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Shareholders Like Cimarex-Magnum Hunter Combo

Cimarex Energy Co.'s $1.6 billion purchase of Irving, TX-based Magnum Hunter Resources was completed last week after shareholder approval. The deal grew out of a decision last fall by Magnum Hunter CEO Gary Evans to retire and examine strategic alternatives for the company.

Evans started Magnum Hunter with $1,000 nearly 20 years ago and built it into a $1.8 billion asset portfolio. Magnum Hunter has about 1 Tcf of proved reserves and Cimarex has 449 Bcfe of proved reserves. The companies booked year-end 2004 proved reserves of more than 1.3 Tcfe, of which 68% was natural gas. Pro forma combined fourth quarter 2004 estimated net production was 480 MMcfe/d (23% hedged) and full-year 2005 production is expected to be 500 MMcfe/d (18% hedged).

Approximately 99% of Magnum Hunter shares and Cimarex shares voted in favor of the transaction. Magnum Hunter stockholders received 0.415 shares of Cimarex common stock in exchange for each share of Magnum Hunter common stock. Cimarex issued 39.5 million common shares to Magnum Hunter stockholders and has 81.3 million shares outstanding. Cimarex also assumed $645 million in Magnum Hunter debt.

The deal leads to a substantial number of statistical improvements for Cimarex, which currently focuses its E&P operations mainly in the Midcontinent and Gulf Coast regions: it triples Cimarex's reserves, extends its reserve life, doubles its production, establishes the Permian Basin as a substantial core area, adds complementary operations in the Midcontinent and Gulf Coast areas, adds high potential opportunities in the Gulf of Mexico and enhances its operational expertise by adding Magnum Hunter's technical teams. The company will retain Magnum Hunter's base of operations in the Dallas/Ft. Worth area.

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