SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
MAGNUM HUNTER RESOURCES, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee is required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11.
(Set forth the amount of which the filing fee is calculated and
state how it was determined)
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid: ____________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:_______________________________________
2) Form, Schedule or Registration Statement No.:_________________
3) Filing Party:_________________________________________________
4) Date Filed:___________________________________________________
<PAGE>
Magnum Hunter Resources, Inc.
600 East Las Colinas Boulevard
Suite 1100
Irving, Texas 75039
Notice of Annual Meeting of Stockholders
on June 29, 2000
Dear Stockholder:
The Annual Meeting of Stockholders (the "Meeting") of Magnum Hunter
Resources, Inc. will be held at the Omni Park West Hotel, 1590 LBJ Freeway,
Dallas, Texas 75234, on Thursday, June 29, 2000, at 10:00 A.M., Central Time,
for the following purposes:
(1) To elect three (3) Directors for a term of three (3) years or
until their respective successors are duly qualified and elected;
(2) To ratify the appointment of Deloitte & Touche LLP as the
Company's independent auditors to examine the accounts of the
Company for the fiscal year ending December 31, 2000; and
(3) Transacting such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The Board of Directors has fixed May 26, 2000, as the record date (the
"Record Date") for the determination of stockholders entitled to notice of, and
to vote at, the Meeting and any adjournment or postponement thereof. Only
holders of record of Magnum Hunter Resources, Inc. (the "Company") Common Stock,
par value $.002 per share, and holders of record of the Company's (i) 1996
Series A Convertible Preferred Stock and (ii) 1999 Series A 8% Convertible
Preferred Stock at the close of business on the Record Date are entitled to vote
on all matters coming before the Meeting or any adjournment or postponement
thereof. A complete list of stockholders entitled to vote at the Meeting will be
maintained in the Company's offices at 600 East Las Colinas Boulevard, Suite
1100, Irving, Texas, for ten days prior to the Meeting.
Your vote is important. The voting stock of the Company should be
represented as fully as possible at the Meeting. The enclosed proxy is solicited
by the Board of Directors of the Company. Whether or not you plan to attend the
meeting in person, please mark, execute, date and return the enclosed proxy in
the envelope provided, which requires no postage if mailed within the United
States. The return of the enclosed proxy will not affect your right to vote in
person if you do attend the meeting.
By Order of the Board of Directors
/s/Gary C. Evans
Irving, Texas Gary C. Evans
May 31, 2000 President and Chief Executive Officer
WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING, YOU ARE URGED TO
SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD PROMPTLY. IF YOU ATTEND THE MEETING,
YOU CAN VOTE EITHER IN PERSON OR BY YOUR PROXY.
<PAGE>
Magnum Hunter Resources, Inc.
600 East Las Colinas Boulevard, Suite 1100
Irving, Texas 75039
PROXY STATEMENT
The proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the Company's Annual
Meeting of Stockholders which will be held on Thursday, June 29, 2000, at 10:00
A.M., Central Time at the Omni Park West Hotel, 1590 LBJ Freeway, Dallas, Texas
75234. This proxy statement, the foregoing notice and the enclosed proxy are
being sent to stockholders on or about May 31, 2000.
The Board of Directors does not intend to bring any matter before the
meeting except as specifically indicated in the notice and does not know of
anyone else who intends to do so. If any other matters properly come before the
meeting, however, the persons named in the enclosed proxy, or their duly
constituted substitutes acting at the meeting, will be authorized to vote or
otherwise act thereon in accordance with their judgment in such matters. If the
enclosed proxy is properly executed and returned prior to voting at the meeting,
the shares represented thereby will be voted in accordance with the instructions
marked thereon. In the absence of instructions, the shares will be voted "FOR"
the nominees of the Board of Directors in the election of three directors and
"FOR" the remaining proposal(s).
Any proxy may be revoked at any time prior to its exercise by notifying the
Secretary of the Company in writing, by delivering a duly executed proxy bearing
a later date or by attending the meeting and voting in person.
VOTING SECURITIES AND SECURITY OWNERSHIP
Voting Securities
At the close of business on May 26, 2000, the record date fixed for the
determination of stockholders entitled to notice of and to vote at the meeting,
there were outstanding 20,243,601 shares of the Company's Common Stock, $.002
par value (the "Common Stock"). At the close of business on the record date,
holders of the Company's Common Stock will be entitled to one vote per share on
all proper business brought before the Meeting. In addition, the holders of the
Company's 1996 Series A Convertible Preferred Stock are entitled, on all matters
submitted for a vote of the holders of shares of Common Stock, to a number of
votes per share equal to the number of shares of Common Stock issuable upon
conversion of one share of the 1996 Series A Convertible Preferred Stock on the
date of such vote. As of May 26, 2000, there are currently 1,000,000 shares of
1996 Series A Convertible Preferred Stock issued and outstanding which is
convertible into 1,904,762 shares of Common Stock. In addition, the holders of
the Company's 1999 Series A 8% Convertible Preferred Stock are entitled, on all
matters submitted for a vote of the holders of shares of Common Stock, to a
number of votes per share equal to the number of shares of Common Stock issuable
upon conversion of one share of the 1999 Series A 8% Convertible Preferred Stock
on the date of such vote. As of May 26, 2000, there are currently 50,000 shares
of 1999 Series A 8% Convertible Preferred Stock issued and outstanding which is
convertible into 9,523,809 shares of Common Stock. The presence at the Meeting,
in person or by proxy, of the holders of a majority of such outstanding shares
will constitute a quorum. All matters brought before the Meeting will be decided
by a majority of the shares represented in person or by proxy. Stockholders do
not have cumulative voting rights in the election of directors. Abstentions will
have the effect of a vote against a proposal. Non-votes will have no effect on
the voting of any of the proposals.
