On the day MarkWest Energy begins operations of the Mobley facility in West Virginia, Magnum Hunter announces a private offering of an additional $150 million in principal amount of its 9.750% senior notes due 2020, as an add-on to the $450 million in principal amount of Senior Notes currently outstanding that the co originally sold in a private offering in May 2012.
Magnum Hunter anticipates using the net proceeds from the Offering to pay off a portion of the outstanding debt under the Company's Senior Revolving Credit Facility. The Offering is intended to ensure that the co has more than sufficient liquidity in 2013 to continue its active drilling programs in its five shale plays, while simultaneously pursuing ongoing strategic initiatives across its asset base.
The Mobley startup news is completely lost to the market news of MHR going further in debt. 9.75% is not cheap money.
Even before we make the first penny of profit from MHR gas processed through Mobley, the company is on balance borrowing more money.
Why sell Eagle Ford? We'll just pay down debt and borrow back a greater amount.
I wonder if Gary Evans and Tom Ward are related???