Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________

Form 10-Q

SPECIAL FINANCIAL REPORT PURSUANT TO RULE 15d-2 OF THE SECURITIES
EXCHANGE ACT OF 1934

Contains only the financial statements for the period ended ~~June~~ September 30, 2013

Commission file number: 001-32997

_____________________________________

PRC ~~Williston~~WILLISTON, LLC

(Name of registrant as specified in its charter)



Delaware	86-0879278
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

777 Post Oak Boulevard, Suite 650, Houston, Texas 77056 ~~(Address of principal executive offices, including zip code) (832) 369-6986~~

(Address of principal executive offices) (Zip Code)
(832) 369-6986

(Registrant’s telephone number including area code)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes oNo x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes oNo x

Indicate by check mark if the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during

the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes xNo o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes xNo o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	o		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yeso No x

State the aggregate market value of the voting and non-voting common equity held by non-affiliates: The membership interests, or participation interests that may be functionally equivalent to membership interests, of the registrant are not publicly traded. There is no aggregate market value for the registrant’s outstanding equity that is readily determinable.

_____________________________________

DOCUMENTS INCORPORATED BY REFERENCE

None.

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD ENDED ~~JUNE~~SEPTEMBER 30, 2013

TABLE OF CONTENTS

	Page
EXPLANATORY NOTE	1
PART I. FINANCIAL INFORMATION	12
Item 1. Financial Statements (unaudited)	12
Balance Sheets as of June 30, 2013 and December 31, 2012	2
Balance Sheets as of September 30, 2013 and December 31, 2012	2
Statements of Operations for the Six Months Ended June 30, 2013 and 2012	3
Statements of Operations for the Three and Nine Months Ended September 30, 2013 and 2012	3
Statements of Changes in Member’s Deficit for the Six Months Ended June 30, 2013 and December 31, 2012	4
Statements of Changes in Member’s Deficit for the Nine Months Ended September 30, 2013 and December 31, 2012	4
Statements of Cash Flows for the the Six Months Ended June 30, 2013 and 2012 (unaudited)	5
Statements of Cash Flows for the Nine Months Ended September 30, 2013 and 2012 (unaudited)	5
Notes to Financial Statements	6
Item 2. Management's Discussion and Analysis	9
Item 3. Quantitative and Qualitative Disclosures About Market Risk	1011
Item 4. Controls and Procedures	1011
PART II. OTHER INFORMATION	1011
Item 1. Legal Proceedings	1011
Item 1A. Risk Factors	1011
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	1011
Item 3. Defaults Upon Senior Securities	1011
Item 4. Mine Safety Disclosures	1112
Item 5. Other Information	1112
Item 6. Exhibits	1112
SIGNATURES	1213

EXPLANATORY NOTE

On February 7, 2013, the Securities and Exchange Commission (the “SEC”) declared effective the Registration Statement on Form S-4 of Magnum Hunter Resources Corporation (“Magnum Hunter” or “Parent”), relating to the Parent's sale of Senior Notes. A detailed description of the offering is included in the Form S-4 Registration Statement. PRC Williston, LLC (the “Company” or “PRC Williston”), a subsidiary of the Parent, is a guarantor of the Senior Notes registered under the Form S-4 Registration Statement 87.5% owned by the Parent under Rule 3-10 of Regulation S-X, promulgated by the SEC, due to the holding by a third party of a minority participation interest that may be functionally equivalent to a membership interest in the Company. Accordingly, the Company is required to make certain filings under the Securities Exchange Act of 1934, as amended, separately from the Parent, including this Quarterly Report on Form 10-Q.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PRC WILLISTON, LLC

BALANCE SHEETS

(In thousands)

	June 30,			December 31,
	2013			2012
	(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	50		$	—
Accounts receivable	889			703
Inventory	261			—
Total current assets	1,200			703
PROPERTY AND EQUIPMENT:
Oil and natural gas properties, successful efforts method	32,820			33,800
Accumulated depletion, depreciation, and accretion	(16,251		)	(15,543		)
Total oil and natural gas properties, net	16,569			18,257
Total Assets	$	17,769		$	18,960
LIABILITIES AND MEMBER’S DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	1,879		$	1,403
Current portion of asset retirement obligation	936			889
Accounts payable due to Parent	59,871			58,965
Total current liabilities	62,686			61,257
Asset retirement obligation	1,338			1,274
Total liabilities	64,024			62,531
MEMBER’S DEFICIT:	(46,255		)	(43,571		)
Total Liabilities and Member’s Deficit	$	17,769		$	18,960

(unaudited)