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of March 15, 2000,
regarding the share ownership of the Company by (i) each person known to the
Company to be the beneficial owner of more than 5% of the outstanding shares of
Common Stock of the Company, (ii) each director, (iii) the Company's Chief
Executive Officer and the four other most highly compensated executive officers
of the Company, and (iv) all directors and executive officers of the Company, as
a group. None of the directors or executive officers named below, as of March
15, 2000, owned any shares of the Company's 1996 Series A Convertible Preferred
Stock or its 1999 Series A 8% Convertible Preferred Stock. The business address
of each officer and director listed below is: c/o Magnum Hunter Resources, Inc.,
600 East Las Colinas Blvd., Suite 1100, Irving, Texas 75039.
<TABLE>
<CAPTION>
<S> <C> <C>
Common Stock
Beneficially Owned
Number of Percent
Name Shares of Class (q)
Directors and Executive Officers
Gary C. Evans ............................................ 2,262,952 (a) 10.8%
Matthew C. Lutz........................................... 703,588 (b) 3.4%
Richard R. Frazier........................................ 288,115 (c) 1.4%
Chris Tong................................................ 129,951 (d) *
R. Douglas Cronk ......................................... 99,768 (e) *
Gerald W. Bolfing......................................... 368,460 (f) 1.8%
Jerry Box................................................. 12,000 (g) *
Oscar C. Lindemann........................................ 39,526 (h) *
John H. Trescot, Jr....................................... 102,056 (i) *
James E. Upfield......................................... 93,544 (j) *
David L. Kyle ............................................ 19,342 (k) *
Larry M. Brummett ........................................ 10,342 (l) *
All directors and executive officers as a group
(12 persons).............................................. 4,129,644 18.8%
Beneficial owners of 5 percent or more
(excluding persons named above)
ONEOK Resources Company
100 W. Fifth Street
Tulsa, OK 74103-4298 ..................................... 9,523,809 (m) 32.0%
TCW Group, Inc.
865 South Figueroa Street
Los Angeles, CA 90017.................................... 1,904,762 (n) 8.6%
Janus Capital Corporation
100 Fillmore St., Suite 300
Denver, CO. 80206........................................ 1,653,075 (o) 8.2%
Dimensional Fund Advisors Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401.................................... 1,173,100 (p) 5.8%
</TABLE>
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* Less than one percent.
2
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(a) Includes 700,000 shares of common stock issuable upon the exercise of
certain currently exercisable options. Also includes 17,024 shares held in the
name of Jacquelyn Evelyn Enterprises, Inc., a corporation whose sole shareholder
is Mr. Evans' wife. Mr. Evans disclaims any ownership in such securities other
than those in which he has an economic interest.
(b) Includes 505,000 shares of common stock issuable upon the exercise of
certain currently exercisable options.
(c) Includes 225,000 shares of common stock issuable upon the exercise of
certain currently exercisable options.
(d) Includes 121,000 shares of common stock issuable upon the exercise of
certain currently exercisable options.
(e) Includes 96,000 shares of common stock issuable upon the exercise of
certain currently exercisable options.
(f) Includes 12,000 shares of common stock issuable upon the exercise of
certain currently exercisable options.
(g) Includes 2,000 shares of common stock issuable upon the exercise of
certain currently exercisable options.
(h) Includes 12,000 shares of common stock issuable upon the exercise of
certain currently exercisable options.
(i) Includes 37,000 shares of common stock issuable upon the exercise of
certain currently exercisable options.
(j) Includes 12,000 shares of common stock issuable upon the exercise of
certain currently exercisable options.
(k) Includes 2,000 shares of common stock issuable upon the exercise of
certain currently exercisable options.
(l) Includes 2,000 shares of common stock issuable upon the exercise of
certain currently exercisable options.
(m) Consists of shares attributable to shares of Common Stock issuable upon
conversion of 50,000 shares of the Company's 1999 Series A 8% Convertible
Preferred Stock.
(n) Consists of shares attributable to shares of Common Stock issuable upon
conversion of 1,000,000 shares of the Company's 1996 Series A Convertible
Preferred Stock.
(o) Based on Schedule 13G filed by Janus Capital Corporation on February
14, 2000.
(p) Based on Schedule 13G filed by Dimensional Fund Advisors Inc. on
February 4, 2000.
(q) Percentage is calculated on the number of shares outstanding plus those
shares deemed outstanding under Rule 13d- 3(d)(1) under the Exchange Act.
PROPOSAL I.
ELECTION OF DIRECTORS
The Bylaws of the Company divide the Board of Directors into three (3)
classes of Directors serving staggered three-year terms, with one class to be
elected at each Annual Meeting. At this year's meeting, three (3) Directors are
to be elected for a term of three (3) years, each to hold office until the
expiration of his term in 2003 or until a successor shall have been qualified
and elected. The terms of the remaining Directors will continue as indicated
below.
The shares represented by proxies returned duly executed will be voted,
unless otherwise specified, in favor of the three (3) nominees for the Board of
Directors named below. Each of the nominees is now serving as a Director.
3
<PAGE>
Information Regarding Nominees for Election of Directors
Positions
Name Age Term Served With Company
------ --- ------------ ------------
Gerald W. Bolfing.................... 71 Dec. 1995 Director
Larry W. Brummett.................... 49 Feb. 1999 Director
Oscar C. Lindemann................... 77 Dec. 1995 Director
Gerald W. Bolfing has been a director of the Company since December 1995.
Mr. Bolfing was appointed a director of Hunter in August 1993. He is an investor
in the oil and gas business and a past officer of one of Hunter's former
subsidiaries. From 1962 to 1980, Mr. Bolfing was a partner in Bolfing Food
Stores in Waco, Texas. During this time, he also joined American Service Company
in Atlanta, Georgia from 1964 to 1965, and was active with Cable Advertising
Systems, Inc. of Kerrville, Texas from 1978 to 1981. He joined a Hunter
subsidiary in the well servicing business in 1981 where he remained active until
its divestiture in 1992. Mr. Bolfing is on the board of directors of Capital
Marketing Corporation of Hurst, Texas.
Larry W. Brummett has served as a director of the Company since February
1999. Mr. Brummett has been employed by ONEOK Inc. for more than 23 years. He
was employed by ONEOK's Oklahoma Natural Gas Company division as an engineer
trainee in June 1974 and, after receiving a number of promotions within the
division, was elected Vice President of Tulsa District in September 1, 1986, and
Executive Vice President in May 1990. He was elected Executive Vice President of
ONEOK Inc. in January 1993. He was elected President and Chief Executive Officer
in February 1994, and was elected to the additional position of Chairman of the
Board effective June 1994. Mr. Brummett is a director of American Gas
Association; Southern Gas Association; Oklahoma State Chamber of Commerce;
Metropolitan Chamber of Commerce, Tulsa; and the Oklahoma City Branch of the
Federal Reserve Bank. He is also an officer or director of numerous civic and
business organizations and not_for_profit associations. He attended the
University of Oklahoma, earning B.S. and M.S. degrees in civil engineering, and
is also a graduate of the Advanced Management Program at Harvard Business
School.
