Magnum Hunter Reports Fourth Quarter and Fiscal Year 2004 Operating an

IRVING, Texas, March 8 /PRNewswire-FirstCall/ -- Magnum Hunter Resources, Inc. , announced today record financial results for the fourth quarter and fiscal year ended December 31, 2004:

Three Months Ended Twelve Months Ended 12/31/04 12/31/03 12/31/04 12/31/03 Daily Mcfe Production Average 246,020 203,704 219,787 200,143 Average Mcfe Price Received (Net of hedges) $6.22 $3.92 $5.50 $3.90 Daily Natural Gas Production Average (Mcf/d) 174,586 140,103 152,899 136,151 Average Gas Price Received (Net of Hedges) $6.12 $3.76 $5.41 $3.66 Daily Crude Oil Production Average (Bopd) 11,906 10,600 11,148 10,666 Average Crude Price Received (Net of Hedges) $38.88 $25.62 $34.27 $26.42 Total Operating Revenues (000's) $154,852 $83,947 $493,726 $325,014 Net Income (000's) $42,117 $7,288 $103,573 $26,117 Net Income Per Share (Diluted) $0.47 $0.11 $1.31 $0.39 Fourth Quarter 2004 Financial Results

During the three months ended December 31, 2004, net income was $42.1 million ($0.47 per diluted share), an increase of 478% as compared to net income of $7.3 million ($0.11 per diluted share) for the three months ended December 31, 2003. During 2003, costs associated with the early retirement of $60 million of 10% Senior Notes due 2007 reduced net income by $2.6 million (pre-tax) for the three months ended December 31, 2003, or $0.02 per diluted share when tax adjusted.

Total revenues for the fourth quarter of 2004 were $154.9 million, an increase of 84% from revenues of $83.9 million reported in the fourth quarter of 2003. Magnum Hunter reported an operating profit of $68.1 million during the fourth quarter of 2004. This represented an increase of 182% over the operating profit of $24.2 million reported for the corresponding 2003 period.

Production volumes totaled 22.6 billion cubic feet equivalent (Bcfe) or 246.0 MMcfe per day for the fourth quarter of 2004, an increase of 21% over production volumes reported for the fourth quarter of 2003. Natural gas production was 71% of total equivalent production during for the fourth quarter of 2004. Production volumes during the fourth quarter of 2004 were up 5% sequentially over the third quarter of 2004.

Natural gas prices realized by the Company were $6.12 per Mcf for the fourth quarter of 2004, compared to $3.76 per Mcf realized during the fourth quarter of 2003, after the impact of commodity price hedges in place during both periods. Oil prices realized were $38.88 per barrel for the fourth quarter of 2004, compared to the $25.62 per barrel realized during the fourth quarter of 2003, after the impact of commodity price hedges in place during both periods.

Fiscal Year 2004 Financial Results

For the fiscal year 2004, net income was $103.6 million ($1.31 per diluted share); nearly quadruple the net income of $26.1 million ($0.39 per diluted share) for the fiscal year 2003. Earnings in both periods were impacted by costs associated with the early retirement of debt. 2004 income was reduced by $12.3 million (pre-tax) due to the redemption of $105 million of 9.6% Senior Notes due 2012. Income for the 2003 period was reduced by $6.7 million (pre-tax) resulting from the early retirement of all of our $140 million of 10% Senior Notes due 2007.

Total revenues during 2004 were $493.7 million compared to $325.0 million during the 2003 period, a nearly 52% increase. Magnum Hunter reported an operating profit of $205.9 million during 2004, up 122% from an operating profit of $92.7 million for the 2003 period. Net cash provided by operating activities increased 85% from $162.6 million in 2003 to $300.6 million for the twelve months ended December 31, 2004.

Oil and natural gas production increased 10% to 80.4 Bcfe or 219.8 MMcfe per day for the twelve months ended December 31, 2004 when compared to the corresponding twelve months ended December 31, 2003. Natural gas production was 70% of total equivalent production volumes for the 2004 fiscal year.

Natural gas prices realized by the Company were $5.41 per Mcf during all of 2004, 48% higher than the $3.66 received in 2003. Crude oil prices realized were $34.27 per barrel for 2004, a 30% increase from the $26.42 per barrel in 2003. The natural gas and crude oil prices discussed above take into account the commodity price hedges in place during such periods.