	September 30,			December 31,
	2013			2012

ASSETS

CURRENT ASSETS
Accounts receivable	1,234			703
Prepaid expenses	31			—
Inventory	290			—
Total current assets	1,555			703

PROPERTY AND EQUIPMENT
Oil and natural gas properties, successful efforts method	33,636			33,800
Accumulated depletion and depreciation	(16,715		)	(15,543		)
Total oil and natural gas properties, net	16,921			18,257
Total Assets	$	18,476		$	18,960

LIABILITIES AND MEMBER’S DEFICIT

CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	1,962		$	1,403
Current portion of asset retirement obligation	962			889
Accounts payable due to Parent	61,314			58,965
Total current liabilities	64,238			61,257

NONCURRENT LIABILITIES
Asset retirement obligation	1,351			1,274
Total liabilities	65,589			62,531

MEMBER’S DEFICIT	(47,113		)	(43,571		)

Total Liabilities and Member’s Deficit	$	18,476		$	18,960

The accompanying Notes to the Financial Statements are an integral part of these unaudited Financial Statements.

PRC WILLISTON, LLC

~~UNAUDITED~~ STATEMENTS OF OPERATIONS

(In thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
REVENUE:
Oil and gas sales	$	1,687		$	2,102		$	3,296		$	4,189
Total revenue	1,687			2,102			3,296			4,189
EXPENSES:
Lease operating	1,503			1,038			2,169			2,598
Severance taxes and marketing	101			77			201			187
Impairment of proved oil and gas property	1,231			—			1,231			—
Depreciation, depletion, and accretion	381			608			769			1,229
General and administrative	197			299			514			598
Total expenses	3,413			2,022			4,884			4,612
OPERATING INCOME (LOSS):	(1,726		)	80			(1,588		)	(423		)
INTEREST EXPENSE:	(615		)	(481		)	(1,096		)	(962		)
Net loss	$	(2,341	)	$	(401	)	$	(2,684	)	$	(1,385	)

(unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
REVENUE
Oil and natural gas sales	$	2,019		$	1,876		$	5,315		$	6,065
Total revenue	2,019			1,876			5,315			6,065

OPERATING EXPENSES
Lease operating expenses	1,465			875			3,634			3,473
Severance taxes and marketing	120			121			321			308
Impairment of proved oil and gas property	—			—			1,231			—
Depreciation, depletion, and accretion	496			488			1,265			1,717
General and administrative	439			299			953			898
Total operating expenses	2,520			1,783			7,404			6,396

OPERATING INCOME (LOSS)	(501		)	93			(2,089		)	(331		)

INTEREST EXPENSE	(357		)	(565		)	(1,453		)	(1,527		)

NET LOSS	$	(858	)	$	(472	)	$	(3,542	)	$	(1,858	)

The accompanying Notes to the Financial Statements are an integral part of these unaudited Financial Statements.

PRC WILLISTON, LLC

UNAUDITED STATEMENT OF CHANGES IN MEMBER’S DEFICIT

(In thousands)

Balance, January 1, 2013	$	(43,571	)
Net loss	(2,684		)
Balance, June 30, 2013	$	(46,255	)

(unaudited)



Balance, January 1, 2013	$	(43,571	)
Net loss	(3,542		)
Balance, September 30, 2013	$	(47,113	)

The accompanying Notes to the Financial Statements are an integral part of these unaudited Financial Statements.

PRC WILLISTON, LLC

UNAUDITED STATEMENTS OF CASH FLOWS

(In thousands)

	Six Months Ended June 30,
	2013			2012
Cash flows from operating activities
Net loss	$	(2,684	)	$	(1,385	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depletion, depreciation, and accretion	769			1,229
Asset impairment	1,231			—
Changes in operating assets and liabilities:
Accounts receivable	(184		)	1,366
Inventory	(261		)	—
Accounts payable and accrued liabilities	273			1,069
Accounts payable - Intercompany	906			(2,231		)
Net cash (used in) provided by operating activities:	50			48
Cash flows from investing activities
Capital expenditures	—			(48		)
Net cash provided by (used in) investing activities	—			(48		)
Cash flows from financing activities
(Repayments to) Advances from parent	—			—
Net cash (used in)provided by financing activities	—			—
				.
Net change in cash and cash equivalents	50			—
Cash and cash equivalents, beginning of period	—			—
Cash and cash equivalents, end of period	50			—
Cash paid for interest	$	—		$	—
Non-cash transactions
Change in accrued capital expenditures	$	389		$	—
Non-cash additions to asset retirement obligation	$	48		$	—

