Eureka Midstream Confirms MDN Article on New Ownership

In late September MDN connected the dots and was the first to tell you that Blue Ridge Mountain Resources, the renamed Magnum Hunter Resources, had sold its ownership stake in Eureka Midstream (formerly Eureka Resources) to South Korean conglomerate SK Group (see Former Magnum Hunter Sells Remaining Stake in Eureka Midstream). Eureka Midstream was once a subsidiary of Magnum Hunter Resources. Magnum Hunter spun Eureka out into a standalone company prior to Magnum Hunter going through bankruptcy. Not long after Magnum Hunter exited bankruptcy, they changed their name to Blue Ridge Mountain Resources (see Magnum Hunter Changes Its Name, Leaves the Bankrupt Past Behind). The newly named Blue Ridge still owned a slice of Eureka–until a few weeks ago. In a press release issued on Tuesday, Eureka Midstream officially acknowledged that the company’s ownership has changed. Morgan Stanley is still a major shareholder in the company, but now SK Group is in the mix too. Whether Blue Ridge sold its shares directly to SK Group, or whether Blue Ridge sold to Morgan Stanley which then turned around and sold to SK, the result is the same. Blue Ridge is gone, SK is here, and Eureka now answers to a different board of directors…
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Former Magnum Hunter Sells Remaining Stake in Eureka Midstream

We love to connect the dots and reveal information (news) that others miss. Sometimes we get it wrong–but more often we get it right. Here’s another connect-the-dots story. Yesterday we brought you the news that a huge South Korean conglomerate, SK Group, had purchased itself a $100 million slice of ownership in Marcellus/Utica midstream company Eureka Midstream (see South Korean SK Group Buys a Piece of Eureka Midstream for $100M). Eureka Midstream was once a subsidiary of Magnum Hunter Resources. Magnum Hunter spun Eureka out into a standalone company prior to Magnum Hunter going through bankruptcy. Not long after Magnum Hunter exited bankruptcy, they changed their name to Blue Ridge Mountain Resources (see Magnum Hunter Changes Its Name, Leaves the Bankrupt Past Behind). The newly named company still owned a slice of Eureka, but Eureka was/is its own company, not controlled by Blue Ridge Mountain Resources. How big a slice does Blue Ridge own? We don’t know, but we’re guessing around $100 million worth, because yesterday Blue Ridge Mountain Resources coincidentally issued a press release to say it had sold the remaining shares of stock it owned in Eureka to “an undisclosed buyer.” Well isn’t that interesting. The day before SK Group bought a large slice of Eureka–for $100 million. Want to bet the “undisclosed buyer” is SK Group?…
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South Korean SK Group Buys a Piece of Eureka Midstream for $100M

Eureka Midstream, which was once called Eureka Hunter (a subsidiary of Magnum Hunter Resources) popped back up on the radar screen earlier this month (see M-U Pipeline Co. Eureka Midstream Expands Line of Credit to $400M). Eureka, which operates exclusively in the Marcellus/Utica with ~200 miles of local gathering pipelines, announced it had expanded its line of credit from $225 million to $400 million, with an “accordion” option to further expand it to $500 million. Eureka’s former parent Magnum Hunter spun the company off into a standalone company last year, so Eureka did not get dragged through bankruptcy along with Magnum Hunter (see Magnum Hunter Emerges from Bankruptcy with CEO Gary Evans Gone). The newest news is that South Korean SK Holdings, the holding company of SK Group (one of the largest conglomerates in South Korea) has bought itself a piece of Eureka for $100 million…
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M-U Pipeline Co. Eureka Midstream Expands Line of Credit to $400M

Eureka Midstream, which was once called Eureka Hunter (a subsidiary of Magnum Hunter Resources) has popped back up on the radar screen. Eureka, which operates exclusively in the Marcellus/Utica with ~200 miles of local gathering pipelines, announced yesterday it has expanded its line of credit from $225 million to $400 million, with an “accordion” option to further expand it to $500 million. Last time we wrote about Eureka (in December 2015), parent Magnum Hunter was looking to sell it off (see Magnum Hunter De-Listed from NYSE; Still Shopping Eureka Hunter). A lot has happened since that time. Magnum Hunter filed for and later emerged from bankruptcy, minus its colorful CEO Gary Evans (see Magnum Hunter Emerges from Bankruptcy with CEO Gary Evans Gone). During the bankruptcy process, Eureka was not sold but instead spun off into its own standalone company. Magnum Hunter, later renaming itself to Blue Ridge Mountain Resources, has remained a major customer for Eureka. Eureka says it will use the $400-$500M line of credit for “capital expenditures, financing permitted acquisitions, funding working capital, and general corporate purposes.” Here’s an update on Eureka, which has successfully charted a course away from former parent Magnum Hunter…
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Magnum Hunter De-Listed from NYSE; Still Shopping Eureka Hunter

