Prize Merger in Hand, Magnum Hunter Ups Proved Reserves 121% in '02
With its successful merger of Prize Energy boosting proved reserves a year ago, Magnum Hunter Resources Inc. was able to increase total proved reserves 121% last year, the company said. Based on total capital expenditures of approximately $584 million, Magnum Hunter's unaudited finding and development cost was about 93 cents/Mcfe.
The Prize Energy acquisition, which closed in March 2002, added approximately 538 Bcfe of proved reserves at a cost of about 84 cents/Mcfe (see Daily GPI, March 15, 2002).
"The two most important measures of our operational accomplishments during 2002 are reserve growth per share and daily production growth per share, both of which far exceeded our peers," said CEO Gary C. Evans. Noting that Magnum Hunter had drilled 124 wells last year, of which 29 were considered exploratory, the company had an overall 94% drilling success rate, he said.
" Now that commodity prices for both oil and natural gas have reached significantly higher levels, we are creating a much greater increase in cash flow per share from our asset base," said Evans. He said management's 2002 successes "should be multiplied several times over with improved financial results for this new fiscal year."
At the end of 2002, proved reserves totaled 837.1 Bcfe, which was comprised of 458.6 Bcf and 63.1 million bbl of crude and natural gas liquids, up from 378.1 Bcfe in reserves reported at the end of 2001. The company, based in Irving, TX, also added approximately 630.9 Bcfe of total proved reserves during 2002 from all sources, replacing 890% of the company's 2002 production of approximately 71 Bcfe. The reserves life index at year-end 2002 was 11.8 years.
Magnum Hunter's average fully diluted share count during fiscal 2002 increased 169% to 62.5 million shares, mostly because of new shares issued in conjunction with the Prize Energy merger. Based upon the company's estimated proved reserves and oil and gas production estimates, Magnum Hunter increased total proved reserves per share by 31.4% and increased production per share by 25.9%.
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