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Magnum Hunter Resources Corp. Message Board

ibegolfn1 4 posts  |  Last Activity: Jul 14, 2014 6:46 PM Member since: Dec 10, 2002
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  • Now they will have takeaway of waste water if they use the GRH service. GRH is bringing their waste water pipeline to the W Virginia panhandle. Good news. I suspect they are going there because MHR has large presence their. GST is very close to the MHR props luckily.

  • Reply to

    Sun Trust upgrade , target$10.

    by roquew Jun 30, 2014 8:33 AM
    ibegolfn1 ibegolfn1 Jun 30, 2014 10:01 AM Flag

    Does Neal Dingmann follow MILL for Suntrust. I hope so.

  • Reply to

    Historical Dividend Prices

    by cqp2600 Apr 22, 2014 1:50 PM
    ibegolfn1 ibegolfn1 Apr 22, 2014 11:54 PM Flag

    Actually, in terms of safety, MHR-PRC ranks above MHR-PRD. If you read the IPO prospectus of the D for instance, you will see that the C ranks senior to D in preference. In other words, in the unlikely event of the company being liquidated, the holders of the C would all get paid before any holders of the D or E.

    If you mean call risk, then yes I would say the D has less risk of being called soon. There are many Yield to Call calculators available on the internet and you can insert the numbers based upon when you think these issues will be called. If you think it is 3 years, then likely the C is a better choice for you. If you think there will be less time until called then the D would better a better buy for you. But don't forget that the C rates above D/E in liquidation preference.

  • Reply to

    Historical Dividend Prices

    by cqp2600 Apr 22, 2014 1:50 PM
    ibegolfn1 ibegolfn1 Apr 22, 2014 11:07 PM Flag

    Here is what really happened to the preferrreds. In April 2013 Magnum Hunter fell out of compliance with it's senior loan covenants due to the inability of their accountant at the time, Price Waterhouse Coopers, to deliver a timely audit. Consequently they had to defer the cumulative dividends until they got back into compliance.

    After firing PWC, they hired BDO who got them an audit within 45 days after being hired.
    The audit was submitted to the SEC and accepted. In August the dividend payments resumed on all three Issues MHR-C, D, E. All the dividends that had been accumulated for those 5 months were distributed at once.

    The nice thing about these dividends, beside being very healthy, is that they are paid as ROC (return of capital) not as taxable dividends. There is no current tax on them as you get paid. The amount of the dividend reduces your basis and will be treated as capital gains when you sell or they are called.

    I do not believe Gary has any intention of calling any of them at the moment as the wells they are bringing on now have high IRR's sometimes topping 80pc. It would make no sense for them to slow down their capex spending that returns so much more than the dividend yield. But that is just speculation on my part based on experience and closely following the stock over a period of years.

    I own a lot of the preferreds and try to keep up on them. I currently collect well into 5 figures monthly interest, which all counts as ROC, which I can write off against a large real estate loss I incurred years ago, so they are totally tax free to me, hence my intense focus on ROC vs taxable dividends and MHR in general.

    Let me know if I can help you further.


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