Oscar C. Lindemann has served as a director of the Company since December
1995. Mr. Lindemann was previously a director of Hunter, having been appointed
in November 1995. Mr. Lindemann has over 40 years experience in the financial
industry. Mr. Lindemann began his banking career with the Texas Bank and Trust
in Dallas, Texas in 1951. He served the bank until 1977 in many capacities,
including Chief Executive Officer and Chairman of the Board. Since leaving Texas
Bank and Trust, he has served as Vice Chairman of both the United National Bank
and the National Bank of Commerce, also in Dallas. Mr. Lindemann has also served
as a consultant to the banking industry. He retired from commercial banking in
1987. Mr. Lindemann is a former President of the Texas Bankers Association, and
a former state representative to the American Bankers Association. He was a
Founding Director and Board Member of VISA, and a member of the Reserve City
Bankers Association. He has served as an instructor at both the Southwestern
Graduate School of Banking at Southern Methodist University and the School of
Banking of the South at Louisiana State University.
Terms Expiring in 2001
Positions
Name Age Term Served With Company
----- --- ----------- --------------
Matthew C. Lutz.................. 65 Dec. 1995 Chairman and Executive
Vice President of
Exploration and Business
Development
John H. Trescot, Jr. . . . . . 74 June 1997 Director
James E. Upfield................. 79 Dec. 1995 Director
4
<PAGE>
Matthew C. Lutz has served as Chairman since March 1997 after having served
as Vice Chairman of the Company since December 1995. Mr. Lutz has also served as
Executive Vice President of Exploration and Business Development since December
1995. Mr. Lutz held similar positions with Hunter from September 1993 until
October 1996. From 1984 through 1992, Mr. Lutz was Senior Vice President of
Exploration and on the Board of Directors of Enserch Exploration, Inc. with
responsibility for such company's worldwide oil and gas exploration and
development program. Prior to joining Enserch, Mr. Lutz spent 28 years with
Getty Oil Company. He advanced through several technical, supervisory and
managerial positions which gave him various responsibilities including
exploration, production, lease acquisition, administration and financial
planning.
John H. Trescot, Jr. has served as a director of the Company since June
1997. For the past five years, Mr. Trescot has been the principal of AWA
Management Corporation, a consulting firm specializing in financial evaluations.
Mr. Trescot began his professional career as an engineer with Shell Oil Company.
Later, Mr. Trescot joined Hudson Pulp & Paper Corp. (now a part of
Georgia-Pacific Corp.) where he served 19 years in various positions in
woodlands and pulp and paper, advancing to the position of Senior Vice
President, Southern Operations. Mr. Trescot then became Vice President of The
Charter Company, a multi-billion dollar corporation with operations in oil,
communications and insurance. In 1979, Mr. Trescot became the Chief Executive
Officer of Florestal e Agropecuaria, Ltda (JARI), a timber, pulp and mining
operation in the Amazon Basin of Brazil owned by billionaire D.K. Ludwig. During
1982-89, while he was the Chief Executive Officer of TOT Drilling Corp., TOT
drilled many deep wells in west Texas and New Mexico for major and independent
oil companies. Mr. Trescot received his BME degree from Clemson University and
his MBA from the Harvard Business School.
James E. Upfield has served as a director of the Company since December
1995. Mr. Upfield was appointed a director of Hunter in August 1992. Mr. Upfield
is Chairman of Temtex Industries, Inc. based in Dallas, Texas, a public company
that produces consumer hard goods and building materials. In 1969, Mr. Upfield
served on a select Presidential Committee serving postal operations of the
United States of America. He later accepted the responsibility for the Dallas
region, which encompassed Texas and Louisiana. From 1959 to 1967, Mr. Upfield
was President of Baifield Industries, Inc. ("Baifield") and its predecessor, a
company he founded in 1949 which merged with Baifield in 1963. Baifield was
engaged in prime government contracts for military systems and sub_systems in
the production of high_strength, light_weight metal products.
Terms Expiring in 2002
Positions
Name Age Term Served With Company
------ --- ----------- -------------
Gary C. Evans................. 43 Dec. 1995 Director, President
and Chief Executive Officer
Jerry Box .................... 61 Mar. 1999 Director
David L. Kyle................. 47 Feb. 1999 Director
Gary C. Evans has served as President, Chief Executive Officer and a
director of Magnum Hunter Resources, Inc. since December 1995 and Chairman and
Chief Executive Officer of all of the Magnum Hunter subsidiaries since their
formation or acquisition. In 1985, Mr. Evans formed the predecessor company,
Hunter Resources, Inc., that was merged into and formed Magnum Hunter ten years
later. From 1981 to 1985, Mr. Evans was associated with the Mercantile Bank of
Canada where he held various positions including Vice President and Manager of
the Energy Division of the Southwestern United States. From 1978 to 1981, he
served in various capacities with National Bank of Commerce (now BancTexas,
N.A.) including Credit Manager and Credit Officer. Mr. Evans serves on the Board
of Directors of Swanson Consulting Services, Inc., a private Houston based
geological firm, Novavax, Inc., an American Stock Exchange listed pharmaceutical
company, and Karts International Incorporated, an OTC listed manufacturing
company. He also serves as a Trustee of TEL Offshore Trust, an OTC listed oil
and gas trust of which Magnum Hunter owns an approximate 40% interest.
5
<PAGE>
Jerry Box has served as a director of the Company since March 1999. From
February 1998 to March 1999 he served in the position of President, Chief
Operating Officer and Director of Oryx Energy Company ("Oryx"). From December
1995 to February 1998 he was Executive Vice President and Chief Operating
Officer of Oryx. From December 1994 through November 1995 he served as Executive
Vice President, Exploration and Production of Oryx. Previously, he served as
Senior Vice President, Exploration and Production of Oryx. Mr. Box attended
Louisiana Tech University, where he received B.S. and M.S. degrees in geology,
and is also a graduate of the Program for Management Development at the Harvard
University Graduate School of Business Administration. Mr. Box served as an
officer in the U. S. Air Force from 1961 to 1966. Mr. Box is a former member of
the Policy Committee of the U. S. Department of the Interior's Outer Continental
Shelf Advisory Board, past Chairman and Vice-Chairman of the American Petroleum
Institute's Exploration Affairs subcommittee, a former President of the Dallas
Petroleum Club and a member of the Independent Petroleum Association of America.
David L. Kyle has served as a director of the Company since February 1999.
