1
Independent Petroleum Association of America
10th Annual Oil and Gas Symposium
April 19 – 21, 2004
New York, New York
2
Company Overview
Long-lived reserves, high quality, and geographically concentrated in the heart of the oil patch (Texas, Oklahoma, New Mexico, Arkansas and Gulf of Mexico)
Reserve replacement ratio of 436% since 2001 (three years)
Three year average Finding and Development Cost (all sources) $1.22/Mcfe
Production 70% natural gas and 30% crude oil
5+ year drilling inventory of around 2,640 onshore locations/232 OCS Blocks
High historical drilling success rate – 93% (five year average)
We operate approximately 80% of our properties
Diversified down the food chain as an operator, producer, gatherer, processor and marketer of our own products
3
Principal Producing Areas
Offshore Continental Shelf
Corporate Headquarters
District & Field Offices
New Core AreaCoalbed Methane Play
San Juan Basin
1+ Tcf Potential
OffshoreOffshore
82 Bcfe76% gas10% of total reservesPV-10 $308 million
Gulf CoastGulf Coast
72 Bcfe83% gas 9% of total reservesPV-10 $143 million
Permian BasinPermian Basin
438 Bcfe43% gas52% of total reservesPV-10 $633 million
Mid-ContinentMid-Continent
246 Bcfe74% gas29% of total reservesPV-10 $397 million
New Core AreaCoalbed Methane Play
San Juan Basin
1+ Tcf Potential
OffshoreOffshore
82 Bcfe76% gas10% of total reservesPV-10 $308 million
Gulf CoastGulf Coast
72 Bcfe83% gas 9% of total reservesPV-10 $143 million
Permian BasinPermian Basin
438 Bcfe43% gas52% of total reservesPV-10 $633 million
Mid-ContinentMid-Continent
246 Bcfe74% gas29% of total reservesPV-10 $397 million
4
Mineral Leasehold Acreage Ownership Position
As of March 1, 2004(Net Acres)
WY
NV
UTCA
AZ
ND
NM
TX
OK
KS
AR
LA
MO
IL
IN
MS
GOM
1,379,69726,329
11,261
61,187
1,308
7,006
1,804,535
130,92327,325
67,579
209,532
1,200
140310
6,873
283
80
41,726
1,625
105,098
353,560
8,063
25,555
45,486
12,873
382 416
480
1,348
12,519
371
86,001
2,634
2,720
350,599
455,406 1,814,731
1,508,156
Undeveloped 470,343 Acres
Developed 589,999 Acres
Remaining Acreage Options 5,541,409 Acres
Total 8,566,096 Acres
Leased Option Acreage 1,964,345 Acres
CO
720
5
New Core AreaSan Juan Basin
Stratigraphic Column
Mes
aver
de G
roup
The Menefee Formation of the Upper Cretaceous Mesaverde Group contains abundant coal beds that are estimatedto contain 34 Tcf in the San Juan Basin
Until recently, the resource potential inthe Menefee coals was overlooked due to the development and exploitation of the Fruitland coal
Dakota Ss
Mancos Sh
Point Lookout Ss
Menefee Fm
Cliff House Ss
Lewis Sh
Pictured Cliffs Ss
Fruitland Coal
Kirkland SH
Coal Deposit
Cretaceous
Calculation of Resource Potential
Upper Menefee Coal Structure Map
The Upper and Lower Menefee coals contain an estimated combined resource potential of 1.88 Tcf of reserves on Magnum Hunter’s acreage position
Recoverable gas-in-place is estimated at 504 Bcf and 626 Bcf for the Upper and Lower Menefee coals (at a 60% recovery factor), respectively, for a combined recovery of 1.13 Tcf
Gas content for the coals has been estimated by in-house Magnum Hunter personnel from 20 scf/ton to 70 scf/ton, with the higher of the content being in the Lower Menefee coal
(New Magnum Hunter Lease Option Acreage)Menefee Coal Evaluation
1,130Dry Gas Ultimate Recovery (Bscf)1
60%Recovery Factor (%)1,883GIP (Bscf)
107Net Pay (ft)167,089Area (acres)
17,800,876Net acre-ft2379Coal Density (ton/acre-ft)48,133Eff. Drainage Radius (ft)1.750Coal Density (g/cc)
63.5Recoverable GIP (Mscf/acre-ft)44Gas Content (scf/ton)
New MexicoState:
Magnum Hunter Resources/CDXOperator:Menefee FormationReservoir:Grand Total/Southern San Juan BasinLease:
(1) The reserves presented herein may differ from the forecast due to economic limits reached.
