Condensed Consolidating Guarantor Financial Statements

9 Months Ended

Sep. 30, 2011

Condensed Consolidating Guarantor Financial Statements [Abstract]

CONDENSED CONSOLIDATING GUARANTOR FINANCIAL STATEMENTS

NOTE 14 — CONDENSED CONSOLIDATING GUARANTOR FINANCIAL STATEMENTS

The Company and certain of its wholly-owned subsidiaries including Eagle Ford Hunter, Inc., Triad Hunter, LLC, Hunter Disposal, LLC, NGAS Hunter, LLC, Williston Hunter ND LLC, and MHR Acquisition III, LLC (collectively “Guarantor Subsidiaries”), may fully and unconditionally guarantee the obligations of the Company under any debt securities that it may issue pursuant to a universal shelf registration statement, on a joint and several basis, on Form S-3. Condensed consolidating financial information for Magnum Hunter Resources Corporation, the Guarantor Subsidiaries, and its other subsidiaries as of September 30, 2011 and December 31, 2010, and for the three and nine months ended September 30, 2011 and 2010, was as follows:

Magnum Hunter Resources Corporation and Subsidiaries Condensed Consolidating Balance Sheets
(in thousands)

	As of September 30, 2011
											Magnum Hunter
	Magnum Hunter										Resources
	Resources		Guarantor		Non Guarantor						Corporation
	Corporation		Subsidiaries		Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets	$	17,567	$	30,143	$	11,168		$	—		$	58,878
Intercompany accounts receivable		597,078		—		—			(597,078	)		—
Property and equipment (using successful efforts accounting)		12,168		419,775		566,164			—			998,107
Investment in subsidiaries		199,191		—		—			(199,191	)		—
Other assets		16,977		774		2,828			—			20,579
Total Assets	$	842,981	$	450,692	$	580,160		$	(796,269	)	$	1,077,564
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities	$	16,957	$	68,364	$	30,251		$	—		$	115,572
Intercompany accounts payable		—		150,984		446,094			(597,078	)		—
Long-term liabilities		170,253		18,549		132,944			—			321,746
Redeemable preferred stock		100,000		—		—			—			100,000
Shareholders’ equity		555,770		212,796		(29,129	)		(199,191	)		540,246
Total Liabilities and Stockholders’ Equity	$	842,980	$	450,693	$	580,160		$	(796,269	)	$	1,077,564

	As of December 31, 2010
											Magnum Hunter
	Magnum Hunter										Resources
	Resources		Guarantor		Non Guarantor						Corporation
	Corporation		Subsidiaries		Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets	$	4,809	$	6,436	$	1,881		$	—		$	13,126
Intercompany accounts receivable		131,691		—		—			(131,691	)		—
Property and equipment (using successful efforts accounting)		12,049		149,647		70,905			—			232,601
Investment in subsidiaries		80,877		—		—			(80,877	)		—
Other assets		2,723		512		5			—			3,240
Total Assets	$	232,149	$	156,595	$	72,791		$	(212,568	)	$	248,967
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities	$	24,852	$	13,480	$	5,903		$	—		$	44,235
Intercompany accounts payable		—		56,326		75,365			(131,691	)		—
Long-term liabilities		24,386		3,023		3,765			—			31,174
Redeemable preferred stock		70,236		—		—			—			70,236
Shareholders’ equity		112,675		83,766		(12,242	)		(80,877	)		103,322
Total Liabilities and Stockholders’ Equity	$	232,149	$	156,595	$	72,791		$	(212,568	)	$	248,967

Magnum Hunter Resources Corporation and Subsidiaries Condensed Consolidating Statements of Operations
(in thousands)

	For the Three Months Ended September 30, 2011
												Magnum Hunter
	Magnum Hunter											Resources
	Resources			Guarantor		Non Guarantor						Corporation
	Corporation			Subsidiaries		Subsidiaries			Eliminations			Consolidated
Revenues	$	242		$	21,058	$	11,969		$	(830	)	$	32,439
Expenses		(1,675	)		20,548		12,614			(831	)		30,656
Loss from continuing operations before equity in net income of subsidiary		1,917			510		(645	)		1			1,783
Equity in net income of subsidiary		83			—		—			(83	)		—
Gain (loss) from continuing operations before income taxes and non-controlling interest		2,000			510		(645	)		(82	)		1,783
Income tax benefit		—			—		272			—			272
Less: Net income attributable to non-conrolling interest		—			—		(55	)		—			(55	)
Net income (loss) from continuing operations attributable to Magnum Hunter Resources Corporation		2,000			510		(428	)		(82	)		2,000
Net loss		2,000			510		(428	)		(82	)		2,000
Dividends on preferred stock		(3,952	)		—		—			—			(3,952	)
Net income (loss) attributable to common shareholders	$	(1,952	)	$	510	$	(428	)	$	(82	)	$	(1,952	)