Mr. Kyle is currently employed by ONEOK Inc., as its President and Chief
Operating Officer. Mr. Kyle was employed by Oklahoma Natural Gas Company, a
division of ONEOK Inc., in 1974 as an engineer trainee. He served in a number of
positions prior to being elected Vice President of Gas Supply in September 1986,
and Executive Vice President in May 1990. He was elected President in September
1994. He was elected President of ONEOK Inc. effective September 1997. He has
the management responsibility for all of the unregulated companies of ONEOK,
Inc. He received a B.S. degree in industrial engineering and management from
Oklahoma State University in 1974. He received an MBA degree in 1987 from The
University of Tulsa, and is a graduate of the Advanced Management Program at
Harvard Business School.
Meetings of the Board of Directors
The full Board of Directors met or unanimously voted on resolutions eight
times during fiscal year 1999. Each of the directors attended or acted upon at
least seventy-five percent of the aggregate number of Board of Director
meetings, consents, and Board of Director Committee meetings or consents held or
acted upon during fiscal year 1999.
Committees of the Board of Directors
The Board of Directors has two committees, an Audit Committee and a
Compensation Committee, composed of three (3) and four (4) independent
directors, respectively.
The Audit Committee is composed of Gerald W. Bolfing, Larry W. Brummett and
Oscar C. Lindemann. The Audit Committee met once in 1999.
The Audit Committee met in March 2000 regarding the adoption of a charter
governing the committee's responsibilities and activities. The primary purpose
of the Audit Committee is to assist the Board of Directors in fulfilling its
responsibility to oversee management's conduct of the Company's financial
reporting process, including by overseeing the financial reports and other
financial information provided by the Company to any governmental or regulatory
body, the public or other users thereof, the Company's systems of internal
accounting and financial controls, the annual independent audit of the Company's
financial statements and the Company's legal compliance and ethics programs as
established by management and the Board. In discharging its oversight role, the
Audit Committee is empowered to investigate any matter brought to its attention
with full access to all books, records, facilities and personnel of the Company
and the power to retain outside counsel, auditors or other experts for this
purpose. A copy of the Audit Committee charter is attached hereto as Exhibit
"A".
6
<PAGE>
Beginning at fiscal year-end 2000, the Audit Committee shall:
(1) Review and discuss with the Company's management the Company's 2000
audited financial statements;
(2) Discuss with the independent auditors the matters required to be
discussed by SAS 61 which includes, among other items, matters related to the
conduct of the audit of the Company's financial statements;
(3) Receive written disclosures and a letter from the independent auditors
required by ISB Standard No. 1 (which relates to the auditors independence from
the Company and its affiliates) and will discuss with the auditors the auditor's
independence from the Company; and
(4) Make a recommendation to the Board of Directors that the Company's 2000
audited financial statements be included in the Company's annual report on Form
10-K, based on discussions with management and the independent auditors.
The Compensation Committee, composed of James E. Upfield, John H. Trescot,
Jr., David L. Kyle and Jerry Box, will administer the Company's Stock Option
Plan and make recommendations to the Board of Directors regarding compensation
for the Company's executive officers. The Compensation Committee met twice in
1999.
Compensation of Directors
The Company has nine individuals who serve as directors, seven of which are
independent. Two of these directors receive compensation with respect to their
services and in their capacities as executive officers of the Company and no
additional compensation has historically been paid for their services to the
Company as directors. The other seven directors of the Company are not employees
of the Company and receive no compensation for their services as directors other
than as stated below. For fiscal year 1999, independent directors received a
$10,000 retainer for being a board member and in addition received $1,000 per
meeting attended as compensation for their services. Compensation will be the
same for fiscal year 2000. Each new independent director added to the board in
fiscal year 2000 will be granted an option to acquire 25,000 shares of the
Company's common stock at an exercise price not less than the market price of
the common stock on the date of grant. Other than the compensation stated
herein, the Company has not entered into any arrangement, including consulting
contracts, in consideration of the director's service on the board.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE THREE (3) NOMINEES AS
CLASS I DIRECTORS OF THE COMPANY.
Principal Occupations of Other Officers of the Company and its Subsidiaries
Richard R. Frazier has served as President and Chief Operating Officer of
Magnum Hunter Production, Inc. and Gruy Petroleum Management Co. since January
1994. From 1977 to 1993, Mr. Frazier was employed by Edisto Resources
Corporation in Dallas, serving as Executive Vice President Exploration and
Production from 1983 to 1993, where he had overall responsibility for its
property acquisition, exploration, drilling, production, gas marketing and
engineering functions. From 1972 to 1976, Mr. Frazier served as District
Production Superintendent and Petroleum Engineer with HNG Oil Company (now Enron
Oil & Gas Company) in Midland, Texas. Mr. Frazier's initial employment, from
1968 to 1971, was with Amerada Hess Corporation as a petroleum engineer involved
in numerous projects in Oklahoma and Texas. Mr. Frazier graduated in 1970 from
the University of Tulsa with a Bachelor of Science Degree in Petroleum
Engineering. He is a registered Professional Engineer in Texas and a member of
the Society of Petroleum Engineers and many other professional organizations.
7
<PAGE>
Chris Tong has served as Senior Vice President and Chief Financial Officer
since August 1997. Previously, Mr. Tong was Senior Vice President of Finance of
Tejas Acadian Holding Company and its subsidiaries including Tejas Gas Corp.,
Acadian Gas Corporation and Transok, Inc., all of which are wholly_owned
subsidiaries of Tejas Gas Corporation. In January 1998, Tejas Gas Corporation
was acquired by Shell Oil. Mr. Tong held these positions since August 1996, and
served in other treasury positions with Tejas beginning August 1989. He was also
responsible for managing Tejas' property and liability insurance. From 1980 to
1989, Mr. Tong served in various energy lending capacities with Canadian
Imperial Bank of Commerce, Post Oak Bank, and Bankers Trust Company in Houston,
Texas. Prior to his banking career, Mr. Tong also served over a year with
Superior Oil Company as a Reservoir Engineering Assistant. Mr. Tong is a summa
cum laude graduate of the University of Southwestern Louisiana with a Bachelor
of Arts degree in Economics and a minor in Mathematics.
R. Douglas Cronk has served as Senior Vice President of Operations for
Magnum Hunter Production, Inc. and Gruy Petroleum Management Co. since December
1998. He served as Vice President of Operations for the two companies since May
1996 at which time the Company acquired from Mr. Cronk Rampart Petroleum, Inc.,
based in Abilene, Texas. Rampart had been an active operating and exploration
company in the north central and west Texas region since 1983. Prior to the
formation of Rampart, Mr. Cronk was an independent oil and gas consultant in
Houston, Texas for approximately two years. From 1974 to 1981, Mr. Cronk held
various positions with subsidiaries of Deutsch Corporation of Tulsa, Oklahoma,
including Southland Drilling and Production where he became Vice President of
Drilling and Production. Mr. Cronk graduated in 1970 from the University of
Tulsa as a Chemical Engineer.