Volumetric Calculation
Property Description
McKinley, Sandoval, San Juan, Cibola, Bernalillo, Valencia, Counties:Catron, Socorro
U.S. Coalbed Statistics
San Juan(Menefee Coal)
Recovery Factor
Cherokee
Raton
Uinta
BlackWarrior Green
River
San Juan(Fruitland Coal)
PowderRiver
Piceance
0.00
0.10
0.20
0.30
0.40
0.50
0.70
0.80
0.90
1.00
Rec
ove
ry F
acto
r (f
ract
ion
)
Appalachiac.
Source: Merrill Lynch
San Juan(Menefee Coal)
Net
Co
al T
hic
knes
s (f
eet)
Net Coal Thickness
Arkoma
Canaba
Cherokee
Piceance
Raton
Uinta
San Juan(Fruitland Coal)
PowderRiver
GreenRiverBlack
Warrior
ForestCity
0
10
20
30
40
50
60
70
80
90
100
AppalachiaC.
AppalachiaN.
95
San Juan(Menefee Coal)
Natural Gas Content1000
Arkoma
Cherokee
Piceance
Raton
Uinta
PowderRiver
GreenRiver
ForestCity
BlackWarrior
San Juan(Fruitland Coal)
Canaba
0
100
200
300
400
500
600
700
800
900
Gas
Co
nte
nt
(scf
/to
n)
AppalachiaC.
AppalachiaN.
50
Co
al D
ensi
ty (
g/c
c)
Coal Density
Cherokee RatonBlackWarrior
GreenRiver
PowderRiverPiceance
Uinta
1.00
1.10
1.20
1.40
1.50
1.60
1.70
1.80
1.90
2.00
San Juan(Fruitland Coal)
San Juan(Menefee Coal)
1.32
0.60
7 Sources: Morgan Stanley Equity Research; Herold’s Company
Average Transaction Price
Per MCFE
Panoma 06/96
$34.7 MMPermian Basin
04/97$133.8 MM
TEL Offshore03/98
$10.4 MM
Spirit 7612/98
$25.5MM
Vastar06/99
$32.5 MM
Dynegy11/99
$4.3 MM
GE Capital06/00
($23 MM)
Louis Dreyfus08/00
($15.8)
Mallon09/01
$31.3 MM
Prize Energy03/02
$550 MM
Peak ll($1.06/mcfe)
Trough l($0.88/mcfe)
Trough ll($0.75/mcfe)
Peak lll($1.21/mcfe)
G.E. Capital09/02
($50 MM)
Misc. Sales09/02 –12/02
($17 MM)
So. TX11/02
($33 MM)
Peak l($0.87/mcfe)
60/40 Gas/Oil 12 Mth. Strip
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
Trough Ill($0.83/mcfe)
So. LA05//03
($13.4 MM)
Acquisition/Divestiture HistoryTiming is Key to Profitable Growth
12/24/0301/05/96
08/02/96
02/28/97
09/26/97
04/24/98
11/20/98
06/18/99
01/14/00
08/11/00
03/09/01
10/05/01
05/10/02
12/06/02
07/03/03
8
Mid-Continent $10 Million
7%
Mid-Continent $11 Million
6%Permian Basin
$50 Million
33%
Permian Basin $39 Million
23%
Gulf Coast (Onshore)$5 Million
3%
Gulf Coast (Onshore)$6 Million
3%
2003 Expenditures2004 Capital Budget
2003$175 Million
2004$150 Million
Gulf of Mexico
$119 Million
68%
Gulf of Mexico
$85 Million
57%
9
Magnum Hunter GOM Lease Ownership and Discoveries
Gulf of Mexico
MH Gulf of Mexico Map.jpg
Louisiana
Gulf of Mexico
New Orleans
High
Island
West Cameron East
Cameron
Vermillion
South Marsh Island Eugene Island
Ship ShoalSouth
Timbalier
Grand Isle
Ewing Bank
Green Canyon
Main Pass
MP 178
Lake Charles
ST 265
Beaumont
Lafayette
Baton Rouge
Gulfport
Undeveloped Leases
Currently Drilling
New Discoveries
Currently Producing
Lease Sale Blocks
10
Large inventory of 174 OCS Blocks (800,000 gross acres) - 55 New Blocks awarded at 2004 Central GOM Sale (Highest Bidder Overall)
Over 25 Blocks have Deep Shelf identified prospects
