Quarterly / Earnings Reports

Magnum Hunter Touts Strong Fiscal Results for 2012

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Magnum Hunter Resources Corporation has reported financial and operating results for the three months and year ended December 31, 2012.

Highlights for the three months and year ended December 31, 2012 include:

• Total Revenue Increased 138% to $271.0 million for the Year Ended 2012
• Adjusted EBITDAX was $168.6 million for the Year Ended 2012
• Fourth Quarter 2012 Adjusted EBITDAX increased 35% to $54.8 million compared to $40.6 million in the Third Quarter 2012
• 2012 Production Increased 139% to 13,152 BOEPD compared to 5,510 BOEPD for the Year Ended 2011
• Fourth Quarter Production Increased 60% to 14,587 BOEPD compared to 9,124 BOEPD in the Fourth Quarter 2011
• Proved Reserves at December 31, 2012 Remain Unchanged at 73.1 MMBoe
• Year-End 2013 Production Exit Rate Guidance Reaffirmed at 23,000 - 25,000 BOEPD

Mr. Gary C. Evans, Chairman of the Board and Chief Executive Officer of Magnum Hunter Resources, commented: "Magnum Hunter significantly improved its financial results reported during fiscal year 2012 in all areas: revenues, production, cash flow, and proved reserves. At the same time, costs in the field as well as general and administrative costs continue to decline on a barrel of oil produced equivalent basis. While we are well into the new year, liquidity has subsequently improved with the sale of our Eagle Ford Shale properties which occurred in April. Current cash on hand and credit availability under our existing Senior Revolving Credit Facility is approximately $380 million, excluding non-core asset sales in the works. Even with the loss of approximately 3,500 barrels per day of production as a result of our Eagle Ford Shale properties sale, we remain confident with our prior production guidance of exiting this fiscal year between 23,000 - 25,000 barrels of oil equivalent per day, which is almost double the actual production of last year."

Financial and Production Results

Magnum Hunter reported an increase in revenues of 101% to $83.7 million for the three months ended December 31, 2012 compared to $41.6 million for the three months ended December 31, 2011. This increase in revenues was driven primarily by increases in our oil and natural gas production as a result of a combination of acquisitions and increased drilling efforts completed throughout the year in our unconventional resource plays. Additionally, the Company focused more on oil and liquids rich natural gas related projects during 2012.

The Company reported a net loss of $85.4 million attributable to common shareholders or ($0.54) per basic and diluted common shares outstanding for the three months ended December 31, 2012. The Company's net income attributable to common shareholders for the three months ended December 31, 2012, was $8.9 million or $0.05 per basic and diluted common shares outstanding when adjusted for non-cash and non-recurring expenses of $94.3 million.

For the three months ended December 31, 2012, Magnum Hunter's Adjusted Earnings Before Interest, Income Taxes, Depreciation, Amortization and Exploration (Adjusted EBITDAX) was $54.7 million. Operating margins increased primarily due to an overall production improvement; increased focus on oil and liquids rich natural gas related projects and reduction in operating expenses per Boe.

Oil and gas production increased 60% for the three months ended December 31, 2012 to 1.342 million barrels of oil equivalent (MMBoe) or 14,587 barrels of oil equivalent per day (Boepd) (57% oil/liquids) as compared to the 0.839 MMBoe or 9,124 Boepd reported for the three months ended December 31, 2011. The increase in production is primarily attributable to acquisitions as well as organic growth due to the Company's expanded drilling program in its various shale plays. In addition our oil/liquids production mix increased to 57% of overall production in the fourth quarter of 2012 compared to 37% in the fourth quarter of 2011 as a result of the shift in our capital expenditure program.

Financial and Production Results

Magnum Hunter reported an increase in revenues of 138% to $271.0 million for the twelve months ended December 31, 2012 compared to $113.7 million for the twelve months ended December 31, 2011. This increase in revenues was driven principally by the increases in our oil and natural gas production as a result of acquisitions, expanded drilling completed throughout the year in our unconventional resource plays and an increased focus on oil/liquids capital expenditures.

The Company reported a net loss of $167.4 million attributable to common shareholders or ($1.07) per basic and diluted common shares outstanding for the twelve months ended December 31, 2012, compared to a net loss of $90.7 million or ($0.80) per basic and diluted common shares outstanding during the twelve months ended December 31, 2011. The Company's net loss attributable to common shareholders for the twelve months ended December 31, 2012 was $16.5 million or ($0.11) per basic and diluted common shares outstanding when adjusted for non-cash and non-recurring expenses of $150.9 million.