David S. Krueger has served as Vice President and Chief Accounting Officer
of the Company since January 1997. Mr. Krueger acted as Vice President_Finance
of Cimarron Gas Holding Co., a gas processing and natural gas liquids marketing
company in Tulsa, Oklahoma, from April 1992 until January 1997. He served as
Vice President/ Controller of American Central Gas Companies, Inc., a gas
gathering, processing and marketing company from May 1988 until April 1992. From
1974 to 1986, Mr. Krueger served in various managerial capacities for Southland
Energy Corporation. From 1971 to 1973, Mr. Krueger was a staff accountant with
Arthur Andersen LLP. Mr. Krueger, a certified public accountant, graduated from
the University of Arkansas with a B.S./B.A. degree in Business Administration
and earned his M.B.A. from the University of Tulsa.
Morgan F. Johnston has served as Vice President and General Counsel of the
Company since April 1997 and has served as the Company's Secretary since May 1,
1996. Mr. Johnston was in private practice as a sole practitioner from May 1,
1996 to April 1, 1997, specializing in corporate and securities law. From
February 1994 to May 1996, Mr. Johnston served as general counsel for Millennia,
Inc. (formerly known as SOI Industries, Inc.) and Digital Communications
Technology Corporation, two American Stock Exchange listed companies. He also
served as general counsel to Halter Capital Corporation, a private consulting
firm from August 1991 to May 1996. For the two years prior to August 1991 he was
securities counsel for Motel 6 L.P., a New York Stock Exchange listed company.
Mr. Johnston graduated cum laude from Texas Tech Law School in May 1986 and was
also a member of the Texas Tech Law Review. He is licensed to practice law in
the State of Texas.
Michael P. McInerney has served as Vice President, Corporate Development &
Investor Relations of the Company since October 1997. Prior to joining the
Company, Mr. McInerney owned Energy Advisors, Inc., an energy consulting firm,
from June 1993 until October 1997. Mr. McInerney was employed from 1981 until
June 1993 by Triton Energy Corporation, an independent energy company, where his
responsibilities included investor relations, acquisitions and corporate
planning. Before joining Triton Energy Corporation, Mr. McInerney served nine
years in various financial management positions with American Natural Resources
Company, a gas transmission and distribution corporation. Mr. McInerney
graduated from the University of Michigan with a B.B.A.
8
<PAGE>
Charles R. Erwin has served as Manager of Exploration for Gruy Petroleum
Management Co. since May of 1999. Mr. Erwin became Vice President of Exploration
for Magnum Hunter Production, Inc. and Gruy in January 2000. Mr. Erwin received
a Masters in Geology from the University of Wisconsin - Milwaukee. He has 27
years experience in the oil and gas industry. Prior to joining the Company, Mr.
Erwin was employed at Enserch Exploration for 22 years holding various positions
including Exploration Manager - East Texas, Exploration Manager - Texas and
Louisiana Gulf Coast and Director Exploration Offshore and International.
Gregory L. Jessup has been Vice President of Land for Magnum Hunter
Production, Inc. and Gruy Petroleum Management Co. since April 1998. Mr. Jessup
joined the Company as Land Manager in May 1997. From 1982 until joining the
Company, Mr. Jessup served as Land Manager of Ken Petroleum Corporation of
Dallas managing its Land and Regulatory Department as well as managing its crude
oil marketing business. During his tenure as Land Manager, Mr. Jessup has been
actively involved in all phases of land operations, including negotiations,
acquisitions, and administration. Mr. Jessup holds a Bachelor of Business
Administration degree in Management from Texas Tech University and is a
Certified Professional Landman.
David M. Keglovits has served as Vice President and Controller of Gruy
Petroleum Management Co. since March 1977. Mr. Keglovits joined Gruy as an
accountant before holding the positions of Assistant Controller and Controller.
From December 1974 to December 1976, Mr. Keglovits was employed by Bell
Helicopter International in its financial management office in Tehran, Iran. Mr.
Keglovits was graduated with honors from the University of Texas at Austin with
a B.B.A. in Accounting.
Craig Knight has served as Vice President of Operations for Hunter Gas
Gathering, Inc. since March 1998. Prior to joining the Company Mr. Knight was
employed by MidCon Corp. and its affiliates since 1979 in various capacities.
From 1995 to his departure from MidCon he served as the Sr. Business Manager,
Gathering and Processing for MidCon Gas Products Corp. where he managed MidCon's
gathering and processing activities in the Panhandle and Permian Basin regions
of Texas. From 1992 -1994, he served as an account manager of the Electric Power
Sector Start-up Group for MidCon Gas Services Corp and as Manager - West Region
for MidCon Marketing Corp. Mr. Knight graduated from Texas Tech University with
a B.S. in Engineering Technology with Construction Specialty. He also received
his M.B.A. in Executive Programs from University of Houston in 1989.
Earl Krieg has served as Manager of Engineering for Gruy Petroleum
Management Co. since May of 1999. Mr. Krieg became Vice President of Engineering
for Magnum Hunter Production, Inc. and Gruy in January 2000. Mr. Krieg was
employed by The Wiser Oil Company for the five years prior to joining the
Company in various capacities including Manager of Operations and Manager of
Secondary Recovery. Mr. Krieg has 24 years in various reservoir engineering,
operations, acquisitions and management roles with Chevron, General Crude,
Edisto and most recently The Wiser Oil Company. Mr. Krieg is a Registered
Professional Engineer in Texas and was an officer in the Society of Petroleum
Evaluation Engineers in 1989. Mr. Krieg graduated from Texas A&M University in
1975 with a B.S. degree in petroleum engineering.
Board Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for recommending the types and levels of compensation for executive
officers of the Company. The Committee is comprised of four (4) independent,
non-employee Directors. Following thorough review and approval by the Committee,
decisions relating to executive compensation are reported to and approved by the
full Board of Directors. The Committee has directed the preparation of this
report and has approved its contents and its submission to the stockholders. As
provided by the rules of the SEC, this report is not deemed to be filed with the
SEC, nor incorporated by reference into any prior or future fillings under the
Securities Act of 1933, as amended, or the Exchange Act.
