Houston-based Magnum Hunter Resources Corp. announced that the company’s borrowing base under its $350 million Senior Bank Facility, which consists of a $250 million senior revolving credit facility and a $100 million Term Loan Facility, has been increased by $35 million from $200 million to $235 million. The 17.5% increase in Magnum Hunter’s borrowing base is due to organic growth of the company’s existing proved reserve base due to the drilling activities in its three unconventional resource plays. As previously announced, Magnum Hunter’s proved reserves increased by 21% to 45 million BOE from September 30, 2011 to December 31, 2011.
As a result of the new borrowing base and availability under the company’s senior revolving credit facility, as of February 14, 2012, the company had approximately $80 million of cash and existing liquidity under its senior credit facility and total liquidity of approximately $120 million including the Eureka Hunter Credit Facility. In addition, the company has raised over $21 million year-to-date in our Series D Preferred Stock (non-convertible) and anticipates additional issuances throughout 2012. The additional liquidity from these sales provides the company further financial support to fund its 2012 upstream capital program.
The applicable interest rate margin of the senior revolving credit facility ranges from LIBOR plus 2.25% to LIBOR plus 3.25%, depending on the amount drawn at any given time on the senior revolving credit facility. The senior revolving credit facility is governed by a semi-annual borrowing base redetermination derived from the company’s total proved crude oil and natural gas reserves.
Bank of Montreal serves as the “Administrative Agent” under the Senior Revolving Credit Facility, with Capital One, N.A. serving as the “Syndication Agent”, and Amegy Bank National Association, KeyBank National Association and UBS Securities LLC serving as “Documentation Agents”. BMO Capital Markets serves as “Lead Arranger” and “Sole Bookrunner”. Participating banks in the Senior Revolving Credit Facility include Citibank, N.A., Credit Suisse AG, Deutsche Bank Trust Company Americas, Royal Bank of Canada, SunTrust Bank, Goldman Sachs Bank USA, and Union Bank, N.A.
Ronald D. Ormand, executive vice president and CFO of Magnum Hunter, commented, “We are very pleased to announce another increase in our company’s borrowing base to $235 million, our sixth increase in the last twelve months. The new borrowing base represents an increase of 17.5% over our previous borrowing base established at September 30, 2011 and has grown entirely due to the success of the drilling programs in each of the company’s three resource plays. In addition, the new borrowing base provides additional liquidity to fund our 2012 capital budget. We were also successful in adding a new lender, Royal Bank of Canada, to our bank lending syndicate group. The company remains fully funded on its previously announced 2012 capital budget of $200 million.”
Magnum Hunter Resources Corp. and subsidiaries are engaged in the acquisition, development and production of crude, natural gas and natural gas liquids, primarily in the states of West Virginia, Kentucky, Ohio, Texas, North Dakota and Saskatchewan, Canada. The company is presently active in the Marcellus/Utica Shale, Eagle Ford Shale and Williston Basin/Bakken Shale.