(unaudited)



	Nine Months Ended September 30,
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(3,542	)	$	(1,858	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depletion, depreciation, and accretion	1,265			1,717
Asset impairment	1,231			—
Changes in operating assets and liabilities:
Accounts receivable	(531		)	1,234
Inventory	(290		)	—
Prepaid expenses and other current assets	(31		)	—
Accounts payable and accrued liabilities	431			1,069
Net used in operating activities:	(1,467		)	2,162

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(882		)	(48		)
Net cash used in investing activities	(882		)	(48		)

CASH FLOWS FROM FINANCING ACTIVITIES
(Repayments to) Advances from parent	2,349			(2,114		)
Net cash (used in)provided by financing activities	2,349			(2,114		)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	—			—
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	—			—
CASH AND CASH EQUIVALENTS, END OF PERIOD	—			—

NON-CASH TRANSACTIONS
Change in accrued capital expenditures	$	129		$	43
Non-cash additions to asset retirement obligation	$	129		$	43

The accompanying Notes to the Financial Statements are an integral part of these unaudited Financial Statements.

PRC WILLISTON, LLC

NOTES TO FINANCIAL STATEMENTS

(~~Unaudited~~unaudited)

NOTE 1—ORGANIZATION AND NATURE OF OPERATIONS

PRC Williston, LLC (the “Company" or “PRC Williston”) is a 87.5% - owned subsidiary of Magnum Hunter Resources Corporation, a Delaware corporation, operating directly and indirectly through its subsidiaries (“Magnum Hunter” or “Parent”), a Houston, Texas based independent exploration and production company engaged in the acquisition and development of producing properties and undeveloped acreage, ~~and~~ the production of oil and natural gas, ~~in the United States~~ and ~~Canada and~~ certain midstream and oil field service activities in the United States ("U.S."). PRC Williston is engaged in secondary enhanced oil recovery projects in the ~~United States~~U.S., and all of its properties are non-operated in the Williston Basin.

The Company is a limited liability company (“LLC”). As an LLC, the amount of loss at risk for each individual member is limited to the amount of capital contributed to the LLC, and unless otherwise noted, the individual member’s liability for indebtedness of an LLC is limited to the member’s actual capital contribution. Magnum Hunter is the sole member of the Company; however, the Company has granted a 12.5% net profits interest to an unaffiliated third party. The net profits interest is functionally equivalent to a nonvoting class of membership interest in that it allows participation by the third party in any future distributions made by PRC Williston to the Parent on account of the Parent's equity interest.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

~~Our~~The accompanying unaudited interim consolidated financial statements ~~are~~of PRC Williston have been prepared in accordance with accounting principles generally accepted in the ~~United~~U.S. ~~States~~and the rules of ~~America.~~the ~~The~~SEC, ~~preparation~~for interim financial information and with the instructions to Form 10-Q and Article 10 of ~~our~~Regulation S-X and should be read in conjunction with the audited financial statements ~~requires~~and ~~management~~notes tothereto ~~make~~contained ~~estimates~~in ~~and~~the ~~assumptions~~Company’s ~~that~~annual ~~affect~~report on Form 10-K for the ~~reported~~year ~~amounts~~ended ofDecember ~~assets~~31, ~~liabilities~~2012. In the opinion of management, ~~revenues~~all ~~and~~adjustments, ~~expenses.~~consisting ~~These~~of ~~estimates~~normal ~~are~~recurring ~~based~~adjustments, onnecessary ~~information~~for ~~that~~a isfair ~~currently~~statement ~~available~~of tothe usfinancial position and onthe ~~various~~results ~~other~~of ~~assumptions~~operations ~~that~~for wethe ~~believe~~interim toperiods bepresented ~~reasonable~~have ~~under~~been ~~the~~reflected ~~circumstances~~herein. ~~Actual~~The results ~~could~~of ~~differ~~operations ~~from~~for ~~those~~interim ~~estimates~~periods ~~under~~are ~~different~~not ~~assumptions~~necessarily ~~and~~indicative ~~conditions. Significant~~of ~~estimates~~the ~~are~~results ~~required~~to be expected for ~~proved~~the ~~oil~~full ~~and~~year. ~~gas~~The ~~reserves~~year-end ~~which~~balance ~~may~~sheet ~~have~~data awere ~~material~~derived ~~impact~~from onaudited ~~the~~financial ~~carrying~~statements, ~~value~~but ofdo ~~oil~~not ~~and~~include ~~gas~~all ~~property~~disclosures required by accounting principles generally accepted in the U. S.

