PRIZE ENERGY CORP

PRIZE ENERGY CORP

Previous company name
VISTA ENERGY RESOURCES INC
Name change date
6/8/1998
Company Overview
Prize Energy Corp., with registered head office located in Grapevine, Texas, is a publicly traded mid-size oil and gas company engaged in the acquisition, enhancement and exploitation of producing oil and gas properties. The company owns oil and gas properties in three core operating areas, which are principally located in the Permian Basin of West Texas and Southeastern New Mexico, the onshore Gulf Coast area of Texas and Louisiana, and the Mid-Continent area of Western Oklahoma and the Texas Panhandle. Majority of its oil and gas property base is located in Texas. In addition, the company is involved in numerous drilling and recompletion activities on properties presently owned. It also intends to drill or develop other properties acquired in the future. Prize Energy Corp. was organized in January 1999.
Business Summary
Magnum Hunter Resources, Inc. (Magnum Hunter) is an independent energy company engaged in the exploration, exploitation and development, acquisition and operation of oil and gas properties with a geographic focus in the Mid-Continent Region, Permian Basin Region, Gulf Coast Region and the Gulf of Mexico. At December 31, 2004, Magnum Hunter had an interest in 6,109 wells and had estimated proved reserves of 1.01 trillion cubic feet of natural gas equivalent (Tcfe). Approximately 73% of these reserves were proved developed reserves. The proved reserves have a geographic breakdown as 25% attributable to the Mid-Continent Region, 59% attributable to the Permian Basin Region, 8% attributable to the Gulf Coast Region and 8% attributable to the Gulf of Mexico. Proved reserves had an estimated reserve life of approximately 12.5 years and were 61% natural gas. The Company serves as operator for approximately 78% of its properties, based on the gross number of wells in which it owns an interest.
Description and history
Magnum Hunter Resources, Inc. (Magnum Hunter), incorporated in 1989, is an independent energy company engaged in the exploration, exploitation and development, acquisition and operation of oil and gas properties with a geographic focus in the Mid-Continent Region, Permian Basin Region, Gulf Coast Region and the Gulf of Mexico. At December 31, 2004, Magnum Hunter had an interest in 6,109 wells and had estimated proved reserves of 1.01 trillion cubic feet of natural gas equivalent (Tcfe). Approximately 73% of these reserves were proved developed reserves. The proved reserves have a geographic breakdown as 25% attributable to the Mid-Continent Region, 59% attributable to the Permian Basin Region, 8% attributable to the Gulf Coast Region and 8% attributable to the Gulf of Mexico. Proved reserves had an estimated reserve life of approximately 12.5 years and were 61% natural gas. Magnum Hunter serves as operator for approximately 78% of its properties, based on the gross number of wells in which it owns an interest.

On January 26, 2005, Magnum Hunter and Cimarex Energy, Inc. (Cimarex) announced that their respective boards of directors had approved an agreement and plan of merger that provides for the acquisition of Magnum Hunter by Cimarex.

Mid-Continent Region

Magnum Hunter’s Mid-Continent operations include assets principally located in the Ardmore Basin in south central Oklahoma/Texas Panhandle and in Southwestern Arkansas. The majority of these properties were acquired from Burlington Resources, Spirit 76, Vastar and Prize. Approximately 72% of the estimated reserves are natural gas and 28% are oil and natural gas liquids located on approximately 263,216 net mineral leasehold acres in twenty-seven counties in Oklahoma, 11 counties in Texas and two counties in Arkansas.

Total net daily production from the Mid-Continent properties for the month of December 2004 was 34.9 million cubic feet (MMcf)/d for natural gas and 1,273 barrels per day (Bbl/d) of oil and natural gas liquids or 42.5 million cubic feet equivalent (MMcfe)/d. Magnum Hunter’s wholly owned subsidiary, Gruy Petroleum Management Co. (Gruy), is the operator of approximately 85% of the wells located in the Mid-Continent Region. Additional Mid-Continent development drilling, recompletion activities and improvements to existing waterflood operations will focus on the Walnut Bend Field, the Red Deer Creek Field, the Madill Field and the Eola-Robberson Field.

Permian Basin

The Permian Basin operations include assets located in West Texas and Southeastern New Mexico with an interest in 3,840 wells located in 240 different fields. Gruy Petroleum is the operator of approximately 77% of the producing wells. As of December 31, 2004, the Permian Basin properties had proved reserves of 48.9 million barrels (MMBbl) of oil and 299.5 billion cubic feet (Bcf) of natural gas, or on a natural gas equivalent basis, 592.8 billion cubic feet equivalent (Bcfe). Total net daily production from the Permian Basin properties for the month of December 2004, was approximately 60,269 thousand cubic feet (Mcf)/d of natural gas an 7,451 barrels (Bbls)/d of oil or 104.9 MMcfe/d.

