Magnum Hunter Resources Acquires Oil and Gas Reserves from Vastar Resources

Strategic Insights -

Magnum Hunter Resources, Inc., a leading independent exploration and development company, has announced the acquisition of oil and gas reserves and related assets from Vastar Resources, Inc. The deal, valued at approximately $33.9 million, includes Vastar's interest in 476 wells, a gas processing plant, and two gas gathering systems located in Texas, Oklahoma, and Arkansas. The reserves, primarily from the Walnut Bend Field in Texas, the Madill Field in Oklahoma, and the Walker Creek Field in Arkansas, are expected to generate significant net sales and cash flow for Magnum Hunter.

Key Takeaways:

  • Magnum Hunter Resources, Inc. has acquired oil and gas reserves and related assets from Vastar Resources, Inc. for approximately $33.9 million.
  • The acquisition includes Vastar's interest in 476 wells, a gas processing plant, and two gas gathering systems located in Texas, Oklahoma, and Arkansas.
  • The reserves are located in the Walnut Bend Field in North Central Texas, the Madill Field in Southern Oklahoma, and the Walker Creek Field in Southwestern Arkansas.
  • The three fields currently generate net sales in excess of 1,000 barrels per day of liquids and 10 million cubic feet per day of natural gas production.
  • Magnum Hunter Resources is set to become the operator of all the wells and related assets upon closing, with a closing scheduled on or before June 8, 1999.
  • The acquisition will significantly increase Magnum Hunter's current daily production rate from 70 million cubic feet equivalents per day (MMCFED) to approximately 86 MMCFED, a 50% increase from average daily production of 58 MMCFED in 1998.
  • Magnum Hunter Resources, Inc. is one of the nation's fastest growing independent exploration and development companies engaged in crude oil, condensate and natural gas production, gas gathering and transmission, and managing and operating oil and natural gas properties for interest owners.

Statistics:

  • 476 wells acquired from Vastar Resources, Inc.
  • $33.9 million total purchase price for the oil and gas reserves and related assets.
  • 1,000+ barrels per day of liquids production from the three fields.
  • 10 million cubic feet per day of natural gas production from the three fields.
  • 16 million cubic feet equivalents per day of combined natural gas and liquids production from the three fields.
  • $10.8 million approximate net operating cash flow from the properties during the twelve months ending November 1998.
  • 70 million cubic feet equivalents per day (MMCFED) current daily production rate for Magnum Hunter Resources.
  • 86 MMCFED projected daily production rate for Magnum Hunter Resources post-acquisition.
  • 50% increase in daily production rate for Magnum Hunter Resources from 58 MMCFED in 1998 to 86 MMCFED post-acquisition.

Sources:

  • Magnum Hunter Resources, Inc. press release, April 30, 1999.
  • Vastar Resources, Inc. (NYSE: VRI) investor relations information.
  • Michael P. McInerney, Investor Relations, 972-401-0752.