Notes to the financial statements that would substantially duplicate the ~~disclosure~~disclosures contained in the audited ~~consolidated~~ financial statements as reported in the 2012 annual report on Form 10-K for ~~Magnum~~PRC ~~Hunter~~Williston have been omitted.

Oil and Gas Properties

Capitalized Costs

We follow the successful efforts method of accounting for our oil and gas producing activities. Costs to acquire mineral interests in oil and gas properties and to drill and equip development wells and related asset retirement costs are capitalized. Costs to drill exploratory wells are capitalized pending determination of whether the wells have proved reserves. If we determine that the wells do not have proved reserves, the costs are charged to expense. There were no costs capitalized for exploratory wells pending the determination of proved reserves at either ~~June~~ September 30, 2013 or December 31, 2012. Geological and geophysical costs, including seismic studies and costs of carrying and retaining unproved properties are charged to expense as incurred. We capitalize interest on expenditures for significant exploration and development projects that last more than six months while activities are in progress to bring the assets to their intended use. No interest was capitalized during the periods presented.

On the sale or retirement of a complete unit of a proved property, the cost and related accumulated depreciation, depletion, and amortization are eliminated from the property accounts, and the resultant gain or loss is recognized. On the retirement or sale of a partial unit of proved property, the cost is charged to accumulated depreciation, depletion, and amortization with a resulting gain or loss recognized in income.

Capitalized amounts attributable to proved oil and gas properties are depleted by the unit-of-production method over proved reserves using the unit conversion ratio of six Mcf of gas to one Bbl of oil and the ratio of forty-two Gal of natural gas liquids to one Bbl of oil. Well costs and related equipment are depleted over proved developed reserves, and leasehold costs are depleted over total proved reserves.

Capitalized costs related to proved oil and gas properties, including wells and related equipment and facilities, are evaluated for impairment based on an analysis of undiscounted future net cash flows. If undiscounted cash flows are insufficient to recover the net capitalized costs related to proved properties, then we recognize an impairment charge in income from operations equal to the difference between the net capitalized costs related to proved properties and their estimated fair values based on the present value of the related future net cash flows. We recorded $1.2 million impairment charges to our proved properties during the three and six months ended June 30, 2013 based on our analysis.

~~Unproved~~capitalized ~~oil~~costs ~~and~~related ~~gas~~to proved properties ~~that~~and ~~are~~their ~~individually~~estimated ~~significant~~fair ~~are~~values ~~periodically~~based ~~assessed~~on ~~for~~the ~~impairment~~present value of ~~value,~~the ~~and~~related afuture ~~loss~~net iscash ~~recognized~~flows. atWe ~~the~~recorded ~~time~~proved ofproperty impairment bycharge ~~providing~~of an$1.2 ~~impairment~~million ~~allowance~~ in the ~~Company's~~three ~~statement~~and ofnine ~~operations. We~~months ~~recorded~~ended noSeptember 30, ~~impairment~~2013, ~~charges~~and tono ~~unproved~~impairments ~~properties~~for ~~during~~ the ~~six~~three and nine months ended ~~June~~September 30, ~~2013 or~~ 2012.

Unproved oil and gas properties that are individually significant are periodically assessed for impairment of value, and a loss is recognized at the time of impairment by providing an impairment allowance in the Company's statement of operations. We recorded no impairment charges to unproved properties during the three and nine months ended September 30, 2013 or 2012.

Inventory

Commodities inventories are carried at the lower of average cost or market, on a first-in, first-out basis. The Company’s commodities inventories consist of oil held in storage. Any valuation allowances of commodities inventories are recorded as reductions to the carrying values of the commodities inventories included in the Company’s ~~consolidated~~ balance sheets and as charges to lease operating expense in the ~~consolidated~~ statements of operations. The Company had $~~261~~290,000 and $0 in commodities inventory as of ~~June~~ September 30, 2013 and December 31, 2012, respectively.

Income Taxes

The Company is not subject to federal income taxes and does not have a tax sharing agreement or allocate taxes with its member. Therefore, no provision has been made for federal or state income taxes on the Company’s books. It is the responsibility of the member to report its share of taxable income or loss on its separate income tax return. Accordingly, no recognition has been given to federal or state income taxes in the accompanying financial statements.

Based on management’s analysis, the Company did not have any uncertain tax positions as of ~~June~~ September 30, 2013 or 2012. At ~~June~~ September 30, 2013, and 2012, there were no material income tax interest or penalty items recorded in the statement of operations or as a liability on the balance sheet.

