Magnum Hunter Resources Inc., which announced in January that it would merge with Cimarex Energy Co., reported Tuesday that its U.S.-based oil and natural gas production jumped 21% in the fourth quarter and 10% overall in 2004. Production volumes totaled 22.6 Bcfe, or 246.0 MMcfe/d in 4Q2004, with natural gas accounting for 71% of total equivalent production.

Cimarex, an independent based in Denver, announced two months ago that it would buy Magnum in a stock deal worth $1.94 billion (see Daily GPI, Jan. 27). The transaction, which is expected to close in the second quarter, followed a decision by Magnum CEO Gary Evans to retire. Evans started the company with $1,000 nearly 20 years ago.

Magnum’s production volumes in 4Q2004 were up 5% sequentially over 3Q2004, the company said. For the year, production increased to 80.4 Bcfe or 219.8 MMcfe/d. Gas production was 70% of total equivalent production volumes last year.

The Irving, TX-based independent reported that for 4Q2004, net income was $42.1 million (47 cents/share), an increase of 478% over the $7.3 million (11 cents) reported in 4Q2003. During 2003, costs associated with the early retirement of $60 million of 10% senior notes due in 2007 reduced net income by $2.6 million (pre-tax) for 4Q2003, or 2 cents/share.

Total revenues were $154.9 million in 4Q2004, an increase of 84% over $83.9 million reported the previous year. Magnum Hunter reported an operating profit of $68.1 million, an increase of 182% over the $24.2 million reported for the corresponding 2003 period.

Magnum Hunter participated in drilling 175 new wells last year, with 139 classified as development and 36 deemed exploratory. Of these 175 new wells, 167 (137 development and 30 exploratory) were deemed successful and eight (two developmental and six exploratory) were plugged and abandoned, which provided for an overall success rate of 95% (99% developmental success and 83% exploratory success).

Magnum Hunter’s total proved reserves at year-end 2004 were 1.01 Tcfe, composed of 610.1 Bcf of gas (61% of total) and 66.1 million bbl of crude oil and natural gas liquids (39% of the total). Approximately 730.7 Bcfe (73% of the total) of the proved reserves were classified as proved developed, with approximately 275.9 Bcfe (27% of the total) classified as proved undeveloped.

The company added approximately 248.6 Bcfe of total proved reserves during 2004 from all sources, which replaced 309% of the 80.4 Bcfe in production. The company’s reserves life index at year-end 2004 increased by one year to 12.5 years from 11.5 years at year-end 2003.

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