
  Future discounted income taxes                                          - 
                                                                            
                                                            --------------- 
Standardized measure of discounted future net cash flows    $       666,369 
                                                            --------------- 

 
(1) The PV-10 value and the standardized measure shown in the table
above are the same primarily because the combination of the Company's
intangible drilling capital spending in 2013 and the Company's
projected loss from continuing operations on a tax basis for 2013 are
expected to be approximately equal to the tax gain from the sale of
the Eagle Ford Shale properties sold to Penn Virginia Corporation in
April 2013; therefore, the Company expects to recognize only minimal
tax expense in 2013.  
Certain Definitions 
The SEC requires oil and natural gas companies, in filings made with
the SEC, to disclose proved reserves, which are those quantities of
oil and natural gas that by analysis of geoscience and engineering
data can be estimated with reasonable certainty to be economically
producible from a given date forward, from known reservoirs, and
under existing economic conditions, operating methods, and government
regulations.  
Probable reserves are those additional reserves that are less certain
to be recovered than proved reserves but which, together with proved
reserves, are as likely as not to be recovered. When deterministic
methods are used, it is as likely as not that actual remaining
quantities recovered will exceed the sum of estimated proved plus
probable reserves. When probabilistic methods are used, there should
be at least a 50% probability that the actual quantities recovered
will equal or exceed the proved plus probable reserves estimates.
Probable reserves may be assigned to areas of a reservoir adjacent to
proved reserves where data control or interpretations of available
data are less certain, even if the interpreted reservoir continuity
of structure or productivity does not meet the reasonable certainty
criterion. Probable reserves may be assigned to areas that are
structurally higher than the proved area if these areas are in
communication with the proved reservoir. Probable reserves estimates
also include potential incremental quantities associated with a
greater percentage recovery of the hydrocarbons in place than assumed
for proved reserves. 
Possible reserves are those additional reserves that are less certain
to be recovered than probable reserves. When deterministic methods
are used, the total quantities ultimately recovered from a project
have a low probability of exceeding proved plus probable plus
possible reserves. When probabilistic methods are used, there should
be at least a 10% probability that the total quantities ultimately
recovered will equal or exceed the proved plus probable plus possible
reserves estimates. Possible reserves may be assigned to areas of a
reservoir adjacent to probable reserves where data control and
interpretations of available data are progressively less certain.
Frequently, this will be in areas where geoscience and engineering
data are unable to define clearly the area and vertical limits of
commercial production from the reservoir by a defined project.
Possible reserves also include incremental quantities associated with
a greater percentage recovery of the hydrocarbons in place than the
recovery quantities assumed for probable reserves. Possible reserves
may be assigned where geoscience and engineering data identify
directly adjacent portions of a reservoir within the same
accumulation that may be separated from proved areas by faults with
displacement less than formation thickness or other geological
discontinuities and that have not been penetrated by a wellbore, and
the Company believes that such adjacent portions are in communication
with the known (proved) reservoir. Possible reserves may be assigned
to areas that are structurally higher or lower than the proved area
if these areas are in communication with the proved reservoir. Where
direct observation has defined a highest known oil ("HKO") elevation
and the potential exists for an associated gas cap, proved oil
reserves should be assigned in the structurally higher portions of
the reservoir above the HKO only if the higher contact can be
established with reasonable certainty through reliable technology.
Portions of the reservoir that do not meet this reasonable certainty
criterion may be assigned as probable and possible oil or gas based
on reservoir fluid properties and pressure gradient interpretations. 
In this press release, the Company uses the term "contingent
resources" to describe quantities of petroleum estimated, as of a
given date, to be potentially recoverable from known accumulations,
but the applied project(s) are not yet considered mature enough for
commercial development due to one or more contingencies. This is a
broader category of potentially recoverable volumes than proved,
probable or possible reserves. Contingent resources may include, for
example, projects for which there are currently no viable markets, or
where commercial recovery is dependent on technology under
development, or where evaluation of the accumulation is insufficient
to clearly assess commerciality. Contingent resources may be further
categorized in accordance with the level of certainty associated with
the estimates and may be sub-classified based on project maturity
and/or characterized by their economic status. Estimates of
contingent resources are by their nature more speculative than
estimates of proved, probable and possible reserves and accordingly
are subject to substantially greater risk of actually being realized
by the Company. The Company believes its estimates of contingent
resources and potential drilling locations are reasonable, but such
estimates have not been reviewed by independent engineers. Estimates
