- Magnum Hunter: Proposed Acquisition in Williston Basin Did Not Close
Friday, August 19, 2011
Magnum Hunter Resources Corp.
Magnum Hunter announced that the previously announced proposed acquisition by its wholly owned subsidiary, Williston Hunter ND, LLC, of oil and gas properties in the Williston Basin in North Dakota from Eagle Operating, Inc. ("Eagle") did not close yesterday due to unresolved issues between the parties resulting from what Magnum Hunter considers to be Eagle's intentional and bad faith breach of its obligations under the Purchase and Sale Agreement ("PSA"). In the proposed acquisition, Magnum Hunter would have acquired from Eagle for total consideration of $57 million ($55 million in cash and $2 million in Magnum Hunter restricted common stock), the remaining approximate 48% working ownership interest in the Williston Basin properties owned by Eagle, subject to Eagle's retention of a variable overriding royalty interest not exceeding 2% on certain properties.
The acquisition would also have resulted in the settlement of two pending lawsuits between the Company and Eagle currently filed in the United States District Court for the District of North Dakota (Northwestern Division), which litigation is now expected to continue. Management of Magnum Hunter does not consider this pending litigation to be of any material nature to the Company.
Magnum Hunter has today filed a new lawsuit against Eagle in the United States District Court for the District of North Dakota (Northwestern Division) asking the court to order Eagle to comply with its obligations under the PSA and complete the sale of the properties to the Company on the specific terms outlined in the PSA. Magnum Hunter is also seeking monetary damages, including compensatory, consequential and general damages, for Eagle's material default under the PSA. The Company intends to vigorously pursue all available remedies against Eagle.
As of August 18, 2011, Magnum Hunter had total liquidity including cash and availability under its various credit facilities of approximately $75 million, of which approximately $55 million is currently available to continue to fund its upstream capital program focused on the Company's high growth unconventional resource plays. In addition, Magnum Hunter has a commitment from its bank group to provide an additional $42.5 million in borrowing capacity for the purchase of the Eagle properties referenced above. Moreover, Magnum Hunter continues to pursue various non-dilutive alternatives to provide access to capital in order to fund capital budget needs later in fiscal year 2012.
Additional information regarding the Company's lawsuit against Eagle, including a copy of the complaint filed by the Company Friday in the United States District Court for the District of North Dakota (Northwestern Division), is contained in a Report on Form 8-K also filed today by the Company with the Securities and Exchange Commission.
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