Think “proved reserves” (a company’s best guess for how much retrievable oil or gas there is under their leased property based on real numbers) isn’t all that important? Just so much fluff that drilling companies throw out there to impress investors? That financial numbers like proved reserves don’t affect landowners? Think again. Proved reserves are a very serious business, especially when it comes to borrowing money used for more drilling.
Take Magnum Hunter Resources, for example. MHR concentrates their drilling and midstream activity in the Marcellus and now Utica Shale. Based on a semi-annual review of their credit worthiness by their banks (plural), the banks determined MHR’s proved reserves number has increased sufficiently that they are willing to extend MHR’s line of credit another $92.5 million–to $325 million. That’s a pretty hefty line of credit! Here’s the announcement from MHR…
