Mirroring earlier quarterly reports of its oil and gas peers, Magnum Hunter saw its income nearly double from a year ago, but actual production numbers were down. While core production grew 7%, the Irving, TX-based independent reported a decline in actual boe production of 8% from 2Q02, which it attributed to non-core property sales in fiscal 2002 and 2003.

Production volumes totaled 18.5 Bcfe, or 203.5 MMcfe/d for the second quarter, compared with last year’s 222.2 MMcfe. Natural gas production was 68% of total equivalent production volumes for the second quarter of 2003. Daily average natural gas production stood at 137.6 MMcf, down from 147.6 MMcf a year ago. However, overall production was up for the first six months, standing at 196.6 MMcfe, compared with 184.04 MMcfe for the first half of 2002.

“Management has stayed on course during the second quarter of 2003 by continuing to divest of non-core assets, redeploying drilling capital to higher rates of return projects, and realigning the balance sheet in a manner to further reduce future interest expense,” said CEO Gary Evans. “Core production growth of 7% in the second quarter from internally generated projects is after the loss of 32.4 MMcfe/d attributable to asset sales compared to the second quarter of 2002.”

Evans said that a “combination of recent new discoveries” in the Gulf of Mexico, which are awaiting facility installation this year, as well as two new wells per month added to its production base in southeastern New Mexico, will help the company “continue meaningful production gains throughout the remainder of 2003.”

Magnum Hunter reported net income of $4.2 million (6 cents per diluted share), compared with $2.3 million (3 cents) for 2Q02. On July 29, Magnum Hunter exercised its option to sell its 30% equity investment in an unconsolidated affiliate, and a write-down in the carrying value of this investment to its net realizable value resulted in a non-cash loss of $719,000 (pre-tax) being recorded as part of equity in loss of affiliate in the second quarter of 2003. The tax adjusted cost of this write-down was one cent per diluted share.

Total revenues for the second quarter were $78.4 million, a 3% increase over the $76.2 million reported last year. Magnum Hunter also reported an operating profit of $21.4 million, up 2% from 2Q02. Natural gas prices realized were $3.37/Mcf, compared to $3.20/Mcf for 2Q02.

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