In the Committee's opinion, levels of executive compensation should
generally be based upon the performance of the Company, the contributions of
individual officers to such performance and the comparability to persons with
similar responsibilities in business enterprises similar in size or nature to
the Company. The Committee believes that compensation plans should align
executive compensation with returns to stockholders, giving due consideration to
the achievement of both long-term and short-term objectives. The Committee
believes that such compensation policies and practices have allowed the Company
to attract, retain and motivate its key executives.
9
<PAGE>
The compensation of the Company's executive officers consists primarily of
base salaries, discretionary bonuses and the opportunity to participate in
certain incentive arrangements, including, among other programs, the granting of
contractual non-qualified stock options. Certain executive officers have also
previously participated in the Company's 1996 Incentive Stock Option Plan. The
value of these plan benefits directly relates to the future performance of the
Company's Common Stock. The Committee continues to believe that the utilization
of incentive programs that are linked to the performance of the Company's Common
Stock closely aligns the interests of the executive with those of the Company's
stockholders. Consistent with all other full-time Company employees, the Named
Executive Officers (as defined in "Executive Compensation" below) are also
eligible to participate in the Company's 401(k) Plan and ESOP Plan. The
Committee believes that these plans encourages longer-term employment through
gradual service-based vesting of Company contributions.
The base salaries of the Company's executive officers are based upon a
subjective assessment of each individual's performance, experience and other
factors which are believed to be relevant in comparison with compensation data
contained in published and recognized surveys. The Committee believes that
current executive officer salaries are appropriate to ensure that the Company's
executive officers compensation remains close to the median level of most of the
comparative compensation data. All of the officers of the Company are eligible
to receive discretionary incentive bonuses, based upon the Company's overall
financial achievement and a subjective review of the respective contributions to
such achievement. These incentive arrangements have been extended to such
executive officers for 2000. The Committee believes that an improvement in
various financial measures such as EBITDA, cash flow and earnings from the prior
year and a comparison of actual performance versus budget are appropriate
standards for measuring performance and directly link the individual
participant's total potential remuneration with the accomplishment of
established growth targets.
Eligibility for participation in the various Company plans were determined
after the Committee had thoroughly reviewed and taken into consideration the
respective relative accountability, anticipated performance requirements and
contributions to the Company by the prospective participants, including the
Named Executive Officers. All outstanding stock options that have been granted
pursuant to these plans and programs were granted at prices not less than 100%
of the fair market value of the Company's Common Stock on the dates such options
were granted. The Committee believes that stock options are a desirable form of
long-term compensation that allow the Company to recruit and retain senior
executive talent and closely connect the interests of management with
stockholder value.
Tax Deduction Limitation for Executive Compensation
Section 162(m) of the Internal Revenue Code generally limits the corporate
tax deduction for compensation paid to executives officers named in the
Executive Compensation Table to $1 million, unless certain requirements are met.
The Committee intends to monitor compensation paid to the Company's executive
officers so that the corporate tax deduction is maximized, while maintaining the
flexibility to attract and retain qualified executives.
Compensation of the CEO
The Committee sets the cash compensation for Mr. Evans. The Committee
believes that there is necessarily some subjectivity in setting cash
compensation of the Company's executive officers and does not use predetermined
performance criteria when setting such cash compensation. In determining
appropriate cash compensation levels, the Committee subjectively and
quantitatively analyzes the individual's performance, the performance of the
Company and the individual's contribution to that performance. Specific factors
considered in setting bonus levels include the Company's operational and
financial results, success of the Company's acquisition, exploration and
development programs, including significant proved reserve increases and prudent
management of the Company's capital structure. The Committee also considers the
executive's level and scope of responsibility, experience and the compensation
practices of competitors for executives of similar responsibility. The Committee
does not establish predetermined maximum bonuses.
10
<PAGE>
The minimum salary of Mr. Evans is set by an employment contract as
described under "Employment Contracts and Termination of Employment and
Change-in-Control Arrangements". In setting the 1999 bonus for Mr. Evans, the
Committee took into consideration his role in formulating goals and implementing
the strategy of (i) completed issuance of $50 million of preferred stock to
ONEOK, Inc., (ii) successfully entered into a new geographic region in the
shallow waters of the Gulf of Mexico with four discoveries, (iii) oil and gas
production volumes up 28% to 26.9 Bcfe in 1999 over 21.0 Bcfe in 1998, (iv)
EBITDA up 70% to $37.5 million in 1999 over $22.1 million in 1998 and (v) proved
reserves of 383 billion cubic feet equivalent, an increase of 19% over year-end
1998. These significant achievements increased stockholder value and laid the
foundation for achieving above average production growth rates.
The Committee relies heavily upon stock options to compensate the executive
employees of the Company. The Committee believes that stock-based incentives
encourage and reward effective management that results in long-term corporate
financial success, as measured by stock appreciation. Stock-based incentives
awarded to Mr. Evans and other executive officers are based on the Committee's
subjective evaluation of the employee's ability to influence the Company's
long-term growth and profitability and to reward outstanding individual
performance and contributions to the Company.
Compensation Committee
Jerry Box, Chairman
David L. Kyle
John H. Trescot, Jr.
James E. Upfield
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG MAGNUM HUNTER RESOURCES, INC., THE S & P 500 INDEX,
THE COMPANY'S PEER GROUP AND THE DOW JONES OIL SECONDARY INDEX
Set forth below is a performance graph comparing yearly cumulative total
stockholder return on the Company's Common Stock with (i) the monthly index of
stocks included in the Standard and Poor's 500 Index (ii) the Company's Peer
Group and (iii) the Dow Jones Oil-Secondary Index. The companies that comprise
the Company's Peer Group are as follows: Barrett Resources Corporation, Cabot
Oil & Gas Corp., Chesapeake Energy Corp., Cross Timbers Oil Co., Denbury
Resources, Inc., Forest Oil Corporation, HS Resources, Inc., Nuevo Energy
Company, Range Resources Corporation and Vintage Petroleum Inc.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Dow Jones Magnum Hunter
S&P 500 Peer Group Oil Secondary Resources, Inc.
------- ---------- ------------- ---------------
Dec 31, 1994 100 100 100 100
Dec 31, 1995 138 140 116 67
Dec 31, 1996 169 173 143 101
Dec 31, 1997 226 134 152 120
Dec 31, 1998 290 62 111 69
Dec 31, 1999 351 85 125 67
</TABLE>
All of these cumulative total returns are computed assuming the
reinvestment of dividends at the frequency with which dividends were paid during
the applicable years. The years compared are 1994, 1995, 1996, 1997, 1998 and
1999.