Additional 25% net profits interest in 17 additional OCS Blocks with 29% ownership in TEL Offshore Trust
All 3-D seismic controlled with new vintage data
Prospects located near existing production facilities
Reserve potential of 10-500 Bcfe per prospect
81% drilling success rate with 79 out of 97 GOM wells completed thru December 31, 2003
GOM rate of return (since inception thru December 31, 2003)
ROI RORProved 1.48 13.2%Proved & Probable 2.15 22.5%Proved, Probable & Possible 2.39 24.1%
Offshore Gulf of Mexico
11
Project AreaProduction
OperatorGross
Per DayMHR Net Per Day
East Cameron 73,184, 185, 344, 346, 364 345, 360, 377
RemingtonW & T Offshore
20.6 3.6
Eugene Island 148, 302, 355 397
RemingtonHunt Oil
W & T Offshore
65.9 11.3
High Island A-153 A-441
SPN ResourceRemington
.9 .08
Main Pass 160, 163, 164, 178, 263 107, 108
Magnum HunterKerr McGee
34.7 13.5
South Marsh Island 24, 35, 93 Remington 26.4 6.8
Ship Shoal 28, 38 322 358
CallonRemington
ATP
26.8 4.7
South Timbalier 250, 264,265 274, 275
Magnum HunterSpinnaker
16.5 7.0
Vermilion 61, 100, 117 84
RemingtonW & T Offshore
31.3 8.1
West Cameron 347,403,416,417,426,428,472, 488 Remington 48.4 15.0
Offshore Gulf of MexicoDiscoveries on Production since entering GOM in May 1999
70.1271.5
12
Recent Discoveries/Production Pending
4.02nd Qtr. 200440%RemingtonW. Cameron 457
5.02nd Qtr. 200450%RemingtonEugene Island 304
4.02nd Qtr. 200440%RemingtonW. Cameron 458
3.53rd Qtr. 200440%RemingtonEast Cameron 205
16.5 Total Estimated (MHR Net):
Potential DailyNet Production
(MMCFE)Estimated FirstProduction DateWI
ProductionOperator
ProjectArea
Offshore Gulf of Mexico
13
2004 Offshore Exploration / Development
354 BCFE Total Potential Gross Reserves:
106 BCFE Total Potential MHR Net Reserves:
Drilling8,900’15 BCFE15%ATPShip Shoal 358 A-2
Drilling14,100’30 BCFE25%ForestMain Pass 99
Drilling14,500’23 BCFE25%NewfieldMain Pass 234
Spud Date DepthEstimated
Gross ReservesWorkingInterestOperatorProspect
Completed8,650’20 BCFE40%RemingtonEast Cameron 205
2nd Qtr.10,800’16 BCFE50%RemingtonVermillion 241
Drilling14,000’40 BCFE25%RemingtonShip Shoal 165
Drilling17,668’60 BCFE30%Magnum HunterW. Cameron 295
2nd Qtr.15,500’100 BCFE50%Magnum HunterS. Tim. 261/262
2nd Qtr.7,730’15 BCFE40%RemingtonW. Cameron 398
2nd Qtr.7,383’15 BCFE30%RemingtonS. Marsh Island 24 A-3
2nd Qtr.7,000’10 BCFE50%RemingtonS. Marsh Island 113
Drilling12,500’30 BCFE37.5%GryphonW. Cameron 567
14
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
MC
FE
Pe r
Day
Initiated Drilling in GOM - 1999
Annual Growth Rate = 89%
Annual Growth Rate = 89%
Offshore Gulf of Mexico Production
1999 2000 2002 2002 20022002 2003 20032001 2003 2003 2004E 2004E 2004E
3,3007,600
34,650
40,236 40,958 40,63042,022
52,59956,910 56,232
25,056
57,500
65,00067,500
15
Two Drilling Rigs Working Continuously
• 44 wells drilled successfully
• 42 wells completed
• Recently acquired farm-ins on 20,000 gross mineral acres, with 30 to 50 new drilling locations identified.
