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    Magnum Hunter to buy North Dakota Williston Basin assets for $57M

    Williston Hunter ND LLC, a subsidiary of Magnum Hunter Resources Corp. (NYSE: MHR) has negotiated an agreement to purchase operated working interest ownership in oil and gas leases and 191 wells on roughly 15,500 gross acres over four counties in the Williston Basin of North Dakota from a private company for $57 million. 

    Gross production from the properties is close to 833 barrels of oil per day (boe/d) with total proved reserves estimated at 2.6 MMboe. Currently, Magnum Hunter owns a 47% working interest in the oil and gas properties and expects to own an approximate 95% working interest upon closing, expected before August 18, 2011.

    The transaction will be paid at closing in the form of $55 million in cash and $2 million in Magnum Hunter restricted common stock. Magnum Hunter intends to fund the cash portion of this purchase through existing liquidity and borrowings under the company’s senior credit facility. Additionally, the seller will retain an overriding royalty interest in certain of the properties in various amounts not to exceed 2%. No existing debt of seller will be assumed by Williston Hunter in connection with the closing of the acquisition.

    The purchase agreement between Williston Hunter and the North Dakota-based privately-held company was negotiated pursuant to a Settlement Agreement between Magnum Hunter and the seller as a result of certain lawsuits pending in the US District Court for the District of North Dakota (Northwestern Division). The agreed upon settlement between the parties will resolve all outstanding claims. The parties will file stipulations with the District Court for dismissal, with prejudice, of the two pending civil actions upon the PSA’s final closing.

    Glenn Dawson, president of Williston Hunter, commented, “We are pleased to announce this final agreement to acquire these Williston Basin properties where we have been a minority owner for years. With this “bolt on” transaction, we will be establishing an operating base in North Dakota which has been a primary objective as we continue to grow our presence in the Williston Basin. Our game plan in 2011 is to continue our geological and engineering evaluation of these properties so that we will be in a position to prudently develop these assets beginning early next year.”

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