DEBTWIRE BROADCAST:
MAGNUM HUNTER’S BANKRUPTCY PLAN SLASHES FUNDED DEBT TO ZERO…
SO WHAT’S THE CATCH?
Debtwire’s team of reporters and analysts host a roundtable discussion to explore Magnum Hunter’s plan to
eliminate its entire prepetition funded debtload, as well as highlight how the deal architects potentially skirted
some of the stumbling blocks that cropped up in other recent court proceedings. | 17 December 2015
AGENDA

Opening Remarks: Kate Marino

The Eureka Factor: Alexander Gladstone
Case Overview

Financial Analysis: Thomas Rorick

First Day Hearing: Patrick Holohan

Legal Analysis: Richard M. Goldman

Concluding remarks: Alexander Gladstone
What’s next?
2
THE EUREKA FACTOR: CASE OVERVIEW

Magnum Hunter’s bankruptcy filing:
Oil price decline prompts capex curtailment, liquidity crisis
Strategic options center on stake in Eureka Hunter Holdings
Failure to achieve asset sales
Status of second lien claim on Eureka
Second lien and unsecured holders collaborate on rescue loan to buy time
3
FINANCIAL ANALYSIS: ADJUSTED CAPITAL STRUCTURE
PRO FORMA ADJUSTED SUMMARY CAPITAL STRUCTURE (USD m)
L+ 8.0%
Face
Amount
200
Market
Amount
-
(200)
Pro Forma
Face Amount
0
L + 4.0%
70
70
(70)
4.25% - 8.7%
13
13
L + 7.5%
337
Capital Structure as of 15 Dec. 2015
DIP Term Loan Facility
Coupon
First Lien Bridge Financing Facility
Yield
Maturity
-
-
15 Apr 2016
0
-
-
15 Dec 2015
0
13
-
-
2016-2024
195
(337)
0
58.0
26.9%
22 Oct 2019
420
278
(607)
13
600
189
(600)
0
1,020
467
(1,207)
13
2
2
(1)
1
Liquidation
Preference
1,018
Face
Amount
465
Market
Amount
$25
100
1
(100)
0
$0.18
$50
221
0
(221)
0
$0.10
$25
95
0
(95)
0
$0.02
4
4
884
888
$0.02
1,438
471
2
Equipment & real estate notes payable
Second lien term loan
Price
1
3
Total secured debt
Senior unsecured notes
9.75%
Total debt
Cash and cash equivalents
Net debt
Series C cumulative perpetual preferred stock
Series D cumulative preferred stock
4
4
Series E cumulative convertible preferred stock
Market value of common stock
4
5
Enterprise value
LTM Adjusted EBITDAX
48
2016P Adjusted EBITDAX
2
Adj.
Adj.
12
Pro Forma
Face Amount
2016P Pro Forma
Face Leverage
5.7x
5.7x
31.5
48.9%
15 May 2020
5.7x
5.2x
Price
900
Asset Retirement Obligations
USD 28m
1) The DIP Term Loan Facility is subject to a 1% Libor floor.
The DIP Term Loan facility will mature the earlier of a) nine months after the closing date, b) 30 days after entering into the Interim DIP Order approving the DIP Facility if the Final DIP Order has not been
entered into by the Bankruptcy Court prior to the 30 day period, c) effective date of plan of reorganization or liquidation or d) termination by the DIP Facility Lenders following an event of default.
2) Absent an event of default the Bridge Financing Facility is due on the earlier of 30 December 2015 or the filing of a Chapter 11 case.
3) The second-lien term loan is subject to a 1% LIBOR floor.
4) On 9 October, MHR suspended the monthly dividends on its preferred stock. Unpaid dividends will continue to accumulate from 31 October and afterward.
5) Under the RSA, the total enterprise value assumed is USD 900m.
Sources: SEC Filings, MarketAxess, Markit, Debtwire Analytics, FINRA.
4
FINANCIAL ANALYSIS: DIP FINANCING
SOURCES & USES
Sources
DIP Term Loan Facility
Uses
200
Total Sources
200
