Company earmarks majority for newly-acquired Triad assets, including Marcellus acreage
Magnum Hunter Resources Corp. has approved an initial 2010 capital budget of $25 million. Most of the budget, $17 million (70%), is set for exploration and development activities associated with the company’s acquisition of the assets of Triad Energy Corp. and certain of its affiliated entities.
In late October, Houston-based Magnum Hunter entered an agreement with privately-held Triad Energy Corp. to acquire substantially all of Triad's oil and gas exploration and production operating assets. The $81 million deal, which includes Triad’s 47,000 net Marcellus acres, is expected to next week after Triad’s Chapter 11 reorganization plan becomes effective.
As of June 30 2009, Reno, Ohio-based Triad had total proved reserves of 5.2 MMboe (69% crude oil and 29% proved developed), and daily production of 1 Mboe from 2,000 wells.
The company expects to fund the newly-set 2010 budget, which does not include potential expenditures which may occur for possible merger and acquisition activities, with internally generated cash flows from operating activities and cash liquidity under its $150 million revolving commercial bank line of credit ($70 million borrowing base).
Marcellus
The company’s plans for the Triad assets include the horizontal drilling of a minimum of two unbooked Marcellus Shale locations in Tyler County, West Virginia. The company plans to spend roughly $9 million on upgrading and completing the Eureka Pipeline system in West Virginia, also part of the Triad transaction.
Eagle Ford
For the Eagle Ford Shale, Magnum Hunter has earmarked roughly $7 million (28%). The company plans to horizontally drill two unbooked Eagle Ford Shale locations during fiscal year 2010, with one of these to be completed before mid-year. The company will be fracing this month an Eagle Ford Shale vertical well to test the fracturing and stimulation process for use on the company's Eagle Ford Shale mineral lease acreage inventory. The balance of Magnum Hunter's capex budget in the Eagle Ford Shale will be for additional leasing related activities that are currently ongoing.
