Lexington's NGAS sold to Texas company

Leaders of Lexington-based NGAS Resources, which explores for and produces natural gas, announced this week the firm will be sold to a Texas-based energy firm.

Magnum Hunter Resources (NYSE:MHR) will purchase the company in an all-stock transaction valued at $98 million including assumption of debt.

"Magnum Hunter's substantial financial resources, coupled with its existing Appalachian operations, will enable the combined operations to accelerate growth," William Daugherty, NGAS president and CEO, said in a statement.

Reached Wednesday, Daugherty declined to comment further, saying management is prohibited from discussing the deal until a proxy filing is issued.

NGAS announced in November that it was considering moves including the sale of the company. It has struggled over the past two years, last reporting a profit in the fourth quarter of 2008. Since that time, its quarterly losses have ranged from $1.1 million to $4.8 million.

The deal will give Magnum Hunter ownership of NGAS's more than 345,000 acres of exploration territory and interests in 1,400 wells, primarily in the southern Appalachian Basin. That adds to Magnum Hunter's existing base there, as well as assets in southern Texas and North Dakota.

Under the terms of the agreement, each of the 78.4 million shares of NGAS will be transferred to Magnum Hunter for 0.0846 of a share of Magnum Hunter's common stock, according to a news release announcing the deal.

That values NGAS stock at 55 cents a share, a 41 percent premium to its closing price on Dec. 23, and Magnum Hunter's shares at $6.50 each.

The exchange ratio will not be adjusted for later changes in the stocks' prices.

Magnum Hunter announced it will issue about 6.6 million shares as part of the deal.

The deal, which is expected to close by March 31, is also contingent on restructuring agreements NGAS has with Seminole Energy Services, to which it sold a portion of its business in 2009 for about $50 million. As part of those deals, NGAS continued operating the gas-gathering facilities that were sold.