NOTE 3 - ASSET RETIREMENT OBLIGATIONS

The Company accounts for asset retirement obligations based on the guidance of ASC 410 which addresses accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. ASC 410 requires that the fair value of a liability for an asset’s retirement obligation be recorded in the period in which it is incurred and the corresponding cost capitalized by increasing the carrying amount of the related long-lived asset. The liability is accreted to its present value each period, and the capitalized cost is depreciated over the estimated useful life of the related asset. Both the accretion of the liability and the depreciation of the asset are included in DD&A. We have included estimated future costs of abandonment and dismantlement in our successful efforts oil and gas properties base and deplete these costs as a component of our DD&A expense in the accompanying financial statements.

The following table summarizes the Company’s asset retirement obligation transactions during the ~~six~~nine months ended ~~June~~September 30~~, 2013~~:

	Six Months Ended June 30, 2013
	Nine Months Ended September 30, 2013
	(in thousands)
Asset retirement obligation at beginning of period	$	2,163
Accretion expense	6295
Revisions in estimated liabilities	4948
Asset retirement obligation at end of period	2,274
Liabilities incurred	7
Less: current portion	(936		)
Asset retirement obligation at end of period	2,313
Asset retirement obligation at end of period	$	1,338
Less: current portion	(962		)
Asset retirement obligation at end of period	$	1,351

NOTE 4 - RELATED PARTY TRANSACTIONS

The Company and its parent, Magnum Hunter, have an arrangement whereby Magnum Hunter provides funding to the Company for costs of developing oil and gas properties and Magnum Hunter allocates interest expense and general and administrative expenses to the Company. The allocation of interest expense is based on the amount funded to the Company multiplied by the interest rate applicable to the MHR Senior Revolving Credit Facility. General and administrative expenses are allocated to the Company from Magnum Hunter on a pro rata basis relating to the Company's revenues in proportion to the consolidated oil and gas sales of Magnum Hunter and all its subsidiaries.

The following table sets forth the Company’s related-party expenses during the three and ~~six~~nine month periods ended ~~June~~ September 30, 2013 and 2012:

	Three Months Ended					Six Months Ended
	Three Months Ended September 30,						Nine Months Ended September 30,
	June 30,					June 30,
	2013			2012			2013		2012
	2013		2012			2013		2012
	(in thousands)
Interest expense	~~615,000~~$	357	~~481,000~~	$	565	~~1,096,000~~	$	~~962~~1,~~000~~453	$	1,527
General and administrative	~~197,000~~$	439	~~299,000~~	$	299	~~514,000~~	$	~~598,000~~953	$	898

Accumulated interest and general and administrative expense allocated to PRC Williston are included in accounts payable due to Parent. At ~~June~~ September 30, 2013, the balance due to Magnum Hunter was $5961.93 million, and $59.0 million at December 31, 2012.

NOTE 5 - GUARANTEE

On May 16, 2012, the Company was named a guarantor subsidiary to the Senior Notes issued by the Parent, which are due May 15, 2020. The Senior Notes were issued by the Parent pursuant to an indenture entered into on May 16, 2012, as supplemented, among the Parent, the subsidiary guarantors party thereto , Wilmington Trust, National Association, as the trustee, and Citibank, N.A., as the paying agent, registrar and authenticating agent. The terms of the Senior Notes are governed by the indenture, which contains affirmative and restrictive covenants that, among other things, limit the Parent's and the guarantors' ability to incur or guarantee additional indebtedness or issue certain preferred stock; pay dividends on capital stock or redeem, repurchase or retire capital stock or subordinated indebtedness or make certain other restricted payments; transfer or sell assets; make loans and other investments; create or permit to exist certain liens; enter into agreements that restrict dividends or other payments from restricted subsidiaries to the Company; consolidate, merge or transfer all or substantially all of their assets; engage in transactions with affiliates; and create unrestricted subsidiaries.

The indenture also contains events of default. Upon the occurrence of events of default arising from certain events of bankruptcy or insolvency, the Senior Notes shall become due and payable immediately without any declaration or other act of the trustee or the holders of the Senior Notes. Upon the occurrence of certain other events of default, the trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Senior Notes may declare all outstanding Senior Notes to be due and payable immediately.

