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Magnum Hunter Resources Corp. Message Board

  • rrb1981 rrb1981 Nov 20, 2010 11:52 AM Flag

    Distressed Assets

    As we all know, Gary Evans likes to cherry pick distressed assets. He feels, and rightfully so, that he can achieve a better rate of return in the long run if you buy assets are rock bottom prices, even if they are small and underutilized or underperforming. Many have mentioned TransEnergy (TENG.OB), Gastar (GST) and NGAS Resources (NGAS). I'd like to throw out another possibility. I think they may be looking to acquire the Appalachia production and acreage held by PostRock Energy (PSTR). PostRock is the old Quest (QELP/QRCP/QMLP) entities that were merged together. The assets are on the sale block and are darn close to MHR's acreage. It would be a pricey deal though, because PSTR is likely expecting $2000+ per acre.

    I am not sure I am an advocate for the deal or not because I would rather see MHR focus on cobbling together small mom and pop operations that have say 4000 acres and 20 or so shallow conventional wells, rather than buying from a larger corporate entity.

    Either way, MHR is likely to announce the 2 acquisitions within the next month or two and we will likely get a nice boost as the deals will likely either bring a good bit of existing production or will bring a good bit of quality acreage.

    I think we crack $7/share by year end and likely crack $10/share by end of 2011.

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