Magnum Hunter Drops After Dismissing Auditor: Dallas MoverMike Lee
Magnum Hunter Resources Corp., an oil and natural gas producer with operations in West Virginia, North Dakota and Saskatchewan, slumped the most in more than 18 months after firing its auditor.
The company fell 15 percent to $2.83 at the close in New York, the most since Oct. 3, 2011.
Magnum Hunter dismissed its auditing company, PricewaterhouseCoopers LLP, after the accountants discovered information that “may have a material impact on the fairness or reliability of the company’s consolidated financial statements,” according to a filing yesterday with the Securities and Exchange Commission.
PwC asked for more information about the value of Houston-based Magnum Hunter’s oil and gas properties and its reserves. It also asked the energy company to review its tax liabilities and its ability to meet debt covenants, according to the filing.
Magnum Hunter hasn’t filed its annual report for 2012, and the accounting firm said inadequate staffing and processes may have affected its financial controls.
Magnum Hunter yesterday hired BDO USA LLP as auditor. The energy company said it has adequate funding to meet its debt covenants and its reserves and other estimates are accurate, according to filing.
Magnum Hunter shares had fallen 17 percent this year before disclosing the accounting problems, and announced April 3 plans to sell 19,000 net acres in the Eagle Ford Shale field for $401 million.
The accounting problems add to doubts about Magnum Hunter’s operations, Amir Arif, an analyst at Stifel Nicolaus & Co. in Washington, wrote in a note to clients.
“We are not sure why a new auditing firm would not have similar concerns,” Arif wrote.
Chris Benton, a spokesman for Magnum Hunter, didn’t immediately respond to a voice message seeking comment.