The Parent had $600.0 million in principal outstanding under the Senior Notes as of ~~June~~ September 30, 2013 ~~and December 31, 2012~~. The Company shares joint and several liability with other guaranteeing subsidiaries of the Parent, and the Company does not expect the default provisions to require recourse to the ~~guarantors~~lenders. As such, the Company cannot estimate any potential loss as a result of the guarantee of indebtedness of the Parent. As of ~~June~~ September 30, 2013, the Parent was in compliance with Senior Note debt covenants, ~~except~~as ~~for~~described ~~the~~in ~~filing~~Magnum ~~of the Parent~~ Hunter's ~~2012~~Quarterly Report on Form 10-K,Q asfor ~~described in~~ the ~~Magnum Hunter second~~ quarter ~~2013~~ended ~~report~~September on30, ~~Form 10-Q~~2013, in "Note 97 - Long -Term Debt"."

Item 2. ~~Management~~MANAGEMENT'sS ~~Discussion~~DISCUSSION ~~and~~AND ~~Analysis~~ANALYSIS ofOF ~~Financial~~FINANCIAL ~~Condition~~CONDITION ~~and~~AND ~~Results~~RESULTS ofOF ~~Operations~~ OPERATIONS

Cautionary Statements Regarding Forward-looking Statements

This section and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements also can be identified by words such as “anticipates,” “expects,” “believes,” “plans,” “will,” “would,” “could,” “future,” and similar terms. Forward-looking statements are not guarantees of future performance and the Company's actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part II, Item 1A of this Quarterly Report on Form 10-Q under the heading “Risk Factors,” which are incorporated herein by reference. The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Glossary of terms used:

Boe Barrels of oil equivalent, six Mcf converts to one Boe and forty-two gallons of NGL converts to one Boe.

Mcf One thousand cubic feet of natural gas.

NGL Natural gas liquids.

Business Overview

PRC Williston is an 87.5% owned subsidiary of Magnum Hunter Resources Corporation, a Delaware corporation, operating directly and indirectly through its subsidiaries, a Houston, Texas based independent exploration and production company engaged in the acquisition and development of producing properties and undeveloped acreage and the production of oil and natural gas in the United States and Canada and certain midstream and oil field service activities. PRC Williston is engaged in secondary enhanced oil recovery projects in the United States, and all of its properties are non-operated in the Williston Basin.

~~Oil~~Results and gas volumes. Oil and gas production for the three months ended June 30, 2013 decreased 31% to 21,718 BOE from 31,447 BOE for the three months ended June 30, 2012. The decrease is primarily related to natural production declines and well downtime for maintenance and repair of ~~wells.~~Operations

~~Oil~~Three ~~and gas revenue. Oil and gas sales for the for three~~ months ended ~~June~~ September 30, 2013 ~~decreased~~and ~~20% to $1.7 million from $2.1 million for the three months ended June 30,~~ 2012 ~~as a result of decreased volumes.~~

~~Inventory. The~~Oil ~~Company~~and ~~began~~natural ~~valuing~~gas volumes. Oil and ~~recording~~gas ~~oil~~production ~~held~~for inthe ~~storage~~three asmonths ~~inventory~~ended ~~during~~September 30, ~~the~~2013 ~~first~~decreased ~~quarter~~4% ofto ~~2013. Inventory~~26,530 ~~was~~Boe ~~valued~~from at27,550 ~~cost~~Boe asfor ~~$260,900~~the atthree ~~June~~months ended September 30, ~~2013~~2012. ~~compared~~The decrease is primarily related to $0natural atproduction ~~December~~declines ~~31,~~and ~~2012~~well downtime for maintenance and repair of wells.

~~Lease~~Oil ~~operating~~and ~~expense~~natural gas sales. ~~Lease~~Oil ~~operating~~and ~~expense~~gas sales for the for three months ended ~~June~~ September 30, 2013 increased 458% to $12.50 million from $1.09 million for the three months ended ~~June~~ September 30, 2012. ~~Additional~~as ~~lease~~a ~~operating expense is the primarily the~~ result of ~~maintenance~~an ~~and~~increase ~~costs~~in ~~partially~~prices ~~offset~~we byreceived afor ~~reduction~~our inproduction ~~recurring~~from ~~lease~~$68.12 ~~operating~~Boe ~~expense due~~ to ~~operations~~$76.10 ~~management by Williston Hunter North Dakota~~Boe.

~~Depreciation,~~Lease ~~depletion,~~operating ~~and accretion~~expenses. ~~Depreciation,~~Lease ~~depletion,~~operating ~~and~~expenses ~~accretion expense~~ for ~~the~~ three months ended ~~June~~ September 30, 2013 ~~decreased~~increased 3768% to $~~381,000~~1.5 million from $~~608,000~~0.9 million for the three months ended ~~June~~ September 30, 2012. asAdditional alease operating expense is the primarily the result of ~~decreased~~maintenance ~~volumes~~costs.

