Magnum Hunter Resources Corp. missed its 2014 exit rate by a long shot before recovering with a series of shut-in wells that it turned inline this quarter to grow current volumes 103% above its year-end production.

But the growth is likely to stop there, with the company in search of cash to shore up its weak liquidity position and a limited upstream budget that was slashed by 75% from last year’s level (see Shale Daily, Feb. 18). Although management said its budget would remain flexible if it can raise more cash or service costs continue to fall, the company plans to drill just five new wells in the Appalachian Basin this year, down from 53 in 2014.

It will instead rely on the new wells it has recently turned to sales and 10 others that are already in various stages of development to help keep production near its current rate of 34,299 boe/d throughout the year, said Executive Vice President of Operations James Denny. While it revised its production forecast lower, the company had projected in late 2013 that it would produce 35,000 boe/d last year. Instead, it finished producing 16,879 boe/d, which was up from the 11,728 boe/d it produced in 2013.

“It’s important to note that one reason we missed our production projections was strictly due to shut-ins and timing of new wells,” said CEO Gary Evans on Monday during a conference call to discuss fourth quarter earnings. “We had a number of shut-ins last year because of pad drilling in our development program, predominantly in West Virginia.”

Wells on certain pads had been shut-in to drill and complete others, but permitting issues, a blowout in Ohio and cold weather also helped to curtail production last year (see Shale Daily, Dec. 15, 2014; Oct. 8, 2014).

Denny said all operations have been suspended for the time being. Magnum believes its service providers could reduce costs by up to 40% this year and as those costs come down it will resume operations.

“This gives us a time in our business life to kind of get all of our ducks in a row and get ready for a big spend with maybe the joint venture and be in a position to negotiate some very favorable rates with some service providers out there, that’s our goal before summer,” Evans said.

In January, Evans called an impromptu conference call with financial analysts to explain that the company was not facing an immediate liquidity crisis (see Shale Daily, Jan. 23). In October, the company entered into a revolving credit facility with a borrowing base of $50 million and a second lien term loan of $340 million, neither of which will mature until 2018 at the earliest. Evans added Monday that the move would also protect the company from a borrowing base reduction this year.

Still, Magnum is in need of more cash. At year-end it had $63.9 million of liquidity, including $53.2 million of cash on-hand and just $10.7 million of borrowing available under its senior revolving credit facility. The company is planning a series of events in the months ahead that it hopes will generate more money for its drilling program and help bring down debt. Magnum is searching for a joint venture partner for its Ohio Utica Shale assets, which could lead to more activity this year if an interested party signs-on, management said.

“We have over 80 institutions that have come into the data room,” Evans said. “This is geared to financial types. We’re not allowing oil and gas companies in for competitive reasons. Our goal in this transaction is to take our Ohio Utica acreage, cause an investor to come in a preferred way and allow us to keep developing [the assets] during this oilfield service environment we anticipate in 2015. We anticipate receiving a fair amount of cash up front in that transaction,” Evans said of the JV, which the company believes could bring in up to $500 million.

Moreover, as the company has built its position in Appalachia, it has also purchased mineral rights that it values at about $150 million. The JV, management said, could help to better value some of those assets for monetization.

“As part of the JV, we would anticipate being able to better forecast how much those minerals are worth and what we could possibly do with them,” Evans said. “The goal in the next year, or year-and-a-half, is to maybe do something with these minerals in a public form. It’s a little too early because there’s still some undeveloped there, but there’s a lot of value — unquestionably.”

Magnum is also negotiating for a natural gas marketing agreement in which a third party could assume some of Magnum’s firm transportation liabilities that would help it free up more credit. Management added that it was exploring the sale of a minority interest in its midstream subsidiary Eureka Hunter Pipeline LLC for up to $75 million.

Eureka was the bright spot for Magnum last quarter. The company added four major interconnects and throughput is expected to near 1 Bcf/d this year, said Eureka COO Chris Akers. The company is also still planning to take the gathering network public with a master limited partnership sometime this year.

Fourth quarter production increased 34% from the year-ago period to 17,178 boe/d. While year-over-year oil and gas revenues sank 27% on lower prices in the fourth quarter, full-year revenue was up to $391.5 million from $304.5 million in 2013. The company also took a $301 million write-down on its properties last year.

Magnum reported net income of $42.8 million (21 cents/share) in the fourth quarter, up from a net loss of $61.2 million (negative 36 cents/share) in the year ago period. But it reported a full-year net loss of $249.9 million (negative $1.32/share), compared to a net loss of $278.9 million (negative $1.64/share) in 2013.