Currently negotiating new farm-ins on an additional 15,000 gross mineral acres to further increase acreage position
• 2 new wells in various completion stages
• Average per well IP = 2.0 MMCFE per day (gross)
NEW MEXICO MORROW – ATOKA - STRAWN PROGRAM
Jan. 96 Jan. 97 Jan. 98 Jan. 99 Jan. 00 Jan. 01 Jan. 02 Jan. 03 Dec. 03
0
10,000
20,000
30,000
40,000
50,000
60,000
GR
OSS
GA
S (M
CFP
D)
16
10,000
12,500
15,000
17,500
20,000
22,500
25,000
27,500
30,000
32,500
35,000
37,500
40,000
42,500
45,000
47,500
50,000
2000 2001 2002 2003 2004Year-EndEstimate
All Sources
Compounded Annual Growth Rate = 30%
Compounded Annual Growth Rate = 30%
S. E. New Mexico Gas Production
Ne
t P
rod
uc
t io
n –
Mc
fe/ D
ay
15,672
20,443
31,989
24,486
45,000
17
Onshore Inventory Locations(Including Recompletions)
ProvedDeveloped
Non-Producing*Proved
Undeveloped*Probable/Possible*
EstimatedUnbooked Total
Abell (Texas) 0 3 0 3 6
Cumberland (Oklahoma) 8 7 29 0 44
Eola-Robberson (Oklahoma) 21 2 31 20 74
Goldsmith Mash Field Area (Texas) 0 17 19 5 41
Keystone (Texas) 1 5 3 10 19
Panoma Area (Oklahoma/Texas) 0 101 42 100 243
Coal Bed Methane (New Mexico/Colorado) -- -- -- 1,000 1,000
Southeast New Mexico 33 70 62 50 215
Walnut Bend Field Area (Texas) 9 0 5 30 44
War-Wink (Texas) 42 3 10 5 60
Westbrook (Texas) 12 81 0 0 93
Other 117 169 265 250 801
Total 243 458 466 1,473 2,640
* As estimated by third party engineering firm DeGolyer and MacNaughton
18
Drilling Activity – Gross Wells Drilled
98%100% 94%
98%
84%31526Total
88%17215Development79%14311Exploration
2002 Drilling Activity ($127.0 million)
1248116
79% 296 23 Exploration 98% 95293Development
Total
88286Total52052Development36234Exploration
2000 Drilling Activity ($60.7 million)
94%100694
69%134 9 Exploration87285Development
Total
2001 Drilling Activity ($159.7 million)
1999 Drilling Activity ($21.7 million)
94%
Successful Success RatioTotalP&A’d2003 Drilling Activity ($174.6 million)
1249115
68% 258 17 Exploration 99% 99198Development
Total 93%
19
Finding and Development Costs per Mcfe(All Sources – three year average)
Peer Group 2003
$0.74$0.84
$0.93
$1.10 $1.13$1.20
$1.22 $1.26$1.29$1.38 $1.38 $1.40
$1.48
$1.64
$1.85
$1.97
$2.15
$-
$0.50
$1.00
$1.50
$2.00
$2.50
Source: Company Data
Average: $ 1.35
Median: $ 1.29
20
Av
era
ge
Da
ily
Pro
du
cti
on
(M
CF
E)
74,777
194,338
91,292
Compounded Annual Growth Rate = 31%
Compounded Annual Growth Rate = 31%
Net Daily Production Growth
200,143
Mid-PointEst.
220,000
Note: Excludes net daily production lost from asset sales of 39,926 MMcfe per day over this period.
