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.
Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read at this site, or think you may have possibly read at this site.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.