Oneok Inc. and Magnum Hunter Resources Inc. have created astrategic alliance to maximize gas production and developmentopportunities for both companies. Oneok will buy $50 million ofMagnum Hunter convertible preferred stock, becoming a 31% equityowner. Oneok will acquire $10 million of Magnum Hunter’s pendingacquisition of Spirit 76, including reserves and a gatheringsystem. Oneok also will market all of Magnum Hunter’s Oklahomaproduction and have the right to participate in Magnum Hunter’sOklahoma acquisitions.

The preferred stock will have a liquidation value of $50 millionand will be convertible into Magnum Hunter’s common stock at$5.25/share. Magnum Hunter will use net proceeds from thetransaction to repay debt, provide working capital for generalcorporate purposes, and finance acquisitions. ONEOK will have theright to nominate two new members to Magnum Hunter’s six-memberboard.

David Kyle, president and chief operating officer of ONEOK,said, “This alliance will give Oneok another platform to grow ourresource base along with our strategy of growing all our naturalgas business segments including gathering, processing, transportingand marketing.”

Gary C. Evans, president and chief executive officer of Magnum,said, “ONEOK has recognized not only the value of Magnum Hunter’sexisting proved reserve base which is predominantly natural gas,but also, more importantly, the many opportunities that willnaturally become available to our respective companies in 1999 andbeyond because of the alliance that we have now formed.”

The convertible preferred stock transaction is contingent uponthe execution of definitive agreements between ONEOK and MagnumHunter, a consent from a majority of Magnum Hunter’s existing 10percent Senior Note holders and compliance under theHart-Scott-Rodino Act. It is anticipated closing will occur on orbefore January 29, 1999.

©Copyright 1998 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.