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Magnum Hunter could bring in some serious cash

If Magnum Hunter Resources Corp. can close two deals, the company would be bringing in some major cash.

The company has the potential to close two major deals by the end of August, and one of the deals would bring in over $500 million.  Magnum Hunter is looking to sell its interests in its Eureka Hunter Midstream pipeline system, which could happen within the next three weeks if no setbacks occur.  Second, a joint venture partnership for the company’s shale acreage in the works is worth $450 million. This deal is expected to close early this week.

As reported by the Columbus Business First, “Both transactions have been in the works for months. Magnum Hunter (NYSE:MHR) has 200,000 acres under lease in the Utica and Marcellus shale plays. It has often made headlines for natural gas wells with huge production results and, more recently, for its attempts to meet a cash-raising obligation.”  Magnum Hunter CEO Gary Evans commented on the company’s current situation:

Our sector is definitely in the pits and is going to be here for a while is the way we’re assuming it.

During the last quarter, Magnum Hunter managed to bring in $33.8 million in oil and gas revenue.  However, this is down 60 percent from last year’s earnings.  The company currently has an estimated $8.8 million in cash available.

Both of the deals are ways the company is looking to bring in money while oil and natural gas prices continue to stay low.  The joint venture with an unnamed partner would allow Magnum Hunter to “contribute some of its considerable undeveloped Ohio acreage and get an up-front cash infusion.” Evans explained the deal has been in the works since March, and between Magnum Hunter and its partner, 20 different term sheets have been worked on.

The deal involving Magnum Hunter’s Eureka Hunter Midstream pipeline system is planned to close between $460 million and $600 million, and during the second-quarter earnings call last Friday, Evan’s explained the deal should close “near the upper end of that range.”

Last Friday, Evans also mentioned the company has received three bids so far and is expecting for more to roll in. Magnum Hunter will choose a company at the beginning of next week.

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