Commodity Hedges

The Company utilizes commodity hedges as a means to provide a base level of cash flow. During the fourth quarter of 2004, the company had approximately 85.0 Mmcf per day hedged through cost-less collars with a weighted average floor price of $4.03 per MMbtu and a weighted average ceiling price of $6.01 per MMbtu. Approximately 49% of fourth quarter 2004 natural gas production was hedged. On the crude oil side, the company had approximately 4,000 barrels per day hedged through cost-less collars with a weighted average floor price of $23.25 per barrel and a weighted average ceiling price of $28.36 per barrel. Approximately 34% of the Company's fourth quarter 2004 crude oil production was hedged. During the fourth quarter of 2004, the Company paid approximately $17.6 million more than it received under its commodity hedges and, for the full-year; $45.0 million was paid out due to commodity hedge losses.

Full-Year 2004 Operating Results

Magnum Hunter participated in the drilling of 175 new wells during the twelve months ended December 31, 2004, of which 139 were classified as development and 36 were deemed exploratory. Of these 175 new wells drilled during fiscal year 2004, 167 (137 development and 30 exploratory) were deemed successful and 8 (2 developmental and 6 exploratory) were plugged and abandoned, which provided for an overall success rate of 95% (99% developmental success and 83% exploratory success). Since entering the Gulf of Mexico in 1999, Magnum Hunter has successfully completed 109 wells out of 132 new wells attempted, for an overall success rate of 83%.

Highlights for the fiscal year ended December 31, 2004 in the Gulf of Mexico include exploration discoveries at South Marsh Island 113, West Cameron 457, West Cameron 567, and Vermilion 241. At the beginning of 2004, Magnum Hunter owned interests in 174 OCS blocks. During 2004, Magnum Hunter was very successful at the Central gulf lease sale, with the company adding 53 OCS blocks and ending 2004 with interests in a total of 233 OCS blocks.

Onshore highlights center around the Company's continuous drilling program in the Morrow/Atoka/Strawn formations in Southeast New Mexico, where we continue to drill increased density wells on acreage held by production and targeting the Morrow, the Atoka, and Strawn reefs. In 2004, our drilling in this area was greatly enhanced by the acquisition of properties from Tom Brown Inc., a subsidiary of EnCana Corporation. In addition to the 465 producing wells, Magnum Hunter also acquired 44,000 net acres of undeveloped mineral leasehold interests. Success in this area remains impressive with a 99% success rate on 97 wells drilled since 1999. The wells continue to average over 1.2 Bcfe of net proved reserves and drilling and completion costs average $1.5 million.

Year End 2004 Proved Reserves

Magnum Hunter's total proved reserves at December 31, 2004, as fully engineered by the Company's independent petroleum engineering consultants, DeGolyer and MacNaughton and Cawley Gillespie & Associates, Inc. were 1.01 trillion cubic feet equivalent ("Tcfe"), composed of 610.1 billion cubic feet ("Bcf") of natural gas (61% of the total) and 66.1 million barrels ("MBbl's") of crude oil and natural gas liquids (39% of the total). Approximately 730.7 Bcfe (73% of the total) of the Company's year-end 2004 total proved reserves were classified as proved developed, with approximately 275.9 Bcfe (27% of the total) classified as proved undeveloped. The Company successfully added approximately 248.6 Bcfe of total proved reserves during 2004 from all sources, which replaced 309% of the approximately 80.4 Bcfe in production. The Company's reserves life index at year-end 2004 increased by one year to 12.5 years from 11.5 years at year-end 2003.

Recent Announcement To Be Acquired by Cimarex Energy

On January 26, 2005, Magnum Hunter and Cimarex Energy Co. 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. Closing is anticipated before the end of the second quarter in 2005, subject to customary regulatory approvals.

Under the terms of the proposed agreement, Magnum Hunter shareholders will receive 0.415 shares of Cimarex common stock for each share of Magnum Hunter common stock that they own. The merger is expected to be non-taxable to the shareholders of both companies. In addition to the merger consideration and prior to closing, Magnum Hunter intends to distribute its ownership interest in TEL Offshore Trust to its common stockholders as a special dividend.

As a result of the merger transaction and based on the 87.1 million Magnum Hunter common shares currently outstanding, Cimarex expects to issue approximately 36.1 million common shares to Magnum Hunter's common stockholders. On that basis, it is anticipated that after closing, the combined company would have approximately 78 million basic shares outstanding. Cimarex shareholders would own 53.6 percent and Magnum Hunter shareholders will own 46.4 percent of the combined entity.

