Drilling Down

Magnum Hunter Resources to Sell Utica Assets

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DALLAS – Magnum Hunter Resources Corp. says it’s in negotiations with “certain parties” to establish a joint venture that would entail selling $450 million of the oil and gas producer’s leasehold positions in Ohio’s Utica shale.

In a statement released Monday, the company said the proposed sale is one of several initiatives underway in order to improve Magnum Hunter’s liquidity.

The company is negotiating an asset management agreement that would increase its borrowing capacity under Magnum’s senior revolving credit facility of $40 million. It is also negotiating an agreement to sell 5,000 acres of undeveloped leasehold acreage in Appalachia that could generate between $45 million and $60 million.

Magnum Hunter currently has four producing wells in the Utica, but has no rigs or crews working in the shale play. Two other Utica wells have been drilled but have yet to be fractured, while three other wells are in various stages of the drilling phase, the company said.

All drilling and completion operations with respect to these wells have been suspended, Magnum Hunter said.

Magnum Hunter reported a loss of $114.8 million for the three-month period ended March 31, 2015 compared to a net loss of $76.5 million a year earlier.

Oil and gas production increased 66% during the first quarter of 2105, the company reported. The increase in production was attributable to the company’s expanded drilling programs in the Marcellus and Utica shales.

But falling oil prices have clobbered oil and gas producers across the country, forcing many of them to scale back spending and drilling operations.

“We continue to be in our ‘hunker down’ mode as we work on closing our various liquidity events previously outlined,” said Gary C. Evans, CEO. “Currently, we are not drilling or completing any new wells in anticipation of further reduction in service costs and improvements in our working capital position.”

Published by The Business Journal, Youngstown, Ohio.