Related Party Transactions

9 Months Ended

Sep. 30, 2011

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 12 — RELATED PARTY TRANSACTIONS

We rented an airplane for business use at various times from Pilatus Hunter, LLC, an entity 100% owned by Gary C. Evans, our Chairman and CEO. Airplane rental expenses totaled $160,000 and $388,000, for the three and nine months ended September 30, 2011, respectively and $149,000 and $337,000 for the three and nine month period ended September 30, 2010, respectively.

We obtained accounting services and use of office space from GreenHunter Energy, Inc., an entity for which Mr. Evans is an officer and major shareholder and for which Ronald Ormand, our Chief Financial Officer and a director, is also a director. Professional services expenses totaled $66,000 and $107,000, for the three and nine months ended September 30, 2011, respectively, and $30,000 and $90,000 for the three and nine months ended September 30, 2010, respectively. All accounting services are now managed entirely by Magnum Hunter employees.

We entered into a one year lease for a corporate apartment from an executive of the Company who was transferred for monthly rent of $4,500 for use by Company employees. During the three and nine months ended September 30, 2011, the Company paid rent of $14,000 and $23,000, respectively, pertaining to the lease.

During the nine months ended September 30, 2011, Triad Hunter, LLC, a wholly owned subsidiary of the Company, rented storage tanks for disposal water from GreenHunter Energy, Inc., an entity for which Mr. Evans is an officer and major shareholder and for which Mr. Ormand is also a director. Storage costs totaled $230,000 for the three and nine months ended September 30, 2011 and $0 for the three and nine months ended September 30, 2010. Terms for the storage rental are comparable to those that could be obtained from third parties in the marketplace.

As of September 30, 2011, our net accounts payable to Pilatus Hunter, LLC was $48,000 and our net accounts payable to GreenHunter Energy, Inc. was $66,000.

On October 13, 2011, the Company purchased an office building for $1.7 million from GreenHunter Energy, Inc., an entity for which Mr. Evans is an officer and major shareholder and for which Mr. Ormand is a director. In conjunction with the purchase, the Company entered into a term note with a financial institution for $1.4 million due on November 30, 2017. The building houses the accounting functions of Magnum Hunter and the building purchase enabled the Company to terminate the previous services arrangement described above.