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. 

Does Magnum Hunter Resources Have a Winning Bid - or Not?

Management of Magnum Hunter Resources ($0.67) said on the August 5 earnings call that a decision on the Eureka Hunter pipeline asset sale was "imminent."

Direct quote: "We've gotten three more bids now – or three total bids. We're expecting more over the weekend and this week. And so we will pick a horse probably by the end of the next week or at the latest the beginning of the following."

It's now September and no deal has been announced -- and the stock price continues to hit new lows. Whom should investors believe - Gary Evans, the CEO of this struggling Marcellus/Utica NG driller or selling shareholders?  At present, a sagging share price suggests "no deal."

Gary Evans, "come on down" and prove to Wall Street you do have a winning bid for your showcase.

... And on a related note: According to a recent SEC filing, as MHR struggles to maintain solvency it hands over the keys to a company-owned residence in Marietta, Ohio to employee, Jim Denny, a former MHR executive at Triad Hunter, an Appalachian subsidiary,

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