Magnum Hunter Resources (MHR) is a company in trouble. We won’t recount all of the signs (read our MHR articles here). One of the silver bullets that was supposed to help pull MHR’s bacon out of the fire was the sale of their midstream/pipeline subsidiary Eureka Hunter. On August 14 MHR CEO Gary Evans announced there were three potential buyers for Eureka Hunter and that a deal would net the company somewhere around $600-$700 million. Evans said a deal was imminent. That deal never materialized. In November the company refinanced some of its debt to keep going and stopped holding quarterly conference calls with investors (see Magnum Hunter Refinances Again, Dodges a Bullet…Just Barely). Also in November, MHR told the Securities and Exchange Commission that the company is likely headed for bankruptcy (see Dire Straits: Magnum Hunter Tells SEC Heading for Bankruptcy). However, one of MHR’s investors has stated he’ll sue to prevent them from filing for bankruptcy (see Magnum Hunter Investor: We’ll Sue to Stop Bankruptcy Filing). Yeah, it’s complicated. So when we saw a new press release from MHR, a press release about Eureka Hunter, we perked up. What does it say?…
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How Much is Magnum Hunter & Eureka Hunter Worth Today?

Valuing an oil and gas or midstream/pipeline company is probably as much art as it is science. In any real estate or land or business valuation, in fact in any kind of transaction where something is bought and sold, something is worth as much as someone is willing to pay for it. But we all need guidelines…rules of thumb…markers that help us determine how much value something has. The “thing” under consideration in this post is the value of both driller Magnum Hunter Resources, and its midstream subsidiary Eureka Hunter. A stock analyst writing on the Seeking Alpha website tackled that question and came up with some interesting numbers…
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Family of Man Who Died in 2013 Eurkea Hunter Accident Gets $18M

lawsuitIn April 2013 MDN reported on the tragic death of 56-year-old Bruce Phipps from Marietta, OH who was working at a Eureka Hunter “pig” (Pipeline Inspection Gauge) receiving station near near Wick (Tyler County), WV (see Flash Fire at Pipeline Station in WV Kills 1, Injures 3 Others). Later, Pennsylvania resident Raymond Miller, another of the injured workers, also died (see Second Death from Flash Fire at WV Pipeline Station). Phipps’ widow sued Eureka Hunter and several other companies involved with the pipeline and last week all parties settled and the Circuit Court of Ohio gave its stamp of approval. Phipps’ widow and her family will receive $18 million, minus one-third ($6 million) that goes to the lawyers…
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Activist Investor Threatens Magnum Hunter with Takeover Unless…

Dallas Salazar
Dallas Salazar

We’re still trying to process this bit of news. One of the Seeking Alpha blog writers we’ve enjoyed following over the past year or so is Dallas Salazar. Dallas is the CEO of Austin, TX-­based Atlas Consulting. He specializes in “private company lifecycle management, up to and including taking companies public, and in helping consult publicly traded companies ranging in market cap from $100 million to $500 million.” That is, Salazar helps companies raise money to go public, and helps public companies get profitable. He’s just stepped up his game. Salazar said in a letter to Gary Evans (CEO) and the board at Magnum Hunter Resources (MHR) two days ago that he, Salazar, is close to having enough shareholder support to take over the company–unless. Unless what? Unless MHR responds to his demands, which include selling Eureka Hunter posthaste, stop doing some of the things they are now doing that put the company at financial risk, and unless they start talking to him, now. Some might view it as a form of blackmail. Some might say Dallas is transforming himself into a corporate raider, like Carl Ichan. Many call it being an “activist investor.” We’re not sure what to call it or think of it, quite frankly…
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5 Weeks Later and Still No Word on Buyer for Eureka Hunter

over promise under deliverSomething we’ve noticed for some time: When Magnum Hunter Resources (MHR) and its subsidiaries (like GreenHunter and Eureka Hunter) make a pronouncement like “such and such will be online next month” or “so and so asset will be sold this quarter” the timing rarely matches the pronouncement. For Magnum Hunter “the next few weeks” turns into “the next few months” and “sometime this quarter, maybe next” turns into “next year.” Somebody else has noticed MHR’s timeline peculiarity too–and has written about it on the Seeking Alpha investors website. This particular post notes that MHR’s CEO Gary Evans announced he would name the winning bidder in the “next week to 10 days” for the Eureka Hunter midstream subsidiary, a deal that will bring in something like $600-$700 million (see 3 Potential Buyers Identified for Eureka Hunter Pipeline Deal). That announcement by Evans was on August 14, some five weeks ago, and still no word on who the buyer is, and for how much…
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3 Potential Buyers Identified for Eureka Hunter Pipeline Deal

silhouette questionFinally we know. In June Magnum Hunter Resources (MHR), majority owner of subsidiary pipeline company Eureka Hunter, said it was negotiating to sell all of its ownership of Eureka Hunter to an unnamed buyer for $600-$700 million (see Magnum Hunter Cuts Deal to Sell Eureka Hunter & 2 New JVs). Two weeks ago Magnum Hunter CEO Gary Evans continued to tease that the sale is imminent and will bring in around $550 million (see Magnum Hunter About to Close 2 Deals Worth $1 Billion Cash). Cash amounts and deadline dates seem to be “fluid,” shall we say, when it comes to MHR statements. We still haven’t heard who the potential buyer is. That is, until now. Bloomberg is reporting the potential buyer is…
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Magnum Hunter About to Close 2 Deals Worth $1 Billion Cash