General and administrative expense. General and administrative ("G&A") expense ~~decreased~~increased to $~~197~~439,000 from $299,000 for the three months ended ~~June~~ September 30, 2013, due to ~~lower~~increased ~~costs~~charges ~~incurred by the Parent~~ for ~~financial~~shared ~~administration~~services ~~and~~with ~~accounting services~~parent.

~~Impairment~~Interest expense. AnInterest ~~impairment~~expense ~~charge~~decreased ofto $~~1.2~~357,000 ~~million~~from ~~was~~$565,000 ~~recognized on certain proved properties~~ in the three months ended ~~June~~ September 30, ~~2013 as compared to no such impairments for the three months ended June 30,~~ 2012~~. Due to increased lease operating costs~~, ~~some~~primarily ~~reserves~~as ~~became~~a ~~uneconomic~~result toof ~~produce~~decreased ~~and~~interest ~~were written off~~rates.

~~Review~~Nine ~~of Results for the six~~ months ended ~~June~~ September 30, 2013 and 2012

Oil and natural gas volumes. Oil and gas production for ~~six~~nine months ended ~~June~~ September 30, 2013 decreased 2619% to 4370,~~969~~854 ~~BOE~~Boe from 5987,~~769~~319 ~~BOE~~Boe in ~~six~~nine months ended ~~June~~ September 30, 2012. The decrease is primarily related to natural production declines and ~~second~~ ~~quarter~~ well downtime for maintenance and repair of wells.

Oil and gas revenue. Oil and gas sales for the six months ended June 30, 2013 decreased 21% to $3.3 million from $4.2 million in the six months ended June 30, 2012.

Inventory. The Company began valuing and recording oil held in storage as inventory during the first quarter of 2013. Inventory was valued at cost as $260,900 at June 30, 2013 compared to $0 at December 31, 2012.

~~Lease~~Oil ~~operating~~and ~~expense~~natural gas sales. ~~Lease~~Oil ~~operating~~and ~~expense~~gas sales for the nine months ended September 30, 2013 decreased 1712% to $25.23 million from $2.6.1 million in the ~~six~~nine months ended ~~June~~ September 30, 2012, of which $1.~~. The~~1 ~~decrease~~million is ~~primarily~~ the result of ~~Williston~~the ~~Hunter~~decease ~~North~~in ~~Dakota~~volume ~~acting~~which asis ~~operator~~partially ~~for~~offset ~~the~~by ~~entire six months of 2013~~$0. ~~During~~4 ~~2012,~~million ~~Williston~~increase ~~Hunter~~in ~~North Dakota began operating our properties April 1, 2012 after its acquisition of Eagle Operating interests~~price.

~~Depreciation,~~Lease ~~depletion,~~operating ~~and accretion~~expense. ~~Depreciation,~~LOE ~~depletion,~~increased ~~and accretion expense decreased 37~~5% to $~~770,000~~3.6 million from $13.25 million in the ~~six~~nine months ended ~~June~~ September 30, 2012. The ~~primarily~~increase asin aLOE is primarily the result of ~~decreased~~higher ~~volumes~~maintenance costs.

~~General and administrative expense~~Impairment. ~~General~~An ~~and~~impairment ~~administrative~~charge ~~("G&A")~~of ~~expense decreased to~~ $~~514,000~~1.2 ~~from~~million ~~$598,000~~on incertain ~~the~~proved ~~six~~properties ~~months~~was ~~ended~~recognized ~~June 30, 2012 primarily~~ as acompared ~~result~~to ofno ~~lower~~such ~~costs~~impairments ~~incurred~~for by the ~~Parent~~nine ~~for~~months ~~financial~~ended ~~administration~~September 30, ~~and accounting services~~2012.

~~Impairment. An~~Depreciation, ~~impairment~~depletion, ~~charge~~and ~~of $1~~accretion.2 Depreciation, ~~million~~depletion, onand ~~certain~~accretion ~~proved~~expense ~~properties~~decreased ~~was~~26% ~~recognized as compared~~ to no$1.3 ~~such~~from ~~impairments~~$1.7 ~~for~~million in the ~~six~~nine months ended ~~June~~ September 30, ~~2012~~2013 primarily as a result of decreased volumes.

General and administrative expense. General and administrative ("G&A") expense increased to $953,000 from $898,000 in the nine months ended September 30, 2012, primarily as a result of charges for shared services with parent.

Interest expense. Interest expense decreased to $1,453,000 from $1,527,000 in the nine months ended September 30, 2012, primarily as a result of decreased interest rates.