Management Comments

Commenting on Magnum Hunter's operating and financial results for fiscal year 2004, Mr. Gary C. Evans, President and CEO of the Company stated, "Magnum Hunter continued executing its game plan during 2004 by completing strategic acquisitions in our onshore regions most familiar to our professional staff, and then exploiting this newly acquired acreage position in a manner that increased the return on our investment. With this new oil and gas production stream added to our existing daily base of operations, and then coupled with an extraordinary commodity price environment, the end result was record revenues, cash flow, and net income that exceeded $100 million. We anticipate continuing our growth by the drill bit during 2005 on our significant inventory base, as we move closer to a final closing on our merger with Cimarex Energy, anticipated sometime during the second quarter. The ultimate test in measuring the improvement in our Company's operations has been the reaction from our shareholders. Our stock price increased 34% during fiscal 2004 and has increased 73% over the most recent 52 weeks."

About Magnum Hunter Resources, Inc.

Magnum Hunter Resources, Inc., located in Irving, TX, is an independent oil and gas exploration and production company 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. Its operations are concentrated in the Permian Basin of West Texas and New Mexico, the Gulf of Mexico and in the Mid- Continent and Gulf Coast areas of the U.S.

About Cimarex Energy

Cimarex Energy Co., headquartered in Denver, CO, is an independent oil and gas exploration and production company with operations focused in the Mid- Continent and Gulf Coast areas of the U.S. Its principal operations offices are located in Tulsa, New Orleans and Houston.

This communication contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on Cimarex Energy Co. and Magnum Hunter Resources, Inc. current expectations and beliefs and are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those described in the forward-looking statements. Risks, uncertainties and assumptions include 1) the possibility that the companies may be unable to obtain stockholder or regulatory approvals required for the acquisition; 2) the possibility that problems may arise in successfully integrating the businesses of the two companies; 3) the possibility that the acquisition may involve unexpected costs; 4) the possibility that the combined company may be unable to achieve cost-cutting synergies; 5) the possibility that the businesses may suffer as a result of uncertainty surrounding the acquisition; 6) the possibility that the industry may be subject to future regulatory or legislative actions; 7) the volatility in commodity prices for oil and gas; 8) the presence or recoverability of estimated reserves; 9) the ability to replace reserves; 10) environmental risks; 11) drilling and operating risks; 12) exploration and development risks; 13) competition; 14) the ability of management to execute its plans to meet its goals and other risks that are described in SEC reports filed by Cimarex and Magnum Hunter. Because forward-looking statements involve risks and uncertainties, actual results and events may differ materially from results and events currently expected by Cimarex and Magnum Hunter. Cimarex and Magnum Hunter assume no obligation and expressly disclaim any duty to update the information contained herein except as required by law.

Additional Information About the Acquisition and Where to Find It:

In connection with the proposed acquisition, Cimarex and Magnum Hunter will file relevant materials with the SEC, including one or more registration statement(s) that contain a prospectus and a joint proxy statement. Investors and security holders of Cimarex and Magnum Hunter are urged to read these documents (if and when they become available) and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information about Cimarex, Magnum Hunter and the merger. Investors and security holders may obtain these documents (and any other documents filed by Cimarex and Magnum Hunter with the SEC) free of charge at the SEC's website at http://www.sec.gov/ . In addition, the documents filed with the SEC may be obtained free of charge (i) at http://www.cimarex.com/ or http://www.magnumhunter.com/ or (ii) by directing a request to Mary Kay Rohrer, Assistant Corporate Secretary, Cimarex Energy Co., phone: 303-295-3995, fax: 303-295-3494; or Morgan F. Johnston, Corporate Secretary, Magnum Hunter Resources, Inc., phone: 972-401-0752, fax: 972-443-6487. Investors and security holders are urged to read the joint proxy statement/prospectus and the other relevant materials when they become available before making any voting or investment decision with respect to the proposed acquisition.

Participants in the Solicitation:

Cimarex, Magnum Hunter and their respective executive officers and directors may be deemed to be participants in the solicitation of proxies from the stockholders of Cimarex and Magnum Hunter in favor of the merger. Information about the executive officers and directors of Cimarex and their ownership of Cimarex common stock is set forth in the proxy statement for its 2004 Annual Meeting of Stockholders, which was filed with the SEC in April 2004. Information about the executive officers and directors of Magnum Hunter and their ownership of Magnum Hunter common stock is set forth in the proxy statement for their 2004 Annual Meeting of Stockholders, which was filed with the SEC in August 2004. Investors and security holders may obtain more detailed information regarding the direct and indirect interests of Cimarex, Magnum Hunter and their respective executive officers and directors in the merger by reading the joint proxy statement/prospectus when it becomes available.

