NEW YORK (TheStreet) -- Magnum Hunter Resources (MHR) was gaining 12.4% to $6.14 Thursday after announcing production results in West Virginia's Utica shale and throughput volumes on Eureka Hunter's West Virginia and Ohio gas gathering pipeline.
The oil and gas company said its Stewart Winland 1300U well in Tyler County, WV was put on production last weekend. The well recorded a peak production rate of 46.5 million cubic feet of natural gas per day, or about 7,750 barrels of oil equivalent per day.
Magnum Hunter also announced that throughput volumes of Eureka Hunter's gas gathering pipeline increased to about 316,500 MMBtu per day. The company expects the pipeline's throughput to reach about 400,000 MMBtu per day by the end of the year.
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TheStreet Ratings team rates MAGNUM HUNTER RESOURCES CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate MAGNUM HUNTER RESOURCES CORP (MHR) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 139.1% when compared to the same quarter one year ago, falling from $165.44 million to -$64.65 million.
- The debt-to-equity ratio of 1.13 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.50, which clearly demonstrates the inability to cover short-term cash needs.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, MAGNUM HUNTER RESOURCES CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- MAGNUM HUNTER RESOURCES CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, MAGNUM HUNTER RESOURCES CORP reported poor results of -$1.53 versus -$0.96 in the prior year. This year, the market expects an improvement in earnings (-$0.53 versus -$1.53).
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- You can view the full analysis from the report here: MHR Ratings Report