What: Magnum Hunter Resources Corp (NYSE: MHR) stock jumped as much as 17% in midmorning trading after disclosing that it intends to pursue the sale of its interest in midstream company Eureka Hunter. Magnum currently owns a 45.5% equity stake in Eureka Hunter. 

So what: Magnum Hunter Resources estimates that the sale of its stake could generate upward of $700 million in gross cash proceeds for the company. It's cash the company desperately needs, as its banks are requiring it to sell assets to bolster its balance sheet. The company has had trouble meeting its timeline, which is why the timeline was just recently extended for a few more weeks. While the Eureka Hunter sale will likely take longer than that to complete, the proposed sale suggests that the company is now focused on improving its balance sheet far above the minimum requirements of its banks. In fact, such a sale, if completed, would enable the company to "restructure its balance sheet and dramatically improve its current liquidity," according to a filing with the SEC.

Now what: Magnum Hunter Resources has hinted in the past that it would like to eventually sell its stake in Eureka Hunter. However, given its currently liquidity situation, it really can't wait too much longer as it needs all the cash it can get its hands on. A quick sale at the top end of its expected range would really do wonders for the company's balance sheet, which would improve its future prospects.