Current State of Magnum Hunter

Starting this thread to post info related to Magnum Hunter and its various business components.  First post is Triad Hunter opening office in Marietta, Ohio.  Definately Magnum Hunter is spending in Monroe, Noble and Washington counties in Ohio as well as Tyler and other WV counties.

http://www.mariettatimes.com/page/content.detail/id/549789/Triad-op...

 

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Permalink Reply by searcherone on August 12, 2013 at 5:46pm

Wheeling Planning Commission has approved Green Hunter's plans and now it goes to Wheeling City Council.

http://www.theintelligencer.net/page/content.detail/id/588403/Green...

Permalink Reply by searcherone on August 21, 2013 at 2:29pm

http://www.investorcalendar.com/IC/CEPage.asp?ID=171238&CID=

Interesting audio accompanied by slides that most of us have seen before. 

Highlight:  32,000 acres purchased @4400 acre in northern Washington County;  the highest price Magnum Hunter has paid for acreage;

Also comments on a blowout at Farley pad that took four days to control.

Permalink Reply by searcherone on September 3, 2013 at 2:11pm

Wheeling Water Warriors are not giving up in their protest against Green Hunter and barging frac water on the Ohio River.  The Warriors have organized a protest through six states, going the length of the Ohio River.

http://www.ohio.com/blogs/drilling/ohio-utica-shale-1.291290/great-...

Permalink Reply by searcherone on September 6, 2013 at 2:15pm

http://www.magnumhunterresources.com/Magnum_Hunter_Resources.pdf

This is the BEST Magnum Hunter presentation in this entire thread; 71 pages; the maps tell what the words don't!

Monroe County: Blue Racer Berne in Seneca Township listed on map as processing center!!!

p. 41 details of the acquisition of 32,000 acres in Monroe, Noble, Washington counties from MNW Energy. (my research shows MNW formed August 2011, a Doug Mallett of Marietta listed on LLC papers)

maps of where Eureka Hunter pipeline has ROW and where it plans to go;  info on Alpha Hunter, the drilling unit;  picture of Schramm rig on the Stalder pad.

pages 43,48, 50, 53,54,55,63,66 will be interesting.

and PLEASE if you feel like commenting or discussing what you read in this presentation do so; I would love to hear your comments. 

Permalink Reply by gary SWF on September 6, 2013 at 4:28pm
searcherone , Thanks for your post......I have also been reviewing the same Magnum Hunter's presentation. Maybe what I have attached will help with discussions on their thinking. Remember this is the information they are telling investment banker, Stock analysts and people within their industry. The following is ALL IMHO....I am far from an expert on this or any subject....This has only been done for my learning and understanding.......OK lets get the discussion started......Thanks, Gary
I Would like to see/hear other peoples thoughts about my exercise on the following. Please review my analysis and offer upgrades to my thinking or things I have missed. I have used  information from page 41 in their presentation. I have had to use some of my estimates on some data........ see attached: http://www.magnumhunterresources.com/Magnum_Hunter_Resources.pdf
What is a acre of Utica worth per Magnum Hunter's opinions?
written on 8-24-2013 by me..........chart 41 is part of Magnum Hunter's review/presentation to stock/Banking Analysts in Auguest by Gary Evens....SEE ATTACHED
Note 1st column on page 41 with Utica data at the bottom of the page refers to 600+ for EUR (MBOE/well) and right above that 600+ number they are using 80-160 acres per well. ....lets do some estimating of what they think the value of production from each well will be......lets use 120 acres (80=160/2) for our estimates......
Now the value of a Barrel of Energy equivalent (BOE).....this depends on the ratio of dry gas/wet gas(NGL) and condensate(oil) that make up the BOE....every well is different, but I have seen numbers used by the industry any where from $40/BOE where the majority of the well production is dry gas, to $95/BOE for a well that has a lot of oil production. Remember we are looking at wells in the wet gas and condensate(oil) area of the Utica. So we should expect numbers(value of BOE) towards the upper area of our defined range of $40-$95/BOE.....so lets be conservative and use $65/BOE for exercise.
Note they have used 600+ MBOE per well....the M stands for thousands....so for a minimum (conservative) number of BOE we would expect 600,000 BOE to be produced during the wells life. This is the production value of what they are telling the stock analysts per well in the Utica is 600,000 BOE times $65 or $39,000,000 per well. or about $325,000 acre ($39,000,000/120acre)....if the land owner received a 20% royalty he should receive $65,000/acre over the life of the well........Now everything we have done here in this exercise has been on the conservative side......I have seen wells(data) that should do 2X+ what we show here.....
Also remember a couple other things:.... 1.) they believe with current technologies they can only recover about 8-10% of what is down there.....2 years ago they were at 5-6%, but they believe they are getting better. Needless to say they are working very hard on this. General Electric just announced a couple months back that they have committed $100,000,000 toward a facility(think tank) to study and understand how to remove product from the shale strata's, and GE is not even in the OIL and Gas business but trying to sell technology....... 2.) Remember the Utica is only one shale strata.....many areas have 3-4 or more..........
written  on 8-29-2013
Just finished listening to Gary Evens CFO of Magnum Hunter's presentation at a Energy Conference.......Remember in our exercise the other day we used a" 600 for EUR (MBOE/well)"...and we came out with an estimated value of $65,000/acre for land owners for the Utica strata. In today's conference call he used the same charts as we looked at but brought attention to this number and stated,..."I believe this number is way understated and should/could be upwards of 3,000 EUR (MBOL/Well)"......Sooooo......we need to now change our possible/expected value of an acre of Utica strata to a "range" of $65,000 to $325,000/acre...or every 10 acre's could be worth as much as $3,250,000 to the land owner. Remember this is for the Utica strata only.
Permalink Reply by searcherone on September 8, 2013 at 2:06pm

