Magnum Hunter forms alliance with GE Capital

Magnum Hunter Resources, Inc., Irving, Tex., on Wednesday said it is forming a limited partnership with GE Capital Structured Finance Group's (SFG) oil and gas unit. Through a partnership with Mallard Hunter LP, Magnum Hunter and an SFG affiliate will acquire oil and natural gas reserves from two of Magnum Hunter's subsidiaries.


Magnum Hunter Resources, Inc., Irving, Tex., on Wednesday said it is forming a limited partnership with GE Capital Structured Finance Group's (SFG) oil and gas unit. Through a partnership with Mallard Hunter LP, Magnum Hunter and an SFG affiliate will acquire oil and natural gas reserves from two of Magnum Hunter's subsidiaries.

Magnum Hunter assigned about 20 bcfe of producing reserves, 60% oil and 40% gas, to the partnership, effective June 1, in exchange for a $23 million cash payment with a 35% reversionary interest upon predetermined partnership payout.

Magnum Hunter's wholly operated subsidiary, Gruy Petroleum Management Co., will remain operator of the properties sold to the partnership. The SFG affiliate is a limited partner of Mallard Hunter LP. Magnum Hunter is general partner.

"By deleveraging our balance sheet, we will be in a better position to fund our substantial proved undeveloped opportunities, both onshore and offshore, which will ultimately provide our shareholders with the highest return on their investment," said Gary C. Evans, president and CEO of Magnum Hunter.

Gruy Petroleum also will receive copas (cost of purchases and sales) income and management fees earned from the limited partnership over the life of the partnership. Magnum Hunter used the net proceeds received from the limited partnership to reduce commercial bank debts on two existing credit lines.

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