Magnum Hunter Resources said it plans to sell a total of $100 million in assets this year in order to drop its debt-to-capitalization ratio to 50% from about 65% currently. The company has closed over $10 million of non-core oil and gas assets to date, is in the process of closing another $50 million, and has plans to sell an additional $40 million of non-strategic assets by the year’s end.

In a statement, the company noted it has grown daily production at a compounded annual growth rate of 53% since Magnum Petroleum and Hunter Resources merged in December 1995. Proved reserves have increased 25 times since the merger from 37 Bcfe to 934 Bcfe, daily production has increased 23 times to 230 MMcfe/d, while shares outstanding have only increased 5.7 times from 12 million to 69 million.

Magnum Hunter recently completed the first four wells in a new 20 well onshore drilling program in southeastern New Mexico targeting the Morrow and Atoka formations, where it has enjoyed a 100% drilling success rate over the last three years. It also has become very active in the shallow waters of the Gulf of Mexico (GOM), developing an inventory of 135 OCS blocks (634,000 gross acres). Discoveries are currently producing 202 MMcfe/d gross, 53 MMcfe/d net to Magnum Hunter. Recent discoveries with production pending are expected to add an incremental 28 MMcf/d this year. It also has nine current prospects with potential reserves of 675 Bcfe gross, 83 Bcfe net.

Magnum Hunter posted net income of $2.3 million ($0.03 per diluted share) in the second quarter compared to $6.3 million ($0.17 per diluted share) in 2Q2001. Special charges totaled $4.9 million including non-cash hedging adjustments ($3.3 million), accounting and legal expenses associated with the Prize Energy merger ($1 million), and provision for impairment of an asset ($621,000). Total revenues were $76.2 million, an increase of 94%. Cash flow increased by 66% to $31.5 million. Oil and gas production was 20.2 Bcfe, an increase of 163%.

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