Gary,

My comment here is, is it more appropriate to use 12 1/2% for the landowner with an MH lease?  CEO Evans in the presentations I have listened to always brags about the fact that most of the acreage they have acquired in the Utica/Marcellus is HP(held by production) and those types of leases typically are at 12 1/2%.  Magnum Hunter purchased Triad  and Virco, both out of southeast Ohio and I am certain that acreage would be 12 1/2%. 

If anyone has a 20% lease with MH could they please say so, with county and state location. 

Permalink Reply by John OBrien, landowner advocate on September 8, 2013 at 3:42pm

If your hypothesis is anywhere close to reality, then even the best leases/offers to landowners have been miserably low.  Remember, many have sold their Eagle Ford acreage, only to invest here in Ohio.  Those acres in Texas they just sold to come here..............they paid 20K/acre signing bonus for not so long ago.

Permalink Reply by gary SWF on September 8, 2013 at 4:10pm

searcherone, your point is well taken, thanks. I think I used 20% to make the math easy.......... Magnum Hunter just (in the last month) entered into an agreement to lease somewhere between 25,000- 35,000 acres for about $4400/acre in what is believed to be mostly dry gas area. I believe some could be in Washington  County and some across the river in W. Va.. I do not know at this time what the royalty % is in that deal.....The deal would appear not to be  that straight forward as MH is to take the land leases  out in $15,000,000 phases over some period of time..........  John OBrien,  I agree with your thinking and your point about them selling Eagle Ford land to move to the Utica.....why would I tell someone "the real value to me" if I am purchasing something from them?........ALL IMHO

Permalink Reply by J.D on September 9, 2013 at 2:41am

searherone,

the most I am aware of Magnum [Triad] paying for unleased land is 19% enhanced w/ deductions. I have also seen Virco/Triad amended hbp leases w/ 12.5% wellhead w/ post wellhead deductions. What a deal!  Both Virco and Triad have most likely retained a 6.25 -7.5% overriding royalty. The reason for the approach Magnum is using on the new aquisition is Magnum, Cheasapeake, and other E&P's have been burned by small producers assigning leaseholds with significant title issues that have resulted after the fact in a number of court cases.

Only a fool would believe anything a producer/landman tells them. The companies are only interested in their bottom line, and will tell you anything they think you'll believe.

As an O&G attorney told me recently.. "it's business". and don't think the attorney you hire is pure as the driven snow either. Money and greed can cause otherwise good people to rationalize their decisions.

Is there any CEO of the large E&P's that remind you more of Aubrey Mcclendon than Gary Evans?

Permalink Reply by J.D on September 9, 2013 at 2:49am

Gary swf

2 years ago companies were telling us that the Marcellus in Washington county was dry. Now that line has been moved into western PA. As more drilling occurs and more info leaks out, the wet utica will also end up moving eastward possibly covering most of washington county. My evidence? history, and belief that the companies are telling us the opposite of what they know.

Permalink Reply by gary SWF on September 9, 2013 at 3:06am

 J.D......I agree money makes people do unusall things.......I think people pay way to much attention to news papers and etc.......As I have gotten older I seldom even pick up a news paper....as the old saying goes.."don't read a news paper and be uninformed...read a news paper and be misinformed". I only believe (part of) what the O & G companies tell the invstment world. If they intentional mis inform them, they will more than get even, they will turn the lights out......ALL IMHO

Permalink Reply by searcherone on September 13, 2013 at 1:21pm

Green Hunter has new brine disposal well in Newport, Washington County, Ohio.  Exploring option of having a pipeline to this disposal site.   Also article casually mentions "barging fresh water".

http://www.ohio.com/blogs/drilling/ohio-utica-shale-1.291290/washin...

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