Magnum Hunter Resources Corp (NYSE:MHR) to Sell Stakes in Eureka to Pay down Debt

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Dallas, Texas 06/29/2015 (Financialstrend) -Magnum Hunter Resources Corp (NYSE:MHR) has been a buzz of activities over the past few weeks having announced a series of positive news. The oil and gas company is currently in the process of selling its interests in midstream company Eureka Hunter. Proceeds from the sale are be used to pay down the company’s debt.

Liquidity Improvement Plans

Magnum Hunter Resources Corp (NYSE:MHR) owns 45.5% stake in Eureka Hunter and expects to raise up to $700 million on gross cash from the sale. The company urgently needs the cash after being bashed by plunging oil prices in the recent past. Asset sales, as well as the formation of joint ventures, have been the order of the day as the company tries to improve its liquidity by up to $50 million

Magnum Hunter Resources Corp (NYSE:MHR) needs to raise $9.4 million to pay back some of its lenders by July 10, having already raised $55.6 million of the $65 million it is owed. Meeting deadlines has always been a challenge for the oil and gas companies something it hopes to avoid this time around. The sale of the Eureka Hunter stake may take some time but expected to improve the company’s balance sheet, according to filings to the SEC.

Drilling Operations Plans

The sale of the stakes in Eureka Hunter should also provide the company with the much-needed funds to resume drilling operations, according to CEO, Gary Evans. Magnum Hunter Resources Corp (NYSE:MHR) is also looking forward to forming two new joint ventures one in Ohio and the other in West Virginia. The joint venture in Ohio is valued at $500 million while the West Virginia’s venture could total $100 million.

The CEO also confirmed that there are about ten wells in various stages of completion expected to add to the company’s capacity. Getting them to full production should take less than $50 million. However, drilling costs are a point of concern for the company.

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