Thursday, September 17, 2015

More Lies from Magnum Hunter Resources?

The price of Magnum Hunter Resources (MHR - $0.52) soared more than 70% to $1.33 per share on August 10 when the Marcellus/Utica NG driller announced intent to farm-out certain undeveloped and unproved oil and gas leasehold acreage currently held by a wholly-owned subsidiary.

The putative deal was to be structured so that cash-starved MHR would receive – in total – an infusion up to $430 million to co-develop acreage located in the Marcellus Shale and Utica Shale in Monroe and Washington Counties, Ohio from this un-named venture capital fund.

Following the achievement by the fund of the greater of (i) a 12% internal rate of return on invested capital and (ii) a 1.20x multiple on invested capital, 100% of the Fund’s working interests in the acreage would automatically revert to Triad, save for a non-operated working interest of 10% by the fund. 

These days, Magnum Hunter seems to be “growing a tree of falsehood from a small grain of truth (Polish poet Czeslaw Milovz).”

Similar to the supposed asset sale of its Eureka Hunter pipeline, this joint venture looks more like another desperate act of dissimulation by management: the regulatory filing stated that a definitive agreement would be executed within “the next 30 to 45 days.”

Come September 25, investors will find out if Gary Evans & company are dealing in truths or lies.

Editor David J Phillips holds a financial interest in the stock mentioned in this article. The 10Q Detective has a Full Disclosure Policy. 

1 comment:

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