An Investor’s Guide to Magnum Hunter Resources

Source: Magnum Hunter Resources Investor Presentation

Intro to Magnum Hunter Resources

• Current management team assumed leadership of the company in 2009.

• Refocused the company’s business strategy on shale fueled growth in two major shale basins.

• Currently divesting of non-core properties to fund growth and improve liquidity.

A Look at the Leadership

• Assumed position of CEO and Chairman of the Board after taking over predecessor company in 2009.

• Renamed to Magnum Hunter Resources Corporation.

• Previously founded Magnum Hunter Resources Inc., which he sold to Cimarex Energy in 2005 for $2.2 billion.

Gary Evans, CEO

Magnum Hunter Resources Key Stats

• Recent Enterprise Value: $2.7 billion• Proved Reserves: 75.9 million BOE• PV-10 of Proved Reserves: $922 million• 2013 Average Daily Production: 14,831 BOE/d• 2014 Target Production Exit Rate: 35,000 BOE/d

The Opportunity

• 152,000 net acres in the Williston Basin

• 99,000 net acres in the Utica

• 79,000 in the Marcellus

“Shale scale”

Source: Magnum Hunter Resources Investor Presentation

Core Assets

• 152,000 net acres in Bakken/Three Forks

• 20.8 million BOE of proved reserves

• 1,437 future drilling locations

• 2-3 active drilling rigs

Williston Basin

Source: Magnum Hunter Resources Investor Presentation

Core Assets

• 99,000 net acres in Utica/Point Pleasant

• Continuing exploration and appraisal program

• Minimal proved reserves but 496.2 million BOE in contingent resources

Utica Shale

Source: Magnum Hunter Resources Investor Presentation

Core Assets

• 99,000 net acres in Marcellus

• 53.4 million BOE in proved reserves

• Current focus of 2014 capital plan

Marcellus Shale

Source: Magnum Hunter Resources Investor Presentation

Key Areas to Watch

• Utica Shale well results• Takeaway and processing capacity for NGLs• Non-core asset sales• Balance sheet• Bakken Shale returns• Eureka Hunter midstream

Biggest Risks

• Utica Shale isn’t as prolific nor as profitable as the company expects.

• Non-core asset sales don’t generate enough cash to fund drilling program.

• Long-term funding after non-core asset sales are complete.

What could go wrong?

Top 3 Reasons to Buy

• Massive upside to the Utica Shale with half of its resource potential attributable to that emerging liquids rich play.

• Strong position in the liquids rich Marcellus Shale. • Production expected to more than double in

2014 and has averaged 145% average annual growth since 2010.

Summarizing the bull case

Top 3 Reasons to Stay Away

• A lot has to go right in the Utica.• Balance sheet is complex due to Preferred

Stock and debt heavy with both Senior Notes and the Credit Facility.

• Focus on natural gas and NGLs could hurt if gas prices fall in the future.

Summarizing the bear case

Final Thoughts

• One of the most levered drillers to the Utica Shale with tremendous untapped upside.

• Strong presence in the high returning areas of the Marcellus Shale.

• Non-core divestment program should keep the company funded.

Big upside overshadows the risks

Our Top Stock for 2014