Repayment of First Lien Bridge Financing Facility
70
Commitment fee
4
Cash collateralize letters of credit
39
General unsecured claims
67
Cash used during bankruptcy
20
Total Uses
200
PLAN RECOVERIES (USDm)
Class
Portion of New Common Equity
Value of Equity Received
Claim
Estimated Recoveries
31.800%
212
200
107.8%
Second Lien Lenders
36.9%
245
341
71.9%
Senior Noteholders
31.3%
208
632
33.0%
DIP Lenders 1
1) Our recovery for DIP Lenders includes the 3% Backstop Fee payable in New Common Equity.
Sources: 3Q15 10-Q Report, Court Filings, Debtwire Analytics.
5
FINANCIAL ANALYSIS: CASH BUDGET
CASH BUDGET
USD m
Beginning Cash
Fcst
Fcst
Fcst
Week 1 Week 2 Week 3
12/18/15 12/25/15 1/1/16
Fcst
Fcst
Fcst
Fcst
Fcst
Fcst
Fcst
Fcst
Fcst
Fcst
Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13
1/8/16 1/15/16 1/22/16 1/29/16 2/5/16 2/12/16 2/19/16 2/26/16 3/4/16 3/11/16
-
40
37
30
23
37
33
37
29
28
21
20
4
40
-
-
-
96
-
-
-
-
-
-
-
-
1st Lien Roll-up
-
-
-
-
(70)
-
-
-
-
-
-
-
-
Net Operating Receipts
0
3
-
0
1
0
5
0
0
1
5
-
0
Net Operating
Disbursements
-
(1)
(0)
(1)
(3)
(1)
(0)
(4)
(0)
(5)
(0)
(3)
(1)
Total Capital Expenditures
-
-
(1)
(1)
(1)
(1)
(1)
(0)
(0)
(0)
(0)
(2)
(2)
Ch.11 Relief / Financing
Costs / Other
-
(5)
(6)
(5)
(9)
(1)
(1)
(3)
(1)
(2)
(6)
(11)
(1)
40
37
30
23
37
33
37
29
28
21
20
4
1
DIP Draw
Ending Cash Balance
Source: Interim DIP Order.
6
FINANCIAL ANALYSIS: MGT. PROJECTIONS
PROJECTIONS
$ in millions, except pricing data)
Net Production
Oil (Boe)
Gas (Bcf)
NGL (Mboe)
Total Net Production (Bcfe)
Realized Prices
Oil ($/Bbl)
Gas ($/Mcf)
NGL ($/Bbl)
Cash Flows
Oil
Gas
NGL
Total Oil & Gas Revenue
Other Revenue-Oilfield Services
Total Revenue
Operating Expense-Upstream
Operating Expense-Oilfield Services
G&A
Expenses
EBITDAX
Capex-Williston Hunter
Capex-Triad
Capex-MH Production
Capex-Alpha Hunter Drilling
Discretionary Cash Flow
Working Capital
Other Free Cash Flow Items
Unlevered Free Cash Flow
Source: Lender Presentation.
Q1 2016
Q2 2016
Q3 2016
Q4 2016
FY 2016
Q1 2017
Q2 2017
Q3 2017
Q4 2017
FY 2017
FY 2018
FY 2019
FY 2020
0.2
7.0
0.3
9.8
0.2
7.5
0.3
10.4
0.2
7.8
0.3
10.5
0.2
8.3
0.3
10.9
0.7
30.5
1.1
41.5
0.1
9.1
0.2
11.4
0.1
8.0
0.2
10.2
0.1
7.2
0.2
9.3
0.1
10.3
0.2
12.5
0.6
34.6
0.9
43.5
0.5
47.7
0.8
55.4
0.4
60.4
0.7
66.9
0.4
74.7
0.7
81.2
$36.22
$2.08
$13.96
$37.99
$2.06
$14.52
$39.07
$2.14
$14.85
$40.04
$2.24
$15.14
$38.27
$2.13
$14.61
$40.97
$2.68
$15.42
$41.74
$2.48
$15.64
$42.45
$2.54
$15.85
$43.20
$2.66
$16.09
$42.06
$2.60
$15.74
$44.62
$2.66
$16.50
$46.41
$2.76
$17.04
$47.59
$2.87
$17.40
7
15
4
25
2
27
20
2
7
28
(1)
-(12)
-(0)
(13)
(2)
-(14)
7
15
4
27
3
30
21
3
7
31
(0)
-(6)
-(0)
(6)
(1)
(0)
(7)
7
17
4
27
3
31
20
3
7
30
1
-(12)
-(0)
(11)
1
-(10)
7
19
4
29
2
31
21
2
6
29
3
-(12)
-(0)
(10)
(2)
-(11)
27
65
17
108
11
120
81
9
27
117
2
-(41)
-(0)
(39)
(3)
(0)
(43)
6
24
4
34
2
36
20
2
6
28
8
-(6)
-(0)
2
(3)
-(1)
6
20
4
29
2
32
19
2
6
27
5
-(17)
-(0)
(12)
7
-(5)
6
18
3
28
2
30
17
2
6
26
4
-(42)
-(0)
(37)
3
(0)
(34)
6
28
4
37
2
39
21
2
6
29
10
-(33)
-(0)
(23)
2
-(21)
24
90
14
128
9
137
77
8
25
110
27
-(97)
-(0)
(70)
9
(0)
(61)
21
127
13
161
16
178
86
14
25
126
52
-(105)
-(0)
(53)
(12)
(0)
(65)
19
167
12
197
16
214
93
14
25
133
81
-(101)
-(0)
(21)
1
-(20)
18
214
12
245
17
261
107
14
25
146
115
-(111)
-(0)
4
(4)
-0
LEGAL ANALYSIS

