Magnum Hunter Resources Corporation Increases Borrowing Base to $75 Million

Strategic Insights -

Magnum Hunter Resources Corporation announced an increase in its borrowing base under its $150 million senior secured revolving credit facility to $75 million. This increase reflects the growth in the company's proved reserves and the acquisition of Triad. The elimination of the Tranche B facility, which was used to finance part of the Triad acquisition, is expected to decrease the estimated cost of future borrowings. The applicable interest rate margin ranges from LIBOR plus 2.50% to LIBOR plus 3.50%, depending on the amount drawn on the facility. The company had $61 million outstanding on the facility and approximately $4 million in cash, providing it with over $18 million in current liquidity.

Key Takeaways:

  • Magnum Hunter Resources Corporation increased its borrowing base under its $150 million senior secured revolving credit facility to $75 million.
  • The increase reflects the growth in the company's proved reserves and the acquisition of Triad.
  • The elimination of the Tranche B facility is expected to decrease the estimated cost of future borrowings.
  • The applicable interest rate margin ranges from LIBOR plus 2.50% to LIBOR plus 3.50%, depending on the amount drawn on the facility.
  • As of May 12, 2010, the company had $61 million outstanding on the facility and approximately $4 million in cash, providing it with over $18 million in current liquidity.
  • The Company's semi-annual borrowing base redetermination is derived from its proved crude oil and natural gas reserves.
  • BMO Capital Markets and Capital One acted as co-arrangers and joint book runners, with UBS Loan Finance LLC, Amegy Bank National Association, and KeyBank National Association participating in the facility.
  • The company's CFO, Ronald D. Ormand, commented that the increase in the borrowing base validates the incremental asset value created over the last 12 months.

Statistics:

  • The borrowing base was increased from $70 million to $75 million.
  • The estimated cost of future borrowings is expected to decrease due to the elimination of the Tranche B facility.
  • The company had $61 million outstanding on the facility as of May 12, 2010.
  • The company had approximately $4 million in cash as of May 12, 2010.
  • The company had over $18 million in current liquidity as of May 12, 2010.
  • The applicable interest rate margin ranges from LIBOR plus 2.50% to LIBOR plus 3.50%.

Sources:

  • Magnum Hunter Resources Corporation (Source)
  • Company's Annual Report on Form 10-K for the year ended December 31, 2009 filed with the Securities and Exchange Commission on March 31, 2010 (Source)