EXHIBIT 99.1
[PRIZE ENERGY CORP. LETTERHEAD] NEWS RELEASE
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MAGNUM HUNTER AND PRIZE ENERGY
ANNOUNCE $1.2 BILLION MERGER
Irving, Texas, December 18, 2001, Magnum Hunter Resources, Inc. ("Magnum
Hunter") (AMEX: MHR) and Prize Energy Corp. ("Prize Energy") (AMEX: PRZ)
announced today that they have agreed to merge. The transaction would create a
large U.S. based independent oil and gas company with a combined enterprise
value of approximately $1.2 billion. The company will continue to be named
Magnum Hunter Resources, Inc. and will remain headquartered in Irving, Texas.
The strategic rationale for the merger is as follows:
o LARGE RESERVE BASE - on a combined basis, the companies had total proved
reserves of approximately one trillion cubic feet of natural gas
equivalent at December 31, 2000
o SIGNIFICANT DAILY PRODUCTION - for the nine months ended September 30,
2001, the combined companies had net daily production of 232 million
cubic feet of natural gas equivalent
o STRONGER BALANCE SHEET/ENHANCED FINANCIAL FLEXIBILITY- as a result of
the merger, it is anticipated that the combined companies will have a
debt-to-capitalization ratio lower than 60% and significantly improved
financial coverage ratios
o STRONG ASSET OVERLAY - the two companies have substantial property
overlay in the core operating areas of the Permian Basin of West Texas
and Southeastern New Mexico, Mid-Continent region of western Oklahoma
and the Texas Panhandle, and the onshore Gulf Coast area of South Texas
and Louisiana
o EXTENSIVE DRILLING INVENTORY - the combined companies will have over a
five year drilling inventory that includes in excess of 1,000 onshore
locations
o SIGNIFICANT EXPLORATION UPSIDE - the combined companies will continue to
have significant upside potential in the shallow waters of the Gulf of
Mexico due to an ongoing exploration effort from a large inventory of
undrilled blocks
o SIGNIFICANT COST SAVING POTENTIAL - the combined companies expect to
realize cost savings of $8 to $10 million on an annualized basis
o SUBSTANTIAL COMMODITY PRICE HEDGE POSITION - the combined companies have
hedged calendar year 2002 daily gas production of 103 million cubic feet
at a NYMEX weighted average floor price of $3.44 per Mcf and have hedged
daily oil production for calendar 2002 of 5,750 Bbls at a NYMEX weighted
floor price of $23.23 per barrel
o LONG-LIFE RESERVES - the combined companies have a reserve-to-production
ratio in excess of 12 years
o BALANCED OIL/GAS MIX - the combined companies have an oil and gas
reserve mix of 55% natural gas and 45% crude oil
o GREATER ACCESS TO CAPITAL AS A LARGER COMPANY - the larger market
capitalization and total enterprise value of the combined companies
should improve access to the capital markets
Mr. Gary C. Evans, Chairman, President and CEO of Magnum Hunter stated, "The
combination of these two Dallas based companies creates an organization that is
stronger and in better position to compete than either would be independently.
Both companies have adhered to a focused growth strategy as active acquirers and
consolidators. At the same time, each company has been very active and highly
successful with the drill bit. These strategies, along with Magnum Hunter's
existing exploration program, will be greatly enhanced by this larger platform."
Mr. Philip B. Smith, Chairman and CEO of Prize stated, "Magnum Hunter has
demonstrated an excellent exploration track record. The exploration inventory of
Magnum Hunter combined with the exploitation opportunities of Prize offer our
shareholders an excellent opportunity for future growth. In addition, the Prize
shareholders will enjoy substantially increased liquidity in their securities."
MAJOR TERMS AND CONDITIONS
Under the terms of the definitive agreement, Prize shareholders will receive
$24.00 per common share payable in 2.50 shares of Magnum Hunter common stock for
each share of Prize Energy plus a cash component that will be determined based
upon a sliding scale with a minimum of $0.25 per share (Magnum Hunter market
price of $9.50 per share or greater) to a maximum of $5.25 per share (Magnum
Hunter market price of $7.50 per share or less). The market price of the Magnum
Hunter common stock is defined as the average price of Magnum Hunter common
stock during the 20 trading day period ending on the fourth trading day prior to
closing. The parties have certain rights to terminate the transaction, should
such market price be outside of the designated collar.
With respect to the stock portion of the transaction, the merger is expected to
be non-taxable to the shareholders of both companies. The Board of Directors of
both companies have unanimously approved the merger. The merger will remain
subject to shareholder approval and other conditions. As a result, Prize
shareholders will own approximately 49 percent of the combined company and
Magnum Hunter shareholders will own approximately 51 percent.
The accounting method to be used for the merger is expected to be "purchase
accounting." Magnum Hunter expects to remain on the "full cost" method of
accounting.
Mr. Gary C. Evans will remain Chairman, President and CEO and Magnum Hunter's
executive staff will continue in their current capacities. The size of Magnum
Hunter's Board of Directors will remain the same, however, two Prize independent
board members will replace two existing independent directors of Magnum Hunter.