FOR FURTHER INFORMATION CONTACT Magnum Hunter Resources, Inc. contact: Howard M. Tate, Vice President of Capital Markets 972-401-0752 http://www.magnumhunter.com/ Cimarex Energy Co. contact: Paul Korus, Vice President & CFO 303-295-3995 http://www.cimarex.com/ MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands of dollars) Unaudited December 31, December 31, 2004 2003 ASSETS Current Assets Cash and cash equivalents $20,342 $18,693 Restricted cash 212 --- Accounts receivable Trade, net of allowance of $4,776 and $4,331, respectively 85,462 46,716 Notes receivable 1,396 1,996 Due from affiliates 768 --- Deferred income taxes, current 5,010 8,263 Deposits 3,198 2,713 Available for sale investments 6,067 7,563 Prepaid drilling costs 9,480 8,770 Other current assets 7,579 5,623 Total Current Assets 139,514 100,337 Property, Plant and Equipment Oil and gas properties, full-cost method Unproved 94,472 110,467 Proved 1,828,839 1,292,388 Pipelines 36,607 34,149 Other property 9,969 7,805 Total Property, Plant and Equipment 1,969,887 1,444,809 Accumulated depreciation, depletion, amortization and impairment (472,975) (348,926) Net Property Plant and Equipment 1,496,912 1,095,883 Other assets Deferred financing costs and other 9,608 13,205 Goodwill 56,467 56,467 Total Assets $1,702,501 $1,265,892 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Trade payables $65,215 $28,793 Accrued interest 5,764 8,909 Accrued liabilities 15,298 11,228 Due to affiliates 503 1,742 Other current liabilities 8,198 7,060 Revenues payable 10,871 7,860 Suspended revenue payable 22,401 16,049 Derivative liabilities, current 14,046 21,853 Current maturities of long-term debt 2,458 2,009 Total Current Liabilities 144,754 105,503 Long-Term Liabilities Long-term debt, less current maturities 643,042 595,503 Asset retirement obligations 40,086 32,489 Derivative liabilities, noncurrent 5,981 1,198 Deferred income taxes payable 188,366 141,000 Other non-current liabilities 459 523 Stockholders' Equity Preferred stock - $.001 par value; 10,000,000 shares authorized, 216,000 designated as Series A; 80,000 issued and outstanding, liquidation amount $0 1 1 Common Stock - $.002 par value; 200,000,000 shares authorized, 91,324,168 and 71,977,759 shares issued, respectively 183 144 Additional paid-in capital 615,046 429,446 Accumulated other comprehensive loss (12,621) (13,576) Retained earnings 108,576 5,003 Common stock in deferred compensation plan, at cost (34,416 shares) (192) (192) Unearned common stock in KSOP, at cost (880,083 and 1,012,203 shares, respectively) (6,215) (6,110) 704,778 414,716 Treasury stock, at cost (3,931,614 and 3,942,294 shares, respectively) (24,965) (25,040) Total Stockholders' Equity 679,813 389,676 Total Liabilities and Stockholders' Equity $1,702,501 $1,265,892 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Unaudited Three Months Ended Twelve Months Ended December 31, December 31, 2004 2003 2004 2003 Operating Revenues: Oil and gas sales $141,036 $73,479 $443,412 $284,929 Gas gathering, marketing and processing 11,732 8,802 41,900 35,317 Oil field management services 2,084 1,666 8,414 4,768 Total Operating Revenues 154,852 83,947 493,726 325,014 Operating Costs and Expenses: Oil and gas production lifting costs 17,092 13,353 60,945 56,262 Production taxes and other costs 13,858 7,689 43,704 32,772 Gas gathering, marketing and processing 8,066 6,113 29,112 25,373 Oil field management services 1,261 945 5,016 3,119 Depreciation, depletion, amortization and accretion 38,828 26,430 127,179 99,614 Gain on sale of assets (24) (19) (288) (171) General and administrative 7,664 5,249 22,125 15,347 Total Operating Costs and Expenses 86,745 59,760 287,793 232,316 Operating Profit 68,107 24,187 205,933 92,698 Equity in loss of affiliate --- (98) --- (162) Other income 291 280 2,584 889 Non-cash hedging adjustments 309 245 1,124 1,482 Costs associated with early retirement of debt --- (2,631) (12,250) (6,716) Interest expense (9,441) (10,815) (38,059) (47,260) Income Before Income Tax Benefit (expense) 59,266 11,168 159,332 40,931 Income tax benefit (expense) Current (536) 250 (1,977) 250 Deferred (16,613) (4,130) (53,782) (15,463) Total Income