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MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp.

Magnum Hunter Resources Corp. · May 7, 2012 · 56 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 1
    MAGNUM HUNTER RESOURCES CORPORATION 450 Million Senior Unsecured Notes Offering / 35 Million Shares Common Equity Offering May 2012 Private and Confidential
  2. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 2
    Transaction Overview On April 18, 2012, MHR announced an agreement to acquire additional interests in a significant portion of its existing Williston Basin Bakken / Three Forks properties for 311 million Magnum Hunter Resources…
  3. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 3
    Sources and Uses ( in millions) Sources Uses New Senior Unsecured Notes 450.0 Baytex Acquisition 311.0 (1) Common Equity Offering 208.3 Pay down Revolver 205.0 Pay down existing Second Lien 100.0 General corporate purposes 42.3…
  4. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 4
    Management Team Gary C. Evans Previously founded and served as the CEO and Chairman of the Board of Chairman & CEO Magnum Hunter Resources Inc. (Old Magnum Hunter) In June 2005, Cimarex acquired Old Magnum Hunter in an allstock…
  5. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 5
    Company Overview 5
  6. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 6
    Overview of Magnum Hunter Overview Production Growth (Boe/d) Magnum Hunter Resources is an exploration and Oil / Liquids Natural Gas 18,000 production company focused on three of the 14,500 13,700 most prolific unconventional…
  7. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 7
    Transactions Enhance Liquids Exposure Williston Basin Acquisition Capex transition to LiquidsRich Basins Increase working interest in Baytex 2012 Capex budget of 325 million properties to 47.5% 92% dedicated to oil / liquids Proved…
  8. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 8
    Large, Diversified Asset Base 125,000 Net Acres 58,426 Net Marcellus Acres 61,151 Potential Net Utica Shale Acres 313,000 Net Southern Appalachia Acres Proved Reserves of Potential % Oil/ Drilling Locations 24,000 Net…
  9. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 9
    MHR Track Record of Value Creation Successful history of creating value for shareholders Bakken acquisition represents potential for additional value creation (3) 2,023.0 / EV = 1.4x Current Enterprise Value (EV) (3) 945.5…
  10. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 10
    Liquids Driven Capital Plan Revised 2012 Drilling Budget 325 Million 2012 upstream capital budget heavily weighted to liquids targets Appalachia Williston Basin: 34 net wells expected to be 25 mm drilled in 2012 8% Eagle Ford:…
  11. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 11
    Pro Forma Proved Reserve and Resource Summary Proved Reserves and PV10% up 32% and 53%, respectively since year end 2011 (1) (2) Significant Unrisked Potential Resources ProForma Proved Reserve Summary Proved Reserve Allocation ( in…
  12. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 12
    Key Investment Highlights Large, contiguous operations in three of the highest return resource plays in the U.S. Large, Diversified Asset Base in Highest Diversification and acreage in each core area provides investment flexibility…
  13. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 13
    Asset Overview 13
  14. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 14
    Williston Hunter Overview Overview Areas of Operation Proforma Proved Reserves Total proved reserves of 20.6 MMBoe as of 3/31/12 Proved producing reserves of 7.1 MMBoe as of 3/31/12 100% Avg. WI Acreage 125,000 net acres in the…
  15. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 15
    Williston Basin Acquisition Overview The Company is acquiring Baytex Energys assets out of the Samson operated area in Divide County, North Dakota for 311 million Transaction expected to close on or about May 22, 2012, with an…
  16. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 16
    Williston Basin Acquisition Bid Value The metrics for the 311 million acquisition price for the Baytex Energy assets in the Samson operated area in Divide County, ND are: Total Proved ( in MM) Reserves (MMBOE) PV-10% PDP 1.39…
  17. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 17
    Williston Basin Acquisition Highlights Attractive cost of 3,663 per undeveloped acre for large contiguous block of acreage in a known producing area Well results continue to improve in acquired area Completion code cracked Less…
  18. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 18
    Williston Basin Economics Sensitivity North Dakota (2 mile lateral) Saskatchewan (1 mile lateral) CAPEX: 6.9 Million North Dakota (2 mile lateral) CAPEX: 3.4 Million IP24 Hour: 550 Bbl/D IP24 Hour: 250 Bbl/D EUR: 350 MBoe Saskatchewan…
  19. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 19