	For the Three Months Ended September 30, 2010
												Magnum Hunter
	Magnum Hunter											Resources
	Resources			Guarantor		Non Guarantor						Corporation
	Corporation			Subsidiaries		Subsidiaries			Eliminations			Consolidated
Revenues	$	284		$	5,389	$	2,707		$	(460	)	$	7,920
Expenses		5,289			4,751		2,729			(460	)		12,309
Income (loss)from continuing operations before equity in net losses of subsidiary		(5,005	)		638		(22	)		—			(4,389	)
Equity in net loss of subsidiary		592			—		—			(592	)		—
Gain (loss)from continuing operations before income taxes and non-controlling interest		(4,413	)		638		(22	)		(592	)		(4,389	)
Less: Net income attributable to non-conrolling interest		—			—		(26	)		—			(26	)
Net loss from continuing operations attributable to Magnum Hunter Resources Corporation		(4,413	)		638		(48	)		(592	)		(4,415	)
Income from discontinued operations		690											690
Net income (loss)		(3,723	)		638		(48	)		(592	)		(3,725	)
Dividends on preferred stock		(601	)		—		—			—			(601	)
Net income (loss)attributable to common shareholders	$	(4,324	)	$	638	$	(48	)	$	(592	)	$	(4,326	)

	For the Nine Months Ended September 30, 2011
												Magnum Hunter
	Magnum Hunter											Resources
	Resources			Guarantor		Non Guarantor						Corporation
	Corporation			Subsidiaries		Subsidiaries			Eliminations			Consolidated
Revenues	$	857		$	58,512	$	23,065		$	(2,334	)	$	80,100
Expenses		31,208			48,374		22,880			(2,334	)		100,128
Income (loss) from continuing operations before equity in net income of subsidiary		(30,351	)		10,138		185			—			(20,028	)
Equity in net income of subsidiary		10,621			—		—			(10,621	)		—
Gain (loss) from continuing operations before income taxes and non-controlling interest		(19,730	)		10,138		185			(10,621	)		(20,028	)
Income tax benefit		—			—		470			—			470
Less: Net income attributable to non-conrolling interest		—			—		(172	)		—			(172	)
Net income (loss) from continuing operations attributable to Magnum Hunter Resources Corporation		(19,730	)		10,138		483			(10,621	)		(19,730	)
Net income (loss)		(19,730	)		10,138		483			(10,621	)		(19,730	)
Dividends on preferred stock		(10,017	)		—		—			—			(10,017	)
Net income (loss) attributable to common shareholders	$	(29,747	)	$	10,138	$	483		$	(10,621	)	$	(29,747	)

	For the Nine Months Ended September 30, 2010
												Magnum Hunter
	Magnum Hunter											Resources
	Resources			Guarantor		Non Guarantor						Corporation
	Corporation			Subsidiaries		Subsidiaries			Eliminations			Consolidated
Revenues	$	1,008		$	15,173	$	8,486		$	(1,690	)	$	22,977
Expenses		18,103			12,885		8,288			(1,690	)		37,586
Gain (loss) from continuing operations before equity in net losses of subsidiary		(17,095	)		2,288		198			—			(14,609	)
Equity in net loss of subsidiary		2,392			—		—			(2,392	)		—
Gain (loss) from continuing operations before non-controlling interest		(14,703	)		2,288		198			(2,392	)		(14,609	)
Less: Net income attributable to non-conrolling interest		—			—		(91	)		—			(91	)
Net income (loss) from continuing operations attributable to Magnum Hunter Resources Corporation		(14,703	)		2,288		107			(2,392	)		(14,700	)
Income from discontinued operations		1,645			—		—			—			1,645
Net income (loss)		(13,058	)		2,288		107			(2,392	)		(13,055	)
Dividends on preferred stock		(1,310	)		—		—			—			(1,310	)
Net loss attributable to common shareholders	$	(14,368	)	$	2,288	$	107		$	(2,392	)	$	(14,365	)

Magnum Hunter Resources Corporation and Subsidiaries Condensed Consolidating Statements of Cash Flows
(in thousands)

	For the Nine Months Ended September 30, 2011
												Magnum Hunter
	Magnum Hunter											Resources
	Resources			Guarantor			Non Guarantor					Corporation
	Corporation			Subsidiaries			Subsidiaries			Eliminations		Consolidated
Cash flow from operating activities	$	(150,913	)	$	124,354		$	36,816		$	—	$	10,257
Cash flow from investing activities		(80,160	)		(124,113	)		(69,246	)		—		(273,519	)
Cash flow from financing activities		236,565			(278	)		34,827			—		271,114
Effect of exchange rate changes on cash		—			—			(231	)		—		(231	)
Net increase (decrease) in cash		5,492			(37	)		2,166			—		7,621
Cash at beginning of period		1,556			(1,094	)		92			—		554
Cash at end of period	$	7,048		$	(1,131	)	$	2,258		$	—	$	8,175

	For the Nine Months Ended September 30, 2010
												Magnum Hunter
	Magnum Hunter											Resources
	Resources			Guarantor			Non Guarantor					Corporation
	Corporation			Subsidiaries			Subsidiaries			Eliminations		Consolidated
Cash flow from operating activities	$	(9,463	)	$	11,246		$	1,862		$	—	$	3,645
Cash flow from investing activities		(69,576	)		(15,594	)		(1,950	)		—		(87,120	)
Cash flow from financing activities		82,185			(64	)		(91	)		—		82,030
Net decrease in cash		3,146			(4,412	)		(179	)		—		(1,445	)
Cash at beginning of period		(1,707	)		3,727			262			—		2,282
Cash at end of period	$	1,439		$	(685	)	$	83		$	—	$	837