Tax Benefit (Expense) (17,149) (3,880) (55,759) (15,213) Income Before Cumulative Effect of a Change in Accounting Principle 42,117 7,288 103,573 25,718 Cumulative effect on prior years of a change in accounting principle, net of income tax of $244 --- --- --- 399 Net Income $42,117 $7,288 $103,573 $26,117 Income per Common Share - Basic $0.49 $0.11 $1.35 $0.39 Income per Common Share - Diluted $0.47 $0.11 $1.31 $0.39 Common Shares Used in Per Share Calculation Basic 86,062,667 66,136,286 76,952,204 66,191,816 Diluted 88,806,863 68,250,780 78,958,618 67,501,811 MAGNUM HUNTER RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of dollars) Unaudited For the Years Ended December 31, 2004 2003 2002 CASH FLOW FROM OPERATING ACTIVITIES: Net Income $103,573 $26,117 $15,522 Adjustments to reconcile net income to cash provided by operating activities: Cumulative effect of a change in accounting principle --- (399) --- Depreciation, depletion, amortization and accretion 127,179 99,614 86,468 Impairment of investments --- --- 621 Amortization of financing fees 2,647 2,377 2,037 Imputed interest on debt due to merger --- --- 108 Increase in allowance for doubtful accounts 841 231 206 Deferred income taxes (benefits) 53,782 15,463 (1,591) Equity in (income) loss of unconsolidated affiliate --- 162 (792) Costs associated with early extinguishment of debt 12,250 6,716 1,000 Cost of shares released from KSOP suspense 1,347 1,109 867 Minority interest in consolidated subsidiary (64) 89 --- Stock compensation 768 3,017 --- Non-cash directors' compensation 145 --- --- Excess of fair value over cost of shares released from KSOP suspense 2,291 441 110 Gain on sale of assets (288) (171) (61) Other non-cash hedging adjustments (1,124) (1,482) 6,626 Changes in certain assets and liabilities, net of the effect of acquisitions Accounts and notes receivable (40,357) 6,565 (17,429) Derivative assets --- --- 3,600 Deposits and other current assets (2,872) (4,264) (9,314) Accounts payable and accrued liabilities 42,931 (1,081) (7,449) (Payment) refund of income taxes (2,439) 8,134 2,874 Net Cash Provided by Operating Activities 300,610 162,638 83,403 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of assets 22,902 17,123 95,988 Proceeds from sale of unconsolidated affiliate --- 5,160 --- Purchase of land to be held for sale --- (7,563) --- Purchase of controlling interest in Metrix Networks, Inc., net of cash acquired --- (253) --- Additions to property and equipment (303,125) (175,535) (141,046) Cash paid for New Mexico property acquisition (234,180) --- --- Cash paid in Prize merger net of cash acquired --- --- (41,095) (Increase) decrease in other assets (136) (17) 238 Loan made for promissory note receivable --- --- (2,596) Payments received on promissory note receivable 600 500 --- Distribution from unconsolidated affiliate --- 1,510 256 Investment in unconsolidated affiliate --- (600) (1,165) Net Cash Used In Investing Activities (513,939) (159,675) (89,420) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of debt 466,000 517,375 627,850 Fees paid related to financing activities (1,011) (4,428) (11,961) Payments of principal on long-term debt and production payment liability (313,012) (486,348) (591,451) Redemption of notes payable (115,080) (134,374) --- Proceeds from issuance of convertible notes --- 125,000 --- Loan repaid by stockholder --- --- 742 Loan to KSOP (2,259) (2,711) (3,652) Loan repaid from KSOP 807 380 473 Proceeds from issuance of common stock 10,431 1,245 3,634 Proceeds from issuance of secondary offering of common stock 169,314 --- --- Proceeds from issuance of treasury stock --- 3,448 --- Purchase of warrants --- --- (128) Purchase of treasury stock --- (7,413) (18,494) (Increase) decrease in restricted cash for payment of notes payable (212) 682 (682) Net decrease in note receivable from affiliate --- 100 --- Purchase common stock for deferred compensation plan --- (295) --- Net Cash Provided by Financing Activities 214,978 12,661 6,331 NET INCREASE IN CASH AND CASH EQUIVALENTS 1,649 15,624 314 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 18,693 3,069 2,755 CASH AND CASH EQUIVALENTS AT END OF YEAR $20,342 $18,693 $3,069