21
Gulf Coast (onshore)17 MMcfe/d
8%
Mid-Continent
44 MMcfe/d
22%
Production by Area
Permian Basin
86 MMcfe/d
42%
Gulf of Mexico57 MMcfe/d
28%
Reserves By CategoryPDP
PDNP 10%
PUD
26%
64%
Oil31%
Production By Product
Gas
69%
22
-12.8-12.2 -11.6
-10.5
-7.2-6.1
-4.3 -4.3-3.3 -3.0 -2.9
-1.5
2.5
5.06.2
10.4 10.8 11.313.1 13.5 13.6 13.8
15.816.7
17.7
21.222.1
33.4
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
CH
KP
XDN
EVC
RK
SFY
NB
LK
MG
FST
DN
RO
XY
VPI
UC
LB
RO
EI
NXY
APA
DVN TB
IE
CA
EO
GN
FXP
PPTH
XTL
MS
GY
CN
QA
PC
XTO
PE
RC
EN
TA
GE
Source: Lehman Brothers
Cash Flow Per Share (Debt Adjusted)
Five Year Annual Growth Rate
Large/Mid/Small Caps1998 - 2002
MH
R
32.4%
% Change
23
Acquisitions & Mergers
Bil
lio
n C
ub
ic F
ee
t E
qu
iva
len
t
Natural Gas Equivalents (Bcfe)
367 Bcfe 378 Bcfe
63%
37%
66%
34%
55%
45%
837 Bcfe
98% DrillingSuccess
MallonAcquisition
Prize Acquisition
History of Reserve Growth
Development & ExploitationExploration
Compounded Annual Growth Rate = 32%
838 Bcfe
59%
41%
93% DrillingSuccess
24
37%
82%
140%
189% 189%214%
313% 324% 329%
411%
485%
552%576%
861%
249%226%
Source: Company Data
0%
100%
200%
300%
400%
500%
600%
700%
Average: 276%
Median: 260%
Peer Group Three Year Average All Sources Reserve Replacement Ratio
(2001 – 2003)
102%
149% 164% 164% 173% 174%
216% 224%
260%264% 270%
277% 280%
436%450%
455%
627%
25
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
Oil & Gas Gas Gathering, Processing and Marketing Management
($000’s)Average Annual Growth Rate = 40%
Yearly Growth in Revenues
2004E2001200019991998 2002 2003
$51,400$69,626
$127,510$152,806
$265,869
$325,014
$395,600*
* Average consensus of the ten Equity Analysts that currently follow Magnum Hunter Resources, Inc.
The Benchmark Price Consensus from these analysts for 2004 is $5.38 per Mcf and $30.76 per Barrel.
26
G & A Expenses per Mcfe Produced
$0.00
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
2000 2001 2002 2003*
Total Wells/Operated Wells
Operating Efficiency Improvements
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2000 2001 2002 2003
Operated Total Wells
3,042
2,168
3,241
2,230
5,612
4,428
Per
Mcf
e P
rod
uce
d
$0.22$0.21
$0.19Compounded Annual Growth in Well Count = 22%
Compounded Annual Growth in Well Count = 22% Compounded Annual Decline in Overhead = 8%
Compounded Annual Decline in Overhead = 8%
$0.175,591
4,399
Effective Jan. 1, 2003 Magnum Hunter began expensing the fair market value of stock options pursuant to SFAS No.’s 123 and 148. For the year ended Dec. 31, 2003 Magnum Hunter recorded a non-cash compensation expense of $3 million which is reflected in 2003’s G&A total of $15.3 million. The 2003 G & A expense per Mcfe of $0.17, as reflected above, has been adjusted for the 2003 SFAS No.’s 123 and 148 non-cash charge of $3 million in order to be congruent with prior years.
