Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : MHRC on the OTC market -- Ignore unavailable to you. Want to Upgrade?

To: Investor Clouseau who wrote (97)

12/14/2012 10:34:16 PM

From: Investor Clouseau

Read Replies (1) | Respond to of 188

From: Paul Smith	12/14/2012 10:24:48 AM
	of 111840

RBC -- Magnum Hunter Resources Corp. (NYSE: MHR) Bond Deal Helps Liquidity; Plant Start-up Sets Stage For Big 1Q13 Production Ramp Outperform Above Average Risk Price: 3.58 Shares O/S (MM): 168.9 Dividend: 0.00 Float (MM): 152.3 Debt to Cap: 47% Institutional Ownership: 70% Price Target: 6.00 Implied All-In Return: 68% Market Cap (MM): 605 Yield: 0.0% Enterprise Val. (MM): 1,728 Avg. Daily Volume (MM): 3.94 3-Yr. Est. EPS Growth: 30.00% Priced at market close ET, December 13, 2012 Event Issues $150 million add-on bond offering; West Virginia gas processing plant commences operations, setting stage for big 1Q13 production ramp Investment Opinion Bond Deal Provides Boost To Liquidity. MHR completed an add-on offering of $150 million for the Company's outstanding 9.75% senior unsecured 10-year notes and repaid a portion of the Company's revolving credit facility. This follow-on offering coupled with the Company's $25 mm preferred issuance in early December improves current liquidity by nearly $170 million. Deal Also Prefunds Most Of 2013 Outspend. We are currently projecting an outspend of $245 million in 2013, which will be bridged by the bond deal and revolver drawdowns or asset monetizations. MHR has not formally announced its 2013 CapEx budget yet, but we expect the Company should have plenty of liquidity to fund it with only ~$120 million drawn on its $375 million revolver at YE12. The deal also provides flexibility on the timing and structure of the Company's Eagle Ford monetization, which is likely a 1Q13 event. However, the new bonds do significantly increase the Company's fixed debt at a higher rate, increasing interest expense in 2013/14. MarkWest Mobley Processing Plant Commences Operations In Mid-December. The 200 MMcfgpd Markwest Mobley processing plant is now operational, meeting the revised timeline that MHR had guided to in early November. As a result, MHR should remain on schedule to hit its YE12 production rate target of 18,500 Boepd. The plant is currently running at 60% utilization, but should experience accelerated volume growth as new wells are brought on production over the coming weeks. We expect MHR's backlog of 5.5 net wells to be put on production in the very near-term. Decreasing 2013/14 CFPS By 5% And 3%. MHR is utilizing higher cost debt to pay off its credit facility. As a result, we are decreasing our 2013 CFPS and 2014 CFPS estimates by 5% and 3%, respectively. MHR Reflects An $79 Long-Term WTI Oil Price. Our $6 price target is based on a 22% discount to our $7.75 NAV.