Liquidity and Capital Resources

The Company's cash is held by its Parent. When the Company receives revenue, the cash is swept to Parent's bank account and is applied against the accounts payable due to affiliate balance. Parent will not request payment of the intercompany payable balance for at least one year after December 31, 2012.

For the ~~six~~nine months ended ~~June~~ September 30, 2013, our primary sources of cash were cash flows from operating activities.

The following table summarizes our sources and uses of cash for the periods noted:

	Six Months Ended June 30,
	Nine Months Ended September 30,
	2013				2012
	(In thousands)
	(in thousands)
Cash flows (used in) provided by operating activities	$	50$	(1,467	)	$	48$	2,162
Cash flows provided by (used in) investing activities	—	(882		)	~~(48~~	(48	)	)
Cash flows provided by financing activities	—	2,349			—	(2,114		)
Net increase (decrease) in cash and cash equivalents	$	50$	—		$	—$	—

Related Party Transactions

The following table sets forth the Company’s related-party expenses during the three and six month periods ended June 30, 2013 and 2012:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2013	2012	2013	2012
Interest expense	615,000	481,000	1,096,000	962,000
General and administrative	197,000	299,000	514,000	598,000

Accumulated interest and general and administrative expense allocated to PRC Williston are included in accounts payable due to Parent. At June 30, 2013, the balance due to Magnum Hunter was $59.9 million, and $59.0 million at December 31, 2012.

The following table sets forth the Company’s related-party expenses during the three and nine month periods ended September 30, 2013 and 2012:



	Three Months Ended September 30,				Nine Months Ended September 30,
	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(in thousands)
Interest expense	$	357	$	565	$	1,453	$	1,527
General and administrative	$	439	$	299	$	953	$	898

Accumulated interest and general and administrative expense allocated to PRC Williston are included in accounts payable due to Parent. At September 30, 2013, the balance due to Magnum Hunter was $61.3 million, and $59.0 million at December 31, 2012.

Commitments and Contingencies

The Company's Parent is involved in certain legal proceedings which could adversely affect the Company. See Part I, Item 3 of the Parent's Annual Report on Form 10-K for the year ended December 31, 2012 and Part II, Item 1 of the Parent's Quarterly Report on Form 10-Q for the quarter ended ~~June~~ September 30, 2013.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company's Parent is subject to certain Market Risks which could adversely affect the Company. See Part I, Item 3 of the Parent's Quarterly Report on Form 10-Q for the quarter ended ~~June~~ September 30, 2013.

Item 4. Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) and internal control over financial reporting are maintained at the Parent level. See Part I, Item 4 of the Parent's Quarterly Report on Form 10-Q for the quarter ended ~~June~~ September 30, 2013.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

The Company is subject to the same risk factors to which the Parent is exposed. See (i) Part I, Item 1A of the Parent's Annual Report on Form 10-K for the year ended December 31, 2012, (ii) Part II, Item 1A of the Parent's Quarterly Report on Form 10-Q for the quarter ended ~~June~~ September 30, 2013 and (iii) the “Cautionary Statements Regarding Forward-Looking Statements” included in Part I, Item 2 of this Quarterly Report on Form 10-Q.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

See list of exhibits in the Index to this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

1112

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

PRC WILLISTON, LLC

Date: August , 2013		/s/ Joseph C. Daches
Date: November 8, 2013		/s/ Joseph C. Daches
		Joseph C. Daches
		Executive Vice President and Chief
		Senior Vice President and Treasurer
		Financial Officer
		(Principal Financial Officer and Principal Accounting
Date: August , 2013		/s/ Fred J. Smith, Jr.
		Officer)
		Fred J. Smith, Jr.,
		Senior Vice President and Chief
		Accounting Officer

INDEX TO EXHIBITS

Exhibit Number Description

3.1* Certificate of Formation of the Registrant.

3.2* Limited Liability Company Agreement of the Registrant.

31.1* Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2* Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1# Certification of the Chief Executive Officer and Chief Financial Officer provided pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS^ XBRL Instance Document

101.SCH^ XBRL Taxonomy Extension Schema.

101.CAL^ XBRL Taxonomy Extension Calculation Linkbase.

101.DEF^ XBRL Taxonomy Extension Definition Linkbase.

101.LAB^ XBRL Taxonomy Extension Label Linkbase.

101.PRE^ XBRL Taxonomy Extension Presentation Linkbase.


*	Filed herewith.


#	This exhibit is furnished herewith and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

These exhibits are furnished herewith. In accordance with Rule 406T of Regulation S-T, these exhibits are not deemed to be filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are not deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under these sections.

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