UPDATE: Goldman Sachs Initiates Magnum Hunter Resources at Neutral; Still Building Scale

Goldman Sachs initiated its cover on Magnum Hunter Resources

with a Neutral rating and a price target of $6. Goldman Sachs commented, "We view positively exposure to the Bakken/Eagle Ford/Marcellus shales that can drive low cost growth. However, we believe MHR is still in the process of building in these areas (potentially via restructuring/acquisitions); we view scale as crucial to confidence in longer-term execution. We believe investors will seek an additional margin of safety to compensate for potential greater volatility in operational/financial metrics until scale is demonstrated. With in-line valuation to peers adjusted for resource life, we rate shares Neutral." Magnum Hunter Resources closed at $4.49 on Wednesday.