For the twelve months ended December 31, 2012, Magnum Hunter's Adjusted EBITDAX was $168.6 million. Operating margins increased due to increased production as a result of acquisitions and our increased upstream capital budget focused on oil/liquids drilling. Operating margins also improved as lease operating expenses per Boe declined from $13.10 per Boe to $10.67 per Boe, primarily due to the addition of new unconventional production, tighter controls on overall field operating expenses; and recurring cash general and administrative costs were $7.43 per Boe.

Oil and gas production increased 139% for the twelve months ended December 31, 2012 to 4.814 MMBoe or 13,152 Boepd (49% oil/liquids) as compared to the 2.011 MMBoe or 5,510 Boepd reported for the twelve months ended December 31, 2011. The increase in production is primarily attributable to acquisitions as well as organic growth due to the Company's expanded drilling program focused on oil/liquids drilling.

Proved Reserves Overview

The Company's proved reserves as of December 31, 2012, which were disclosed in the Company's previously released reserve update on January 23, 2013, remain unchanged. As of December 31, 2012, the Company had approximately 73.1 MMBoe of estimated proved reserves, of which approximately 63% was oil and natural gas liquids and approximately 52% was classified as proved developed producing reserves. After giving effect to the completion in April 2013 of our Eagle Ford Shale properties sale, the Company had total proved reserves as of December 31, 2012 of approximately 61.6 MMBoe, of which approximately 57% was oil and natural gas liquids and approximately 56% was classified as proved developed producing reserves.

Unproved/Proved Impairments

The Company recorded approximately $74.7 million of non-cash charges for impairment to its unproved properties and proved properties for the twelve months ended December 31, 2012. Specifically, the Company recorded a $70.6 million unproved property and $4.1 million proved property impairment charge, which compares to the estimate of $87.0 million that we previously provided in our Form 8-K dated April 16, 2013. The unproved impairment charge was primarily due to the large acreage position we initially acquired and results to date in the area, which led us to focus on other areas; thereby, impairing certain acreage that will expire in the future. Below is a detailed breakdown of the impairments by division.

Capital Expenditures, Liquidity and Derivative Update

Magnum Hunter's total upstream and midstream capital expenditures, excluding acquisitions, were $489 million for the twelve months ended December 31, 2012, including $428 million for upstream activities and $61 million for midstream activities. As a result of our Eagle Ford Shale properties sale in April 2013, the Company has reaffirmed its 2013 upstream capital expenditure budget of $300 million, which is allocated $150 million to the Appalachian Basin, almost all of which is allocated to its Marcellus Shale and Utica Shale plays, and $150 million to its Williston Basin/Bakken Shale play. The Company has allocated a significant portion of its 2013 upstream capital budget to the Marcellus Shale and Utica Shale plays to take advantage of its processing capacity with the start-up of MarkWest's Mobley Processing Plant in mid-December 2012 and the continued build-out of the Company's Eureka Hunter Gas Gathering System.

As a result of the Company's internally generated cash flows and availability under its Senior Revolving Credit Facility, Magnum Hunter has more than sufficient liquidity to fund its fiscal 2013 upstream capital budget of $300 million. As of May 1, 2013, the Company had total cash liquidity of approximately $380 million which is comprised of approximately $115 million of cash and $265 million of availability under its Senior Revolving Credit Facility. The Company currently owns 10 million shares of common stock of Penn Virginia Corporation that could be divested to increase liquidity and provide increased financial flexibility. The Company is also aggressively pursuing between $100 - $200 million of non-core asset sales to further bolster our overall liquidity and better manage our financial leverage.

Internal Controls

As disclosed in the Company's Form 10-K for the fiscal year ended December 31, 2012, the Company identified a number of material weaknesses in its internal controls. The Board, Audit Committee and senior management of the Company recognize the importance of improving the Company's internal controls and are committed to remediating these material weaknesses as quickly as possible. The Company is implementing remediation plans which it believes will successfully address these material weaknesses. Management has significantly expanded the number and quality of staff; has added outside consultants with the knowledge, training and experience necessary to develop and support the Company's overall internal control environment; and is implementing new land and accounting information systems.