Last Friday Magnum Hunter Resources CEO Gary Evans along with other top MHR executives held a quarterly earnings call. On that call we learned some very important information. According to Evans, MHR is very close to raking in around $1 billion in cash from two initiatives: a joint venture on their Utica Shale acreage, and the sale of MHR’s ownership in their midstream subsidiary Eureka Hunter. Here is what Evans said about the two initiatives, their timing, and potential partners/buyers…
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Magnum Hunter 2Q15: Rev Down 60%; Eureka Hunter Still Not Sold

Magnum Hunter Resources (MHR) released their second quarter 2015 update today, with plenty of information. MHR reports oil and gas production year over year in the second quarter was up 20%. But because of the price collapse over the past 12 months, MHR’s revenue for that production decreased 60% year over year. One of the juicy tidbits we pick up from the update deals with an impending sale of MHR pipeline subsidiary Eureka Hunter. You may recall that MHR CEO Gary Evans, speaking at the Hart Energy DUG East conference in Pittsburgh in June implied the company had cut a deal to sell their ownership stake in Eureka Hunter (see Magnum Hunter Cuts Deal to Sell Eureka Hunter & 2 New JVs). It seems that was the wrong (misleading?) impression. In today’s 2Q15 update we learn that MHR “is in discussions with a number of third parties regarding this potential sale transaction.” So no, the sale of Eureka Hunter is not a done deal–not yet. What else do we learn?…
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Magnum Hunter Cuts Deal to Sell Eureka Hunter & 2 New JVs

On Monday, MDN told you that Magnum Hunter Resources (MHR) was having trouble scraping together $9.4 million to meet liquidity demands by creditors (see Magnum Hunter’s Bankers Say Get $65M in Cash by July 10, Or Else). Today we report that one of MHR’s major investors has sold off millions of shares of the company’s stock (see Magnum Hunter Investor Dumps 6.3 Million Shares of MHR Stock). There’s no ignoring that MHR, a mid-sized Marcellus/Utica driller, is a company in financial trouble. So perhaps it was not surprising that at yesterday’s closing day of the Hart Energy DUG East conference in Pittsburgh, MHR CEO Gary Evans announced that the company has a plan to rake in some big bucks. Number one, MHR has cut a deal to sell their Eureka Hunter pipeline subsidiary for $600-$700 million. Number two, Evans said MHR is working on two joint ventures for other companies to drill on or finance MHR’s drilling on MHR acreage in Ohio and West Virginia. The Ohio deal would bring in around $500 million, and the West Virginia deal around $100 million…
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Magnum Hunter 1Q15: Prod. Up 66%, Financials Worse Than Expected

Magnum Hunter Resources, now a pure play company focused on the Marcellus and Utica Shale region, released their first quarter 2015 update this morning. On the positive side we learn that production as up a healthy 66% in 1Q15 vs 1Q14. Production costs–how much it costs to produce the natural gas/oil/liquids, went down a big 36% year over year. And Magnum Hunter now owns ~80,000 net acres located in the Marcellus Shale and ~130,000 net acres located in the Utica Shale. Eureka Hunter, the company’s pipeline subsidiary, had new record high throughput volumes. But on the downside the company lost $0.57 per share. The “consensus” estimate was that they would lose $0.32 per share, so the performance of the company financially, if you want to think of it this way, was roughly twice as bad as Wall Street watchers thought it would be. Look for the stock price, which (before the opening) was trading at $1.86 per share–well off the typical $8 per share or so over the past year–to take a further beating…
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Eureka Hunter Pipeline Volume Continues to Expand, now 623 Mmcf/d

Every few months Eureka Hunter, the midstream subsidiary of Magnum Hunter Resources, issues a press release to update investors on their progress toward filling their WV/OH pipeline system with natural gas. Eventually they hope to flow 1 billion cubic feet per day through the system. Last September Eureka reported they were up to an average 307 million cubic feet per day (see Magnum Hunter’s Pipeline System Boosts Volumes in OH/WV). In January they were up to 400 Mmcf/d and expecting to hit 500 Mmcf/d by the end of that month (see Eureka Hunter Nears 1/2 Billion Cubic Feet per Day in WV/OH). As of last Friday, Eureka has hit north of 623 Mmcf/d on their path to a billion cubic feet…
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Eureka Hunter Nears 1/2 Billion Cubic Feet per Day in WV/OH

Magnum Hunter announced yesterday that its pipeline/midstream subsidiary Eureka Hunter has set a new record. Eureka pumped more than 400,000 million Btus per day (MMBtu/d) in West Virginia and Ohio by the end of December, and they expect to be pumping more than 500K MMBtus by the end of this month. A half million MMBtus works out to be roughly half a billion cubic feet of natural gas per day…
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