Random Update On Magnum Hunter's Focus On Shale Oil -- For Investors Only

PennEnergy has a great update on Magnum Hunter:

MHR’s 2013 annual results boasted a doubling in market cap since June. This leap followed a difficult period that began for many US shale-focused companies in the middle of 2012, where MHR’s share price fell from US$6.41 to US$4.18 in 3 months and moved further towards $3.50 until June 2013. 

The MHR shareholders will be hoping this rise in market cap is sustainable, unlike a similar rise between Q3 2011 and Q1 2012 that eventually led to a fall. Whilst the share price continued to trend downwards in this year between June 2012 and June 2013, the company’s daily production actually went in the opposite direction, proving that a rise in production in isolation is not necessarily a good thing for an oil and gas company shareholder.

The rise in share price and market cap in 2013 came after a big sale in the Eagle Ford shale in Texas; MHR sold its holdings in Gonzalo and Lavaca counties for $401 million in April to Penn Virginia (NYSE:PVA). MHR completed its exit from the play in early 2014 with the $24 million sale of its remaining Eagle Ford acreage to New Standard Energy (ASX:NSE). This was in some ways a surprising move as the Eagle Ford has been the most active shale play in terms of companies acquiring new or bolstering existing acreage positions over the last few years; MHR is almost unique (especially for a company of its size) in actually leaving the play to focus its efforts elsewhere, but the rise in share price is proof that the market welcomed the move.

The exit from the Eagle Ford, around $100 million of other sales in the year and further planned non-core divestitures of over $400 million have allowed Magnum Hunter to focus its investment plans on its core plays, the Bakken in North Dakota and the Marcellus and Utica plays in the Appalachian basin.

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