*
27
G & A Costs per McfePeer Group 2003
$0.16 $0.17$0.18 $0.18 $0.18
$0.19$0.20 $0.20
$0.24$0.26 $0.27
$0.28 $0.28
$0.32$0.33
$0.34
$0.42
$-
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
$0.35
$0.40
$0.45
$0.50
Source: Company Data
Note: Excludes non-cash charge for stock options expense
Average: $ .25
Median: $ .24
28
Condensed Balance Sheets($ in Thousands)
$ 454,385
117,974
336,411
$ 454,385
71%49%
3,232
129,466
155,000
$ 48,713
9,442
419,837
$ 25,106
Dec. 31, 2001
$ 315,612
67%37%
$ 315,612
93,416
222,196
359
140,000
51,120
$ 30,717
20,242
260,532
$ 34,838
Dec. 31, 2000
$ 304,022
$ 304,022
82%
80%
51,552
252,470
644
140,000
94,800
$ 17,026
23,115
265,195
$ 15,712
Dec. 31, 1999
$ 1,169,656
$ 128,996
125,000
429,466
135,998
61%57%
Dec. 31, 2002
$ 97,973
1,001,609
70,074
$ 1,169,656
350,196
819,460
Debt/Book Capitalization RatioDebt/Market Capitalization Ratio
TOTAL LIABILITIES &
STOCKHOLDER’S EQUITY
TOTAL LIABILITIES
Other Liabilities
Senior Debt and Convertible Notes
Bank Debt
Current Liabilities
TOTAL ASSETS
Other Assets
Net Property, Plant and Equipment
Current Assets
STOCKHOLDERS’ EQUITY
$ 1,265,892
$ 105,503
165,000
425,000
180,713
60%50%
Dec. 31, 2003
$ 100,337
1,095,883
69,672
$ 1,265,892
389,676
876,216
Magnum Hunter Senior Unsecured Convertible Notes
Issuer: Magnum Hunter Resources, Inc. ("MHR") Book-running managers: Deutsche Bank Securities, Bank of AmericaProceeds: $125 millionStatus: Senior, UnsecuredForm of registration: Rule 144A for lifeMaturity: December 15, 2023Denomination: $1,000 per bondIssue/redemption price: 100% of parCoupon (q.): 3 month LIBOR (Currently 1.11%)Yield-to-maturity (q.): 3 month LIBORInitial coupon rate: 1.17000% (Official BBA USD Libor fixing rate at 11:00 AM London time on
December 11, 2003)Conversion premium: 45.0%Reference share price: $8.41 (NYSE closing price on December 11, 2003)Conversion price: $12.19Conversion ratio: 82.0345 shares per $1,000 bond (approximate)Call feature: Unconditionally callable after year 5 Put feature: Puttable in years 5, 10, 15Conversion type: Net share settleContingent conversion:
Yes, trigger at 110%Contingent payment: NoneDividend protection: Full dividend protection for the life of the instrument via conversion
price adjustmentTrade date: December 12, 2003Settlement date: December 17, 2003Interest payment dates:
March 15, June 15, September 15 and December 15 (quarterly in arrears)First coupon date: March 15, 2004Cusip: 55972FAE4ISIN: US55972FAE43Use of proceeds: Magnum Hunter has used the net proceeds from the offering to repay
outstanding indebtedness under Magnum Hunter's revolving credit facility
30
$0.00
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
$0.35
$0.40
$0.45
$0.50
$0.55
$0.60
$0.65
$0.70
$0.75
$0.80
Q4 Q1 Q2 Q3 Q4 Q1
Interest Expense Per Mcfe Produced
2002 2003 2003 2003 2003 2004E
$0.74 $0.74
$0.67
$0.61$0.58
$0.55
31
Net Cash Margin Improvement
Note: Net cash margin is defined as the realized price per Mcfe less LOE, production taxes, G & A expense (recurring), and interest expense.
Cash margin as a percent of realized price per Mcfe
Realized price per Mcfe (net)
Net cash margin percent
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
0%
10%
20%
30%
40%
50%
60%
70%
Old commodity hedges gone as of December 31, 2003
Sold bulk of higher lifting cost properties
Redeemed $140 million of 10% high yield debt
Placed $125 million convertible debt at 1.11% interest rate (floating)
1st Qtr2002
2nd Qtr2002
3rd Qtr2002
4th Qtr2002
1st Qtr2003
2nd Qtr2003
3rd Qtr2003
4th Qtr2003
1st Qtr2004E
$1.22$1.45
$1.41$1.50
$1.85$1.72
$1.87 $2.01
$3.02 $2.99
$3.49$3.36
$3.63
$4.08$3.70
$3.92$3.92
$5.09
41% 42% 42%41%
45%46%
51%48%
59%
32
Panoma Gas Gathering System (100% ownership MHR)- 449 miles of pipeline- 15.5 Mmcf per day throughput
McLean Gas Processing Plant (50% ownership MHR) - Modern cryogenic gas processing plant 980 barrels per day liquids production/23.0 Mmcf/D capacity (65% utilized)
Walker Creek Processing Plant (15% ownership MHR)- Propane refrigeration plant
- 240 barrels per day liquids/12Mmcf/D capacity (35% utilized)
Madill Gas Processing Plant (50% ownership MHR) - Modern cryogenic gas processing plant and gathering system- 970 barrels per day liquids production/18Mmcf/D capacity
(78% utilized)
Elmore City Processing Plant (100% ownership MHR)- Modern cryogenic gas processing plant and gathering system- 980 barrels per day liquids production/35 Mmcf/D capacity (30% utilized)
Acquire or build new systems to complement existing production
Seeking ways to monitize this asset base and continue in operating control
Gas Gathering, Processing and Marketing Strategy
33
Financial Performance (000’s)
Note: Forward estimates for 2004 are derived from average consensus of the ten equity analysts that currently follow Magnum Hunter.