11
<PAGE>
Performance Graph
[Graph intentionally omitted]
This performance graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or the Securities Exchange Act of 1934,
except to the extent that the Company specifically incorporates this information
by reference, and shall not otherwise be deemed filed under such Acts.
[Rest of page intentionally left blank]
12
<PAGE>
Executive Compensation.
The following table contains information with respect to all cash
compensation paid or accrued by the Company during the past three fiscal years
to the Company's Chief Executive Officer and each person serving as an executive
officer of the Company on December 31, 1999 (collectively the "Named Executive
Officers").
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long Term Compensation
Annual Awards Payout
Compensation
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name, Other Number
Principal Annual Restricted Options LTP All Other
Position Year Salary Bonus Compensation (b) Stock SARs Payouts Compensation
-------- ---- ------ ----- ------------- ----- ---- ------- ------------
Gary C. Evans 1999 $250,000 $250,000 $ 7,500 - - - -
President and CEO 1998 $250,000 $300,000 - - - - -
1997 $200,025 $250,000 - - - - -
Matthew C. Lutz 1999 $150,000 $125,000 $ 6,000 - - - -
Executive V.P. and 1998 $156,000 $100,000 - - - - -
Chairman 1997 $106,000 $100,000 - - - - -
Richard R. Frazier 1999 $150,000 $ 75,000 $ 4,200 - - - -
President of 1998 $154,200 $ 50,000 - - - - -
Magnum Hunter 1997 $124,200 $ 50,000 - - - - -
Production, Inc.
Chris Tong (a) 1999 $150,000 $ 35,000 $ 6,000 - - - -
Senior Vice President & 1998 $156,000 $ 30,000 - - - - -
Chief Financial Officer 1997 $ 78,500 $ 25,000 - - - - -
R. Douglas Cronk 1999 $115,000 $ 25,000 $ 4,200 - - - -
Senior V.P. of Magnum 1998 $104,200 $ 20,000 - - - - -
Hunter Production, Inc. 1997 $ 92,033 $ 10,000 - - - - -
</TABLE>
(a) Mr. Tong was hired in August of 1997.
(b) Other compensation consists of a vehicle allowance paid to the employee.
[Rest of page intentionally left blank]
13
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Number of securities Value of unexercised
underlying in-the-money
unexercised options/SARs at fiscal
options/SARs at fiscal year-end ($)
year-end (#)
Shares Acquired Value Exercisable/ Exercisable/
Name On Exercise (#) Realized ($) Unexercisable Unexercisable
(a) (b) (c) (d) (e)
-----------------------------------------------------------------------------------------------------------------------
Gary C. Evans - - 700,000 / 200,000 0 / 0
Matthew C. Lutz 51,073 $150,831 505,000 / 120,000 0 / 0
Richard R. Frazier - - 225,000 / 100,000 0 / 0
R. Douglas Cronk - - 96,000 / 44,000 0 / 0
Chris Tong - - 121,000 / 84,000 0 / 0
</TABLE>
Employment Contracts and Termination of Employment and
Change-in-Control Arrangements
Mr. Gary C. Evans, Mr. Matthew C. Lutz, Mr. Richard R. Frazier, Mr. Chris
Tong and Mr. R. Douglas Cronk each have employment agreements with the Company.
Mr. Evans' agreement terminates January 1, 2005 and continues thereafter on a
year-to-year basis and provides for a base salary of $300,000 per annum. Mr.
Lutz's agreement terminates January 1, 2005 and continues thereafter on a
year-to-year basis and provides for a base salary of $175,000 per annum. Mr.
Frazier's agreement terminates January 1, 2005 and continues thereafter on a
year-to-year basis and provides for a base salary of $175,000 per annum. Mr.
Tong's agreement terminates January 1, 2003 and continues thereafter on a
year-to-year basis and provides for a base salary of $160,000 per annum. Mr.
Cronk's agreement terminates January 1, 2003 and continues thereafter on a
year-to-year basis and provides for a base salary of $122,500 per annum. All of
the agreements provide that the same benefits supplied to other Company
employees shall be available to the employee. The employment agreements also
contain, among other things, covenants by the employee that in the event of
termination, he will not compete with the Company in certain geographical areas
or hire any employees of the Company for a period of two years after cessation
of employment.
In addition, all of the agreements contain a provision that upon a
change-in-control of the Company and the employee's position is terminated or
the employee leaves for "good cause", the employee is entitled to receive,
immediately in one lump sum, certain compensation. In the case of Mr. Evans, Mr.
Lutz and Mr. Frazier, the employee shall receive three times the employee's base
salary, bonus for the last fiscal year and any other compensation received by
him in the last fiscal year. In the case of Mr. Tong and Mr. Cronk, the employee
shall receive the employee's base salary, bonus for the last fiscal year and any
other compensation received by him in the last fiscal year multiplied by two.
Also, any medical, dental and group life insurance covering the employee and his
dependents shall continue until the earlier of (i) 12 months after the
change-in-control or (ii) the date the employee becomes a participant in the
group insurance benefit program of a new employer. The Company also has key man
life insurance on Mr. Evans in the amount of $12,000,000.
14
<PAGE>
PROPOSAL II.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has appointed the firm of Deloitte &
Touche LLP as independent auditors of the Company for its fiscal year-ended
December 31, 2000, and is submitting such selection to the Company's
stockholders for their ratification. The Board recommends that such appointment
be approved by the stockholders. The Company's independent auditors for its
fiscal years ended December 31, 1996, 1997, 1998 and 1999 was Deloitte & Touche
LLP. The affirmative vote of a majority of the shares of common stock present or
represented at the meeting is necessary to ratify the appointment of Deloitte &
Touche LLP. A representative of Deloitte & Touche LLP is not expected to be
present at the meeting. If the foregoing proposal is not approved, or if
Deloitte & Touche LLP declines to act or otherwise becomes incapable of
performing, or if its appointment is otherwise discontinued, the Board of
Directors will appoint other independent accountants whose appointment for any
period subsequent to fiscal year 2000 will be subject to approval by the
stockholders at the 2001 Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
STOCKHOLDERS PROPOSALS AND OTHER MATTERS
The management of Magnum Hunter Resources, Inc. is not aware of any matters
other than those set forth in this Proxy Statement which will be presented for
action at the meeting. If any other matters should properly come before the
meeting, the persons authorized under management's proxies shall vote and act
with respect thereto according to their best judgment.