of contingent resources may change significantly as development
provides additional data, and actual quantities that are ultimately
recovered may differ substantially from prior estimates. 
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,
Ohio, North Dakota, Kentucky, Texas and Saskatchewan, Canada. The
Company is presently active in three of the most prolific
unconventional shale resource plays in North America, namely the
Marcellus Shale, Utica Shale and Williston Basin/Bakken Shale. 
For more information, please view our website at
www.magnumhunterresources.com. 
Forward-Looking Statements 
The statements and information contained in this press release that
are not statements of historical fact, including any estimates and
assumptions contained herein, are "forward looking statements" as
defined in Section 27A of the Securities Act of 1933, as amended,
referred to as the Securities Act, and Section 21E of the Securities
Exchange Act of 1934, as amended, referred to as the Exchange Act.
These forward-looking statements include, among others, statements,
estimates and assumptions relating to our business and growth
strategies, our oil and gas reserve estimates, our ability to
successfully and economically explore for and develop oil and gas
resources, our exploration and development prospects, future
inventories, projects and programs, expectations relating to
availability and costs of drilling rigs and field services,
anticipated trends in our business or industry, our future results of
operations, our liquidity and ability to finance our exploration and
development activities and our midstream activities, market
conditions in the oil and gas industry and the impact of
environmental and other governmental regulation. In addition, with
respect to any pending transactions described herein, forward-looking
statements include, but are not limited to, statements regarding the
expected timing of the completion of proposed transactions; the
ability to complete proposed transactions considering various closing
conditions; the benefits of any such transactions and their impact on
the Company's business; and any statements of assumptions underlying
any of the foregoing. In addition, if and when any proposed
transaction is consummated, there will be risks and uncertainties
related to the Company's ability to successfully integrate the
operations and employees of the Company and the acquired business.
Forward-looking statements generally can be identified by the use of
forward-looking terminology such as "may," "will," "could," "should,"
"expect," "intend," "estimate," "anticipate," "believe," "project,"
"pursue," "plan" or "continue" or the negative thereof or variations
thereon or similar terminology. 
These forward-looking statements are subject to numerous assumptions,
risks, and uncertainties. Factors that may cause our actual results,
performance, or achievements to be materially different from those
anticipated in forward-looking statements include, among others, the
following: adverse economic conditions in the United States, Canada
and globally; difficult and adverse conditions in the domestic and
global capital and credit markets; changes in domestic and global
demand for oil and natural gas; volatility in the prices we receive
for our oil, natural gas and natural gas liquids; the effects of
government regulation, permitting and other legal requirements;
future developments with respect to the quality of our properties,
including, among other things, the existence of reserves in economic
quantities; uncertainties about the estimates of our oil and natural
gas reserves; our ability to increase our production and therefore
our oil and natural gas income through exploration and development;
our ability to successfully apply horizontal drilling techniques; the
effects of increased federal and state regulation, including
regulation of the environmental aspects, of hydraulic fracturing; the
number of well locations to be drilled, the cost to drill and the
time frame within which they will be drilled; drilling and operating
risks; the availability of equipment, such as drilling rigs and
transportation pipelines; changes in our drilling plans and related
budgets; regulatory, environmental and land management issues, and
demand for gas gathering services, relating to our midstream
operations; and the adequacy of our capital resources and liquidity
including, but not limited to, access to additional borrowing
capacity. 
These factors are in addition to the risks described in the "Risk
Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" sections of the Company's 2012
annual report on Form 10-K, and subsequent Form 10-Qs, filed with the
Securities and Exchange Commission, which we refer to as the SEC.
Most of these factors are difficult to anticipate and beyond our
control. Because forward-looking statements are subject to risks and
uncertainties, actual results may differ materially from those
expressed or implied by such statements. You are cautioned not to
place undue reliance on forward-looking statements contained herein,
which speak only as of the date of this document. Other unknown or
unpredictable factors may cause actual results to differ materially
from those projected by the forward-looking statements. Unless
otherwise required by law, we undertake no obligation to publicly
update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise. We urge readers to
review and consider disclosures we make in our reports that discuss
factors germane to our business. See in particular our reports on
Forms 10-K, 10-Q and 8-K subsequently filed from time to time with
the SEC. All forward-looking statements attributable to us are
expressly qualified in their entirety by these cautionary statements. 
Contact:
Chris Benton 
AVP, Finance and Capital Markets
ir@magnumhunterresources.com
(832) 203-4539 
 
 
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