The Benchmark Price Consensus from these analysts for 2004 is $5.38 per Mcf and /$30.76 per Barrel.
1999 2000 2001 2002 2003 2004E
Revenues
$69.6
$127.5$152.8
$265.9
$325.0
$395.6
1999 2000 2001 2002 2003 2004E
Operating Profit
$15.1
$50.3 $48.1
$68.9
$92.7
$140.6
1999 2000 2001 2002 2003 2004E
EBITDA
37.2
$75.9$92.4
$155.3
$192.3
$251.2
Net Income
1999 2000 2001 2002 2003 2004E
($6.8)
$22.3
$13.5$15.5
$26.1
$61.4
34
Oil & Natural Gas Commodity Hedges
Natural Gas Price Commodity Hedges 2004 - 85 Mmcf/d at $3.76 - $5.78 per Mmbtu 2005 - 50 Mmcf/d at $4.05 - $6.32 per Mmbtu
Oil Price Commodity Hedges 2004 - Collars 5,865 BOPD at $23.87 - $29.85
per Bbl
% Hedged
OilBbls
%Hedged
GasMmcfYear
(i) Based on 2004 mid-point guidance
(ii) Based on 2004 4th quarter mid-point guidance
50 62% (i)5,86552% (i)852004 0 (ii)023% (ii)2005
35
Commodity Price Sensitivity
$0.10 increase in gas price – Earnings per share $0.05 $0.05
$1.00 increase in oil price – Earnings per share $0.03 $0.03
2004(i) 2005(ii)
Note: (i) Based upon 2004 mid-point production guidance assuming $25 per barrel oil and $4 per Mcf gas and
existing 2004 commodity hedges
(ii) Based upon 2004 mid-point production guidance assuming $25 per barrel oil and $4 per Mcf gas and
existing 2005 commodity hedges
36
(Millions) Per Share*
Proved Reserves totaling 838.4 Bcfe (6:1 conversion ratio 58.9% natural gas, $5.24 per Mcf & $30.57 per Bbl) (Before Tax Present Value Discounted @10% as of 12/31/03) $1,481.7 $19.60
Estimated Value of Gathering, Marketing, and Processing Segment Assets:7 times 2003’s Estimated EBITDA of $10.0 million
$70.0
$0.93
Book Value of Other Assets Excluding Goodwill (12/31/03) $13.2 $0.17
Undeveloped Acreage, Net (12/31/03)119,744 Domestic Onshore Acres @ $100.00 per acre350,599 Domestic Offshore Acres (100% GOM) @ $200.00 per acre
$12.0 $70.1
$0.16 $0.93
San Juan Basin New Mexico CBM Leasehold Position, 1.5 Million Acres @ $72.00 per acre $108.0 $1.43
Leasehold Option Acreage Position - Other, 6.3 Million Acres @ $3.25 per acre $20.5
$0.27
Working Capital, Net (12/31/03) ($5.2) ($0.07)Non-Current Derivative and Other Liabilities (12/31/03) ($34.2) ($0.45)
Long-Term Debt, Net (12/31/03) ($595.5) ($7.88)
NOL Carry-Forward, $70.2 Million at December 31, 2003 @ 20% of estimated market value $14.0 $0.19
Outstanding Common Stock Options @ 12/31/03 – 6,740,764 with an average strike price of $6.36 per share $42.9 $0.57
Management’s Estimated Per Share Net Asset Value as of December 31, 2003 (Unaudited) * $1,197.5
$15.85
Management’s Estimated NAV (Unaudited) NAV Trading %
Implied MHRShare Price
$15.85 55% $8.72$15.85 60% $9.51$15.85 65% $10.30$15.85 70% $11.10$15.85 80% $12.68
$15.85 90% $14.27
$15.85 100% $15.85$15.85 110% $17.44
* Based on 75.6 million fully-diluted common shares as of December 31, 2003.