Debtor in possession financing

Restructuring support agreement

Industry comps – Samson Resources and Sabine Oil & Gas

Throwing a wrench in the works
8
CONCLUDING REMARKS: WHAT’S NEXT?

What happens to Eureka stake?

How can Magnum generate value
for post-reorg equity holders?
9
DISCLAIMER
We have obtained the information provided in this report in good faith from publicly available data as well as Debtwire data and
intelligence, which we consider to be reliable. This information is not intended to provide tax, legal or investment advice. You should seek
independent tax, legal and/or investment advice before acting on information obtained from this report. We shall not be liable for any
mistakes, errors, inaccuracies or omissions in, or incompleteness of, any information contained in this report, and not for any delays in
updating the information.
We make no representations or warranties in regard to the contents of and materials provided on this report and exclude all representations,
conditions, and warranties, express or implied arising by operation of law or otherwise, to the fullest extent permitted by law. We shall not be
liable under any circumstances for any trading, investment, or other losses which may be incurred as a result of use of or reliance on information
provided by this report. All such liability is excluded to the fullest extent permitted by law.
Any opinions expressed herein are statements of our judgment at the date of publication and are subject to change without notice.
Reproduction without written permission is prohibited. For additional information call Debtwire Analytics at (212) 686-5374.
Copyright 2015 S&P Capital IQ (and its affiliates, as applicable). This may contain information obtained from third parties, including ratings
from credit ratings agencies such as Standard & Poor's. Reproduction and distribution of third party content in any form is prohibited except
with the prior written permission of the related third party. Third party content providers do not guarantee the accuracy, completeness,
timeliness or availability of any information, including ratings, and are not responsible for any errors or omissions (negligent or otherwise),
regardless of the cause, or for the results obtained from the use of such content. THIRD PARTY CONTENT PROVIDERS GIVE NO EXPRESS OR
IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OR USE. THIRD PARTY CONTENT PROVIDERS SHALL NOT BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, EXEMPLARY, COMPENSATORY,
PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES, COSTS, EXPENSES, LEGAL FEES. OR LOSSES (INCLUDING LOST INCOME OR PROFITS AND
OPPORTUNITY COSTS OR LOSSES CAUSED BY NEGLIGENCE) IN CONNECTION WITH ANY USE OF THEIR CONTENT, INCLUDING RATINGS.
Credit ratings are statements of opinions and are not statements of fact or recommendations to purchase, hold or sell securities. They do not
address the suitability of securities or the suitability of securities for investment purposes, and should not be relied on as investment advice.