Magnum Hunter Resources Corp (OTCMKTS:MHRC) was a massive decliner during Tuesday’s trading session, plunging by 26% on heavy volumes, which were 0.8 times the 30 day average turnover. Bears seem to be in total control as the stock continues to form lower tops and lower bottoms. Magnum Hunter currently trades below all important moving averages, which is a bearish sign. The oscillator measuring momentum continues to trend lower and shows no signs of a reversal. The RSI oscillator has continued its downtrend indicative of the strong bearish momentum. Traders see the stock retesting support at levels of $0.03 in the near term.
Magnum Hunter Resources Corp (OTCMKTS:MHRC) has issued the hugely awaited going concern warning in the latest 10-Q report of the company. Since the day it warned that a Chapter 11 bankruptcy filing was certainly on the cards, it continuously remained in the trading halt.
As per the reports, the New York Stock Exchange has already started the delisting procedure for Magnum’s stocks saying that listing based on highly low price levels might not work well in the long run.
Insights Of The Matter
In a recent statement, Magnum Hunter announced that it failed to achieve profitable state even after putting a host of efforts to the operations. If taken into consideration the oil and gas revenues of the company, one can notice that 3Q2014 witnessed massive $62.5 million revenues, but it couldn’t do much in 3Q2015 and ended the quarter with $27.9 million.
The difficulties don’t seem to end so soon for the company. A report claims that the entity that owns Eureka Hunter pipeline along with Magnum has demanded the due amount (gas gathering fees) of $20.8 million. If Magnum failed to make this payment, it could have lost the entire agreement with the company, which would be a bigger loss for the company.
Before this issue, Magnum Hunter announced the refinancing of its sought-after senior secured credit facility in the form of the term loan from financial institutions and banks. The additional financial help is likely to strengthen the financial position of the company and provide it liquidity to execute certain activities.
As per the reports, the total principal amount of this credit help is $60 million. Out of this amount, $44 million is likely to be used to refinance existing loans and pending LOCs, whereas the remaining $16 million will be used for general purposes. Magnum Hunter will keep all the investors informed about the future initiatives through various mediums.