    Williston Basin Comparative Economics Lower drilling and completion costs per well result in bestinclass returns even with lower EUR/well 44% 43% 39% 40% 37% 38% 27% 25% 25% 22% 10.5 9.6 8.5 8.0 8.0 7.0 6.9 1.7 1.7 2.2…
  20. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 20
    Williston Hunter Recent Well Results Williston (North Dakota) MHR results 1,525 1,139 1,212 1,203 1,188 897 900 988 852 790 818 869 636 621 598 684 622 607 591 346 409 350 358 422 335 345 328 220 302 23 15 26 20 15 20 26 30 30…
  21. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 21
    Williston Basin Recent Tableland Results vs. Type Curve 1 mile Type Curve 114110 1316110 1310110 1210110 515110 814110 800 TFSanish 1 Mile Type Curve 185 MBBL 700 600 500 BOPD 400 1-14 Install tubing pump 300 200…
  22. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 22
    Eagle Ford Hunter Overview Total proved reserves of 8.2 MMBoe as of March 31, 2012 Proved Reserves Proved producing reserves of 2.1 MMBoe as of March 31, 2012 85% crude oil, with high btu gas (+1350) Production 21 gross wells on…
  23. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 23
    Eagle Ford Map MHR EOG Hilcorp/Marathon Weber Conoco Phillips Hess / ZaZa Penn Virginia GeoSouthern Leopard Hunter 1H Southern Bay 24hr IP 1,333 Boe/d Penn Virginia Gardner 1H IP 1,247 Boe/d Hawn Holt 9H IP 1,877 Boe/d…
  24. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 24
    Economic Sensitivity of Eagle Ford Gonzales County CAPEX: 8.5MM + 0.3MM (ESP) + .02MM PU IP24 Hour: 1,250 Bbl/D EUR: 433 MBoe 11.0 10.0 IRR: 97% 9.0 IRR: 85% 8.0 IRR: 63% NPV10 ( MM) 7.0 IRR: 54% 6.0 IRR: 51% 5.0…
  25. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 25
    Eagle Ford Hunter Operations Eagle Ford MHR results 2,289 2,044 2,033 1,590 1,545 1,321 1,333 1,336 1,275 1,039 1,017 909 882 902 910 883 886 854 839 841 698 690 618 612 25 24 23 23 21 21 20 20 14 15 16…
  26. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 26
    Eagle Ford Historical Production vs. Type Curve Furrh 1H Furrh 2H Geo Hunter 1H Gonzo N 1H Gonzo N 2H Kudu Hunter 1H Leopard Hunter 1H Oryx Hunter 1H Sable Hunter 1H Southern Hunter 1H 433 MBOE Type Curve 1,200 1,000 800…
  27. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 27
    Appalachia Overview Overview Areas of Operation Proved Reserves MHR areas of operations Total proved reserves of 30.5 MMBoe as of 3/31/12 Proved producing reserves of 17.0 MMBoe as of 3/31/12 Acreage 400,000 net acres in the…
  28. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 28
    Economic Sensitivity of Marcellus CAPEX: 6.5MM IP24 Hour: 5 MMcf/D EUR: 8.2 Bcfe 11.0 IRR: 57% 10.0 9.0 IRR: 52% 8.0 IRR: 47% NPV10 ( MM) (1) 7.0 IRR: 42% 6.0 IRR: 38% 5.0 IRR: 33% 4.0 IRR: 28% 3.0 IRR: 24% 2.0…
  29. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 29
    Marcellus Operations Marcellus MHR results 10,500 10,400 10,000 9,700 9,600 9,500 9,400 7,078 6,450 6,689 6,273 5,800 5,618 5,040 16 16 16 16 18 16 18 WVDNR 1102 WVDNR 1103 WVDNR 1104 Roger Weese 1110 Everett Weese…
  30. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 30
    Marcellus Historical Production vs. Type Curve Weese 1001 Weese 1003 Weese 1110 WVDNR 1102 WVDNR 1103 WVDNR 1104 WVDNR 1107 WVDNR 1108 WVDNR 1109 Type Curve 6.0 Bcfe 8,000 7,000 6,000 5,000 Mcfe/d 4,000 3,000…
  31. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 31
    Utica Shale Overview CHESAPEAKE EXPLORATION On February 17, 2012, MHR closed on the HESS OHIO RESOURCES acquisition of 12,186 net Utica Shale acres for approximately 25 million (2,037/acre) Spencer A1H & A5H The acreage is…
  32. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 32
    Eureka Hunter Midstream Overview Strategically Positioned Assets Pipeline in strategic geographical location in heart of Marcellus wet gas corridor of WV 54 miles of 20 900 high pressure gathering system in the ground todate 200 300…
  33. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 33
    Financial Overview 33
  34. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 34
    Financial Strategy Capital spending dictated by rates of return across all operating areas Capital budget adjusted in Q2 2012 to focus on oil / liquids areas Maintain conservative balance sheet Continue to increase Senior Credit…
  35. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 35
    Pro Forma Capitalization ( in millions, exc ept as indic ated) Status quo Proforma Proforma 3/31/2012 adjustments 3/31/12 (1) Cash 30.7 18.9 49.6 Debt: Revolving Credit Facility due 2016 205.0 (205.0) Second Lien Term Loan 100.0…
  36. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 36
    Hypothetical Impact of Changes in F&D Costs on Debt to Proved Reserves 2011 3/31/2012 12/31/2012E ( in millions, except per unit data) Actual Pro Forma Pro forma Total Q2Q4 2012 E&P Drilling Capex 279.5 (1) Assumed Drillbit F&D cost…
  37. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 37
    Strong Pro Forma Collateral Coverage ( in millions) 2,562 1,773 1,305 958 299 Proforma 441 441 Net Debt: 418.9 MM 517 517 3/31/12 1P Enterprise Value (1) Total NAV (based on undeveloped PV10% (NYMEX) acreage) Proved…
