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Annual report of employee stock purchase, savings and similar plans



To the Magnum Hunter Resources Corporation, Plan Sponsor, and Plan Trustee

We have audited the accompanying statements of net assets available for benefits of the Magnum Hunter Resources Corporation 401(k) Employee Stock Ownership Plan (the “Plan”) as of December 31, 2014 and 2013, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2014 and 2014 and the changes in net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedules, schedule of assets (held at end of the year) as of December 31, 2014 and schedule of delinquent participant contributions for the year ended December 31, 2014 are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan’s management. The supplemental schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.

The following description of the Magnum Hunter Resources Corporation 401(k) Employee Stock Ownership Plan (the "Plan") provides only general information. The Plan is sponsored by Magnum Hunter Resources Corporation (“Magnum Hunter” or the "Company" or "Employer" ). Participants should refer to the Plan agreement for a more complete description of the Plan's provisions.

The Plan was established effective October 1, 2010 as a defined contribution plan covering employees of the Company who are twenty-one years of age or older and have completed one month of service. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The Company serves as the Plan Administrator. The record keeper for the Plan is July Business Services. Plan assets are held by the Trustee, Wilmington Trust Retirement and Institutional Services Company.

The purpose of the Plan is to encourage employees to save and invest, systematically, a portion of their current compensation in order that they may have a source of additional income upon their retirement, or for their family in the event of death. The Plan includes an employee stock ownership feature that is intended to allow participants to share in the growth of the Company and obtain indirect ownership interest in the Company. Employees are eligible to participate in the Plan on the first day of the calendar month following attainment of age 21 and completion of one month of employment.

Participants may contribute up to the maximum allowable Internal Revenue Service ("IRS") plan limits of their pre-tax annual compensation, as defined by the IRS. Contributions are subject to limitations on annual additions and other limitations imposed by the Internal Revenue Code, as amended (the "Code") as defined in the Plan agreement. The Plan allows for two types of elective deferrals. A participant may elect a pre-tax deferral of compensation or a participant may make a Roth contribution which is taxed differently than the pre-tax deferral.

The Plan contains an automatic enrollment feature applicable to participants once a participant meets certain eligibility requirements. Under these provisions, those employees that do not make an affirmative election to not contribute to the Plan are automatically enrolled in the Plan with contributions equal to 3% of pre-tax annual compensation. If those employees added to the Plan under the automatic enrollment feature do not change their deferral, the deferral will increase 1% on each anniversary date up to a maximum of 6%. In practice, the Company has attempted to obtain the participants' express written election to participate or not participate in salary deferrals under the Plan. Employees who are eligible to make salary deferral contributions under the Plan and who have attained age 50 before the close of the Plan year, are eligible for catch-up contributions in accordance with and subject to the limitations imposed by the Code.

Discretionary contributions are made at the end of the plan year by the Company and may take the form of increased matching contributions or profit-sharing contributions. Discretionary matching contributions are intended to provide an incentive to participate, as the Company can match a portion of each participant’s elective salary deferral. Discretionary profit sharing contributions allow the Company to make discretionary contributions to all eligible employees, regardless of whether the employees make elective salary deferrals. Discretionary matching contributions may be made in such amounts as the Company shall determine, subject to certain requirements, including that the discretionary matching contributions (1) may not increase as the amount of an employee's elective deferral increases, (2) may not be made with respect to elective deferrals that exceed 6% of the employee's compensation, and (3) may not exceed 4% of the employee's compensation.

Beginning January 1, 2011, the Company began making Qualified Automatic Safe Harbor, as defined in ERISA, matching contributions in the amount of 100% of the first 1% and 50% of the next 5% of deferred compensation. At the discretion of the Magnum Hunter Board of Directors (the “Board”), the Company may elect to contribute a discretionary matching contribution based on the amounts of salary deferrals of the participants. On August 7, 2014, the...