Based upon estimates and projections provided by both companies, the merger will
be accretive to Magnum Hunter shareholders on a proved reserves and net asset
value basis. Additionally, the merger is expected to be accretive on many
financial measures as well as significantly lowering the debt-to-equity ratio of
Magnum Hunter at closing. At December 31, 2000, total proved reserves were 367
billion cubic feet equivalent (Bcfe) for Magnum Hunter and 593 Bcfe for Prize
Energy. Operational results for the nine months ended September 30, 2001 are
summarized as follows:
<Table>
<Caption>
Magnum Hunter Prize Energy
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Daily Production:
Oil/Liquids (Bbls) 3,733 10,414
Gas (MMcf) 66,322 81,210
MMcfe 88,722 143,694
Revenues (000's) $ 124,255 $ 145,712
Per Diluted Share:
Net Income $ 0.60 $ 2.54
Cash Flow $ 1.75 $ 5.86
EBIDTA $ 2.12 $ 6.62
</Table>
OTHER TERMS AND CONDITIONS
The transaction is subject to approval by the shareholders of both companies and
other customary closing conditions. The largest shareholder of Prize Energy,
Natural Gas Partners V, L.P., representing over 50% ownership, has agreed to
vote in favor of the merger. Both companies intend to hold special shareholders'
meetings as soon as practicable. The companies anticipate filing a Registration
Statement on Form S-4 with the Securities and Exchange Commission in January
2002. Completion of the merger is anticipated to occur in the first quarter of
2002.
A conference call to more thoroughly discuss the merger will be hosted by the
senior management teams of Magnum Hunter and Prize Energy at 2:00 p.m. CST on
Tuesday, December 18, 2001. Investors wishing to participate in the AT&T
conference call, please dial in toll free (888) 276-9998 at 1:50p.m. CST on
Tuesday, December 18, 2001. International callers please dial (612) 332-0632.
A Web Broadcast will be available for listeners on the websites of both
companies. Instructions are:
Go to www.MagnumHunter.com. Go to News. Go to Conference Call.
Go to www.PrizeEnergy.com. Go to News. Go to Conference Call.
Magnum Hunter Resource Inc. is one of the nation's fastest growing independent
exploration and development companies engaged in three principal activities; i)
the exploration, development and production of crude oil, condensate and natural
gas; ii) the gathering, transmission and marketing of natural gas; and iii) the
managing and operating of producing oil and natural gas properties for interest
owners. For additional information relating to Magnum Hunter Resources, Inc. The
Company invites you to visit its website at www.magnumhunter.com.
Prize Energy Corp. is a publicly traded mid-size oil and gas independent,
headquartered in the Dallas, Texas area. The Company's oil and gas operations
are concentrated in the Permian Basin of West Texas and Southeastern New Mexico,
onshore Gulf Coast region of Texas and Louisiana, and the Mid-Continent region
of Western Oklahoma and the Texas Panhandle. The Company's growth strategy is
focused on adding value on a per share basis through the acquisition and
exploitation of producing oil and gas properties in its core operating areas.
For additional information relating to Prize Energy Corp., the Company invites
you to visit its website at www.prizeenergy.com.
Additional Information and Where to Find it
In connection with the proposed merger, Magnum Hunter and Prize will file a
joint proxy statement/prospectus with the Securities and Exchange Commission.
INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of
the joint proxy statement/prospectus (when available) and other documents filed
by Magnum Hunter and Prize with the Commission at the Commission's web site at
http://www.sec.gov. Free copies of the joint proxy statement/prospectus, once
available, and each company's other filings with the Commission may also be
obtained from the respective companies. Free copies of Magnum Hunter's filings
may be obtained by directing a request to Magnum Hunter Resources, Inc., 600
East Las Colinas Blvd., Suite 1100, Irving, Texas 75039, Attn: Michael P.
McInerney, telephone: (972) 401-0752. Free copies of Prize's filings may be
obtained by directing a request to Prize Energy Corp., 3500 William D. Tate,
Suite 200, Grapevine, Texas 76051, Attn: Lon C. Kile, telephone: (817) 424-0406.
PARTICIPANTS IN THE SOLICITATION
Magnum Hunter, Prize and their respective directors, executive officers and
other members of their management and employees may be soliciting proxies from
their respective stockholders in favor of the merger. Information concerning
persons who may be considered participants in the solicitation of Magnum
Hunter's stockholders and Prize's stockholders, respectively, under the rules of
the Commission, including their interests in the merger, will be set forth in
the joint proxy statement/prospectus to be filed by Magnum Hunter and Prize with
the Commission.
This press release includes "forward-looking statements" as defined by the
Securities and Exchange Commission. Such statements are those concerning the
companies' plans, expectations and objectives for future operations. All
statements, other than statements of historical facts, included in this press
release that address activities, events or developments that the companies
expect, believe or anticipate will or may occur in the future are
forward-looking statements. This includes reserve estimates, future financial
performance, and other matters. These statements are based on certain
assumptions made by the companies based on their experience and perception of
historical trends, current conditions, expected future developments and other
factors they believe are appropriate in the circumstances. Such statements are
subject to a number of assumptions, risks and uncertainties, many of which are
beyond the control of the companies. Statements regarding future production are
subject to all of the risks and uncertainties normally incident to the
exploration for and development and production of oil and gas. These risks
include, but are not limited to, inflation or lack of availability of goods and
services, environmental risks, drilling risks and regulatory changes. There can
be no assurance of such stability. Investors are cautioned that any such
statements are not guarantees of future performance and that actual results or
developments may differ materially from those projected in the forward-looking
statements.