Proposals of stockholders intended to be presented at the Annual Meeting of
Stockholders in the year 2001 must be received by the Company by January 31,
2001, in order to be considered for inclusion in the Company's proxy statement
and form of proxy relating to that meeting. The Company will bear the cost of
the solicitation of the Board of Directors' proxies for the meeting, including
the cost of preparing, assembling, and mailing proxy materials, the handling and
tabulation of proxies received and charges of brokerage houses and other
institutions, nominees and fiduciaries in forwarding such materials to
beneficial owners. In addition to the mailing of the proxy material, such
solicitation may be made in person or by telephone or telegraph by directors,
officers and regular employees of the Company, and no additional compensation
will be paid to such individuals.
15
<PAGE>
EXHIBIT A
AUDIT COMMITTEE CHARTER
Purpose
The primary purpose of the Audit Committee (the "Committee") is to assist
the Board of Directors (the "Board") in fulfilling its responsibility to oversee
management's conduct of the Company's financial reporting process, including by
overseeing the financial reports and other financial information provided by the
Company to any governmental or regulatory body, the public or other users
thereof, the Company's systems of internal accounting and financial controls,
the annual independent audit of the Company's financial statements and the
Company's legal compliance and ethics programs as established by management and
the Board.
In discharging its oversight role, the Committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities and personnel of the Company and the power to retain outside
counsel, auditors or other experts for this purpose. The Board and the Committee
are in place to represent the Company's shareholders; accordingly, the outside
auditor is ultimately accountable to the Board and the Committee.
The Committee shall review the adequacy of this Charter on an annual basis.
Membership
The Committee shall be comprised of not less than three members of the
Board, and the Committee's composition will meet the requirements of the Audit
Committee Policy of the American Stock Exchange ("AMEX").
Accordingly, all of the members will be directors:
1. Who have no relationship to the Company that may interfere with the
exercise of their independence from management and the Company; and
2. Who are financially literate or who become financially literate within a
reasonable period of time after appointment to the Committee. In addition, at
least one member of the Committee will have accounting or related financial
management expertise.
Key Responsibilities
The Committee's job is one of oversight and it recognizes that the
Company's management is responsible for preparing the Company's financial
statements and that the outside auditors are responsible for auditing those
financial statements. Additionally, the Committee recognizes that financial
management including the internal audit staff, as well as the outside auditors,
have more time, knowledge and more detailed information on the Company than do
Committee members; consequently, in carrying out its oversight responsibilities,
the Committee is not providing any expert or special assurance as to the
Company's financial statements or any professional certification as to the
outside auditor's work.
The following functions shall be the common recurring activities of the
Committee in carrying out its oversight function. These functions are set forth
as a guide with the understanding that the Committee may diverge from this guide
as appropriate given the circumstances.
The Committee shall review with management and the outside auditors the
audited financial statements to be included in the Company's Annual
Report on Form 10-K (or the Annual Report to Shareholders if
distributed prior to the filing of the Form 10-K) and review and
consider with the outside auditors the matters required to be discussed
by Statement of Auditing Standards (`SAS') No. 61.
As a whole, or through the Committee chair, the Committee shall review
with the outside auditors the Company's interim financial results to be
included in the Company's quarterly reports to be filed with Securities
and Exchange Commission and the matters required to be discussed by SAS
No. 61; this review will occur prior to the Company's filing of the
Form 10-Q.
The Committee shall discuss with management and the outside auditors
the quality and adequacy of the Company's internal controls.
The Committee shall:
request from the outside auditors annually, a formal written statement
delineating all relationships between the auditor and the Company
consistent with Independence Standards Board Standard Number 1;
discuss with the outside auditors any such disclosed relationships
and their impact on the outside auditor's independence; and
recommend that the Board take appropriate action in response to the
outside auditor's report to satisfy itself of the auditor's
independence.
The Committee, subject to any action that may be taken by the full
Board, shall have the ultimate authority and responsibility to select
(or nominate for shareholder approval), evaluate and, where
appropriate, replace the outside auditor.
16
<PAGE>
REVOCABLE PROXY
MAGNUM HUNTER RESOURCES, INC.
600 East Las Colinas Blvd., Suite 1100, Irving, Texas 75039
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Gary C. Evans and Matthew C. Lutz, or
either of them, with full power of substitution, proxies of the undersigned,
with all the powers that the undersigned would possess if personally present to
cast all votes that the undersigned would be entitled to vote at the Annual
Meeting of Stockholders of Magnum Hunter Resources, Inc. (the "Company") to be
held on Thursday, June 29, 2000, at the Omni Park West Hotel, 1590 LBJ Freeway,
Dallas, Texas, 75234 at 10:00 a.m., Central Daylight Savings Time, and any and
all adjournments or postponements thereof, with respect to the following matters
described in the accompanying Proxy Statement and, in their discretion, on other
matters which come before the meeting.
(1) The election of three (3) Directors:
Class I - Gerald W. Bolfing, Larry W. Brummett and Oscar C. Lindemann
o FOR the nominees listed below o WITHHOLD AUTHORITY
(Except as indicated to the to vote for the nominees
contrary below). listed below.
Instructions: To withhold authority to vote for any individual nominee or
nominees, write their names here.
--------------------------------------------------------------------------------
(2) To ratify the appointment of Deloitte & Touche LLP as the
Company's independent auditors to examine the accounts of the
Company for the fiscal year ending December 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Your Board of Directors unanimously recommends a vote FOR the directors set
forth above and FOR the proposal set forth above.
(Continued and to be signed on the reverse side)
<PAGE>
(Continued from other side)
(3) To transact such other business as may properly come before
the meeting or any adjournment thereof. This Proxy will be
voted at the Annual Meeting or any adjournment or postponement
thereof as specified. If no specifications are made, this
Proxy will be voted FOR the election of directors and FOR the
other proposal as set forth above. This Proxy hereby revokes
all prior proxies given with respect to the shares of the
undersigned.
Date:________________________________, 2000
----------------------------------------
(Signature)
----------------------------------------
----------------------------------------
(Please print your name)
(Please sign name as fully and exactly as it appears opposite. When signing
in a fiduciary or representative capacity, please give full title as such. When
more than one owner, each owner should sign. Proxies executed by a corporation
should be signed in full corporate name by duly authorized officer. If a
partnership, please sign in partnership name by an authorized person.)
PLEASE MARK, SIGN, DATE AND MAIL TO THE COMPANY
AT THE ADDRESS STATED ON THE RETURN ENVELOPE.