  38. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 38
    Borrowing Base Growth ( in millions) PreHY 375 300 300 100 268 100 100 Term Loan 100 275 200 200 213 (2) Revolver 188 (1) 168 145 170 6/30/2011 7/13/2011 8/15/2011 9/29/2011 12/7/2011 12/31/2011 3/31/2012 May…
  39. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 39
    Focus on Operational Efficiency Allin costs ( /Boe) 79 4.85 34 43 3.72 31 13 3.17 22 7 13 10 18 11 11 2010 2011 Q1 2012 Drillbit F&D (1) LOE Recurring Cash G&A Production Taxes Note: Refer to pages 54 and 55…
  40. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 40
    Summary of Commodity Hedges in Place As of 3/31/2012 2012 2013 NATURAL GAS HEDGES: Swaps Volume (mmbtu/d) 16,100 16,000 Price /mmbtu 3.53 3.51 Collars Volume (mmbtu/d) 11,910 12,500 Floor Price /mmbtu 4.58 4.50 High Price /mmbtu…
  41. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 41
    Summary of Key Investment Highlights Large, Diversified Asset Base in Highest Return Resource Plays Liquids Driven Capital Plan Leading to Strong Cash Flow Generation Increased Operational Efficiency and Margins Attractive…
  42. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 42
    Appendix 42
  43. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 43
    Recent Company History March 2012: Partial monetization of Eureka May 2009: Gary C. Evans and Ron April 2011: Completed acquisition of Hunter to ArcLight Capital Ormand joined MHR Marcellus Shale assets for 20 million Partners,…
  44. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 44
    Ea gle Fo rd Note: Sh ale Ni ob Liq 10% 20% 30% 40% 50% 60% ra ui ra ds R W ich M at te iss nb iss er ip g Ui pi W n ta a n 54% 53% Ba L kk ol f i en cam Gre me Sh p en M R 51% ale M iv…
  45. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 45
    Track Record of Proved Reserve Growth Robust track record of proved reserve growth since inception Nearly 60 MMBoe proforma for Baytex acquisition Expect to continue to consistently add reserves with mix becoming more dominated by oil…
  46. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 46
    Compelling Drilling Economics Drillbit 24Hour Estimated B /E Drilling (1) D&C EUR F&D % IP Rate IRR Payout (2) Economics (1) (3) Liquids Weighted Plays (MM) (MBoe) (/Boe) Liquids (Boe/d) 80.00 90.00 100.00 (Months) (/Boe) Williston…
  47. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 47
    Williston Basin Acquisition Acreage Map MHR Working Interest Saskatchewan Canada Burke County North Dakota Divide County North Dakota 47
  48. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 48
    Eagle Acquisition Overview MHR announced the closing of the Williston Basin acquisition on April 2, 2012 Purchase price consisted 48.5 million in cash and 2 million in MHRs restricted stock at 6.74 per share Established MHR as an…
  49. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 49
    Eureka Hunter Pipeline Geographical Map 49
  50. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 50
    EBITDAX Reconciliation ( in millions) Quarter ended 1Q11 2Q11 3Q11 4Q11 1Q12 Net income (6,690) (15,040) 2,000 (56,932) (17,137) Loss (gain) on sale of assets 4 (1,559) 908 501 274 Net Interest expense 787 3,925 2,272 5,017 5,384…
  51. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 51
    PV10 Reconciliation As of 3/31/12 As of 12/31/11 Future cash inflows 2,893,358 2,409,249 Future production costs (862,238) (765,048) Future development costs (368,128) (330,007) Future income tax expense (349,717) (253,721) Future net…
  52. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 52
    MHR Track Record of Value Creation Triad Hunter (1) Eureka Hunter Eagle Ford (Marcellus / Utica) (Midstream) Initial Investment Date Sep2009 Feb2010 Feb2010 Initial Investment 2.4 71.0 10.0 Total MHR Investment ToDate (2) 151.5…
  53. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 53
    Pro Forma Legal Structure Magnum Hunter New 450 million Senior Unsecured Notes Resources Corp. Existing credit facility (NYSE: MHR) Series C and D preferred stock (1) 100% 100% 100% 100% 100% 100% 100% Bakken Hunter, Triad…
  54. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 54
    Other footnotes Source: Company information and Management estimates, unless stated otherwise. Note: Unless otherwise stated, market data as of 5/2/2012, Proved Reserves and PV10 figures based on SEC pricing (98.15/Bbl and 3.71/MMBtu) as…
  55. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 55
    Other footnotes (contd) Source: Company information and Management estimates, unless stated otherwise. Note: Unless otherwise stated, market data as of 5/2/2012, Proved Reserves and PV10 figures based on SEC pricing (98.15/Bbl and…
  56. MAY 2012 CORPORATE PRESENTATION – Magnum Hunter Resources Corp. – slide 56
    Contact Information Magnum Hunter Resources (NYSE: MHR) Equity Research Analyst Coverage: BMO Capital Markets MLV Partners Canaccord Genuity Pritchard Capital Capital One Southcoast, Inc. Robert W. Baird & Co. Caris & Company…

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