In evaluating the Permian Basin properties, Magnum Hunter has identified 509 drilling locations including developmental production and injection wells. The top valued fields in the Permian Basin are Spraberry, Westbrook, Warwink, Howard Glasscock, Jo-Mill, Kermit, Keystone, Willo, P&P and the Southeast New Mexico area.

Gulf Coast

Magnum Hunter owns an interest in 360 wells in the Gulf Coast region, of which Gruy is the operator of approximately 71% of the wells. Magnum Hunter has received an engineering evaluation from D&M on the net reserves in the Gulf Coast. According to D&M, as of December 31, 2004, the Gulf Coast properties had proved reserves of 2.0 MMBbl of oil and 63.7 Bcf of natural gas, or on a natural gas equivalent basis, 75.6 Bcfe. Approximately 84% of the estimated reserves are natural gas and 16% are oil. Total net daily production from the Gulf Coast properties for the month of December 2004 was approximately 20.1 MMcf/d of natural gas and 566 Bbls/d of oil. The principal fields in the onshore Gulf Coast region are Brazil, Buchel, Provident City, Alta Loma and Word, North.

Gulf of Mexico

Magnum Hunter’s initial entry into the Gulf of Mexico occurred March 27, 1998 when it acquired approximately 40% beneficial ownership interest in TEL Offshore Trust. The Company owns an interest in 245 blocks in the Gulf of Mexico ranging from 12.5% to 100%. Proved reserves have been assigned in 55 blocks encompassing 85 gross wells (29.7 net wells). The Company operates 16 of these wells (10.1 net wells). According to D&M, as of December 31, 2004, the Gulf of Mexico properties had proved reserves of 3.1 MMBbl of oil and 64.1 Bcf of natural gas (82.6 Bcfe). Approximately 78% of the estimated reserves are natural gas and the remaining 22% is oil. Total net daily production from the Gulf of Mexico properties for the month of December 2004 was 53.4 MMcf/d of natural gas and 2,121 Bbls/d of oil. At December 31, 2004, the Company had nine additional discoveries that commenced production in 2005.

Magnum Hunter owns varying working interests, between 15% and 39.2%, in four wells operated by ATP Oil & Gas. Production is from Upper Pliocene sands at approximately eight to nine thousand feet. The wells are located in Federal waters south of Terrebonne Parish, Louisiana in a water depth of 420 feet. Production from the first well was initiated in March 2004. Subsequent wells were put on production as they were completed. Production from all the wells attributable to the Company’s interest averaged 3,397 Mcfd and 270 Bbls/d in December 2004. As of December 31, 2004, the net proved reserves for Ship Shoal 358 were 5.1 Bcfe.

Gas Processing Plants

Magnum Hunter has a 50% or greater ownership interest in four natural gas processing plants that are located adjacent to certain Company-owned and operated producing properties within the states of Texas, Oklahoma and Arkansas. Magnum Hunter has 50% ownership interest in the McLean Gas Plant and a related 22-mile products pipeline. This plant is a cryogenic plant utilizing approximately 2,000 horsepower of high-speed compression and a gas processing capacity of approximately 23 MMcf/d. For the month of December 2004, throughput of the plant averaged 6.5 MMcf/d with processed liquids of 426 Bbl/d.

In December 1999, the Company acquired the Madill Gas Processing Plant and associated gathering system assets from Dynegy Midstream Services, Limited Partnership, a wholly owned subsidiary of Dynegy Inc. This cryogenic plant has 3,350 horsepower of high-speed compression and has gas-processing capacity of approximately 18 MMcf/d. For the month of December 2004, throughput of the plant averaged 7.9 MMcf/d of natural gas with processed liquids of 483 Bbl/d.

Magnum Hunter holds an approximate 59% ownership interest and is the operator of the Walker Creek Plant and associated gathering system. In 2000, the Company sold a 44.2% interest in the Walker Creek Plant to Mallard Hunter L.P., of which it is the general partner. Magnum Hunter also has a 100% ownership interest in the Elmore City Plant. This gas processing facility and associated gathering system assets are located in Garvin County, Oklahoma. The plant’s 2004 throughput averaged 10.4 MMcf/d with a total throughput capacity of approximately 35 MMcf/d. For the month of December 2004, throughput of the plant averaged 9.8 MMcf/d with processed liquids of 845 Bbl/d. The Elmore City Plant processes natural gas under contracts that are solely POP contracts. The plant receives on average approximately 20% of the residue and 40% to 45% of the recovered liquids attributable to a producer’s gas delivered into the system.

Business Line
Publicly traded mid-size oil and gas company engaged in the acquisition, enhancement and exploitation of producing oil and gas properties
Subsidiary

Advisor
ERNST & YOUNG LLP
IPO date

US SIC Code
1311
Company Address
Suite 200
3500, William D. Tate
City province or state postal code
76051, GRAPEVINE, TX
Phone: +1 817 424 0400
Fax: +1 817 424 0031
Country address: UNITED STATES OF AMERICA
Website url: www.prizeenergy.com