Leaseback

Magnum Hunter Resources said a subsidiary has entered into a sale-leaseback transaction on three newly constructed offshore production platforms and associated pipelines that were recently placed into service. The three platforms are located offshore Louisiana in federal waters and are located on OCS Lease Blocks South Timbalier 266, Main Pass 164 and Main Pass 178. The company has received a total of $11.2 million in new funding that has been used for general corporate purposes, including a voluntary reduction under the company’s corporate bank revolving credit facility. No reduction in its existing bank revolving credit commitment resulted from these new lease transactions. The new production platforms are being leased from a syndicate group of lenders led by General Electric Capital Corp. The leases have a primary term of three years and based upon current interest rates, the cost of funds to Magnum Hunter is 5.30% per annum. CFO Chris Tong said, “The financing terms are very attractive to Magnum Hunter given today’s low interest rate environment. With the funding received from the closing of this transaction, our company can re-deploy capital back into our core business of drilling and developing some of our recent new oil and gas discoveries.”