UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
December 14, 1998
Date of Report (Date of earliest event reported)_______________________________
MAGNUM HUNTER RESOURCES, INC.
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(Exact name of registrant as specified in its charter)
NEVADA 1-12508 87-0462881
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
600 East Las Colinas Boulevard, Suite 1200, Irving, Texas 75039
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (972) 401-0752
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On December 14, 1998, Magnum Hunter Resources, Inc. announced that it had
executed a Letter of Intent with ONEOK, Inc. (NYSE: OKE), the eighth largest
natural gas distributor in the United States, relating to ONEOK's purchase of
$50 million of Convertible Preferred Stock of Magnum Hunter. This Letter of
Intent also includes ONEOK's ability to market Magnum Hunter's natural gas
production in the state of Oklahoma, ONEOK's ability to participate in future
acquisitions of Magnum Hunter in the state of Oklahoma, and ONEOK's
participation in Magnum Hunter's recently announced acquisition of certain oil
and gas assets to be acquired from Spirit Energy 76, a business unit of Union
Oil Company of California.
The Preferred Stock will have a liquidation value of $50 million and will
be convertible into Magnum Hunter's Common Stock at $5.25 per share. Dividends
on the Preferred Stock will be payable in cash at the rate of 8% per annum and
will be cumulative. Magnum Hunter will use the net proceeds from the transaction
to repay senior bank indebtedness, to provide working capital for general
corporate purposes and to finance acquisitions, as determined by Magnum Hunter's
Board of Directors. ONEOK will have the right to nominate two new members to
Magnum Hunter's existing Board of Directors.
A copy of the press release is filed as an exhibit to this Form 8-K.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
99.1 Press Release dated December 14, 1998 issued by Magnum Hunter
Resources, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MAGNUM HUNTER RESOURCES, INC.
/s/ Gary C. Evans
By:____________________________
Gary C. Evans
President and CEO
/s/ Morgan F. Johnston
By:____________________________
Morgan F. Johnston
Vice President, General
Counsel and Secretary
Dated: December 14, 1998
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Magnum Hunter Resources, Inc.
600 East Las Colinas Blvd., Suite 1200, Irving, TX 75039
Phone (972) 401-0752 Fax (972) 401-3110
Internet Address: http://www.magnumhunter.com
NEWS
FOR IMMEDIATE RELEASE
American Stock Exchange
o Common - MHR
o Bonds - MHR.B
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MAGNUM HUNTER ANNOUNCES
CAPITALIZATION PLAN AND STRATEGIC
ALLIANCE WITH ONEOK, INC.
Irving, Texas, December 14, 1998, Magnum Hunter Resources, Inc. ("Magnum
Hunter") announced today that it has executed a Letter of Intent with ONEOK,
Inc. (NYSE: OKE), the eighth largest natural gas distributor in the United
States, relating to ONEOK's purchase of $50 million of Convertible Preferred
Stock of Magnum Hunter. This Letter of Intent also includes ONEOK's ability to
market Magnum Hunter's natural gas production in the state of Oklahoma, ONEOK's
ability to participate in future acquisitions of Magnum Hunter in the state of
Oklahoma, and ONEOK's participation in Magnum Hunter's recently announced
acquisition of certain oil and gas assets to be acquired from Spirit Energy 76,
a business unit of Union Oil Company of California ("Spirit 76").
The Preferred Stock will have a liquidation value of $50 million and will
be convertible into Magnum Hunter's Common Stock at $5.25 per share. Dividends
on the Preferred Stock will be payable in cash at the rate of 8% per annum and
will be cumulative. Magnum Hunter will use the net proceeds from the transaction
to repay senior bank indebtedness, to provide working capital for general
corporate purposes and to finance acquisitions, as determined by Magnum Hunter's
Board of Directors. ONEOK will have the right to nominate two new members to
Magnum Hunter's existing Board of Directors.
ONEOK will directly purchase, for an aggregate consideration of
approximately $10 million, certain Oklahoma based oil and gas property interests
and a gathering system included in Magnum Hunter's $36.6 million acquisition of
proved reserves and associated assets from Spirit 76 scheduled to close at
year-end. The acquisition of the Spirit 76 properties by Magnum Hunter includes
producing fields located in the states of Oklahoma and Texas. Total net
production of this acquisition, as earlier reported, is approximately 16.2
million cubic feet equivalent per day.
The Preferred Stock transaction is contingent upon the execution of
definitive agreements between ONEOK and Magnum Hunter, a consent from a majority
of Magnum Hunter's existing 10% Senior Note holders and compliance under the
Hart-Scott-Rodino Act. It is anticipated that a Closing will occur on or before
January 29, 1999.
David Kyle, President and Chief Operating Officer of ONEOK, said, "This
alliance will give ONEOK another platform to grow our resource base along with
our strategy of growing all our natural gas business segments including
gathering, processing, transporting and marketing. Magnum Hunter shares our
production strategy and has an enviable track record of success that compliments
our efforts to maximize the value of our natural gas assets."
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Mr. Gary C. Evans, President and CEO of Magnum Hunter, stated, "We are very
excited about the opportunity to partner up with the management team at ONEOK.
Over the past twelve months we have determined that we have similar philosophies
with respect to the acquisition of natural gas reserves and related assets. By
forming this strategic alliance between our companies, we believe our
opportunities for success will be significantly enhanced. ONEOK will be making a
substantial investment in our company that will represent our single largest
equity holder. They have recognized not only the value of Magnum Hunter's
existing proved reserve base which is predominantly natural gas, but more
importantly, the many opportunities that will naturally become available to our
respective companies in 1999 and beyond because of the alliance that we have now
formed."
ONEOK, Inc. is engaged in natural gas intrastate distribution and
transmission, gas processing, gas marketing and gas production. ONEOK has
approximately 31.6 million shares of common stock outstanding.
Magnum Hunter Resources, Inc. is one of the nation's fastest growing
independent exploration and development companies engaged in three principal
activities: the acquisition, production and sale of crude oil, condensate and
natural gas; the gathering, transmission and marketing of natural gas; and the
managing and operating of producing oil and natural gas properties for interest
owners.
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.
FOR FURTHER INFORMATION CONTACT: MICHAEL P. MCINERNEY,
INVESTOR RELATIONS (972) 401-0752
