Magnum Hunter Resources (NYSE: MHR) had a tough 2011. Despite a few upticks in April and July, the stock finished the year down nearly 30%. Turns out, the company was batting in the clean-up position and had a killer fourth quarter.

Batter up
To say that Magnum Hunter Resources was firing on all cylinders in the fourth quarter wouldn't quite do the company justice. It was more like MHR borrowed some cylinders from the neighbors and fired on those, too. Production skyrocketed 455% over the fourth quarter of 2010 to 9,166 barrels of oil equivalent per day. That number represents a 74% jump over 2011's third quarter as well.

MHR was a hard-working stock in the fourth quarter, bringing four wells online in the Eagle Ford shale, three wells in the Williston Basin, and four wells in the Marcellus shale. The company reports that the liquids profile of its Marcellus gas is one of the best in the region. Good news for the company that has identified 774 drilling locations over its 369,000 acres in the play. MHR estimates reserves in the Marcellus are as high as 265 million barrels of oil equivalent.

2011
Proved reserves were up 235% compared to numbers at year-end 2010. Reserves increased from 13.4 million BOE to 44.9 million BOE, and featured a 48% crude oil and natural gas liquids ratio.

MHR management attributes much of its success to improved drilling efficiencies and well logistics. Longer laterals and more frac stages have increased production, particularly in the Eagle Ford and Marcellus shale plays.

MHR's year-end exit rate was more than 12,500 BOE/D. All that energy is great, provided it has some place to go. To that end, the company spent much of 2011 working on its Eureka Hunter Pipeline system in the Appalachian region. The company completed 26 total miles on various laterals in the system at a cost of $1.3 million per mile, significantly lower than the industry average.

A look ahead
Average daily production has already outpaced the exit rate for 2011 and is humming along at 13,000 BOE/D, 45% of which is oil and liquids. The company increased guidance for its 2012 exit rate to 15,000 BOE/D. Magnum Hunter Resources is in an excellent position to continue to find success. Production is moving full steam ahead, and I'm impressed by its oil/liquids production ratio.

I'm confident enough in the company's growth plan to head over to CAPS and give it the green thumbs-up. The nice thing about CAPS is that I can paste my investment thesis into a CAPS pitch, allowing me to revisit my thoughts down the road.