Management’s Estimate ofMagnum Hunter Net Asset Value
37
0
200
400
600
800
1,000
1,200
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
Avg Daily Trading Volume Market Capitalization
Compound Annual Market Capitalization Increase = 56%
Compound Annual Market Capitalization Increase = 56%
Liquidity and Market Value
$78MM
Thousands Millions
2000 2001 2002
$700
$400
$0
$100
$200
$300
$500
$600
2003
$726 MM
$547 MM
Institutional Ownership = 59% of Float as of December 31, 2003
2004
*
* As of April 12, 2004
$800
38
Equity Research Analyst Coverage
Strong Buy03/05/04Wayne AndrewsJeffrey L. MobleyPavel Molchanov
Raymond James & Associates, Inc.
Buy03/05/04Frank D. Bracken, IIILeo P. Mariani
Jefferies & Company, Inc
Underweight (Company)Neutral (Sector)
11/05/03Jeffrey W. RobertsonMichael A. Sullivan
Lehman Brothers
Outperform03/04/04David M. KhaniFrank M. Roebuck
Friedman Billings Ramsey
Buy03/04/04
John A. BaileyNeil P. BrownJeffrey S. Wyll
Deutsche Bank Securities Inc.
Neutral03/05/04John GerdesSouthwest Securities
Outperform03/05/04Ronald E. MillsKen Beers
Johnson Rice & Company L.L.C.
RecommendationReportDateAnalyst(s)Firm
Buy/Speculative12/22/03Greg McMichaelChris Pikul
A. G. Edwards & Sons, Inc.
Hold03/09/03Phil DodgeStanford Group Company
39
$100,000 invested in Magnum Hunter at December 31, 1990, when the Company went public on the Boston Stock Exchange, would be worth approximately $4.3 million today. This calculates to an annual compounded return of 33% over the past 12 years (see Note).
The Oil and Gas Journal recently ranked Magnum Hunter as the number one fastest-growing company based on growth in stockholders equity. Magnum Hunter’s stockholder equity nearly tripled last year from $118 million to $350 million.
Shareholder Return
Note: Includes the effect of $6.50 warrants issued in 2000. Shareholders received one warrant for every three shares of Magnum Hunter common stock. Assumes warrants were sold at the average closing price for the first ten trading days ($0.89 per warrant).
Also includes the effect of $15.00 warrants issued in 2002. Shareholders received one warrant for every five shares of Magnum Hunter common stock. Assumes warrants were sold at the average closing price for the first ten trading days ($1.12 per warrant).
33%
40
Diversified, long lived, and stable reserve base
Replaced 436% of last three years production at all sources finding and development cost of $1.22 per Mcfe
Large portfolio of low cost, low-risk exploitation projects located in core operating areas
Significant exploration potential with 232 OCS lease blocks in the Gulf of Mexico Shelf, 25 of which are Deep Shelf
Consistent balance sheet improvement
Experienced low cost operator with significant operating control
Three year growth in proved reserves per share of 15% compounded annually and increase in production per share of 9%
compounded annually
Management team with significant ownership interest
Investment Considerations
41
The information in this release includes certain forward-looking statements
that are based on assumptions that in the future may prove not to have been
accurate. Those statements, and Magnum Hunter Resources, Inc.’s business
and prospects, are subject to a number of risks, including volatility of oil and
gas prices, the need to develop and replace reserves, the substantial capital
expenditures required to fund its operations, environmental risks, drilling and
operating risks, risks related to exploration and development drilling,
uncertainties about estimates of reserves, competition, government
regulation, and the ability of the Company to implement its business strategy.
These and other risks are described in the Company’s reports that are
available from the SEC.
Disclosure Regarding Forward-Looking Statements
42April 21, 2023
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