Magnum Hunter Poised for Big Production Gains

Magnum Hunter Resources (MHR) shares jumped after the company's earnings release Friday as management initiated a target rate of production for year-end 2014 end of 35,000 BoE/day. Given that management's forecast for year-end of 23,000 to 25,000 BoE/day and that current production is about 16,500 BoE/day (including nearly 2,000 bbls/day in properties that are rated as a discontinued operation and will be divested very shortly according to CEO Gary Evans), that's at least a 50% increase in the fourth quarter, and then a 50% increase on top of that rate in 2014. 

How can they do this? Well, I mentioned in my last column on MHR that the company is drilling a mere 41 wells in the fourth quarter. Looking well by well, one can see how fruitful these Marcellus wells are... and the potential of the Utica Wells. Magnum's Collins pad (no I don't own this land, I wish I did) in Tyler County, W.Va., is projected to produce 3,360 BoE/d by the end of the fourth quarter, so that one drilling pad accounts for about a third of the increase assumed for the fourth quarter, and Magnum's Stalder pad is actually more productive on a gross basis, but Magnum has a lower ownership stake.  ...485 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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