17th Oct 2014 09:20
LONDON (Alliance News) - Magnolia Petroleum PLC Friday said it will continue to expand as it announced production has started at two further wells in its US onshore formation, the Mississippi Lime in Oklahoma.
Magnolia has started production at the Partagas and Coffman wells. Partagas has a gross initial production rate of 192 barrels of oil per day and a net initial production rate of 7.2 barrels of oil per day. Coffman has a gross initial producton rate of 566 barrels of oil equivalent per day and a net initial production rate of 6.6 barrels of oil equivalent per day.
"The initial production rates of the Coffman and Partagas wells continue the recent run of excellent results we have seen from wells drilled to the Mississippi Lime formation in Oklahoma," said Chief Operating Officer Rita Whittington.
It is also participating in three further wells, Van Meadows, Woodrell and B&W, at an aggregate cost of USD383,579. Two of the wells are waiting to be drilled whilst the other is waiting to be fracked, it said in a statement.
Magnolia believe it has an opportunity to continue expanding despite difficult market conditions due to its low costings across the Missippi Lime formation.
"The Mississippi Lime has a low breakeven oil price and is therefore well suited to the current volatile price environment. With this in mind and as illustrated by the Van Meadows, Woodrell and B&W wells, we continue to receive multiple proposals to drill new wells," said Whittington.
"Magnolia?s cost to produce is low at less than USD30 per barrel. Like all oil companies, we would prefer to see higher oil prices, but even with pressure on the oil price Magnolia's margins are very healthy. We are therefore well placed to continue to roll-out our strategy of participating in new drilling to prove up the reserves on our leases and I look forward to providing further updates on our progress in due course.? she added.
Across all of its operations, Magnolia has 163 producing wells, 8 of these are being initially drilled such as Coffman and PArtagas, 10 more are currently being drilled and a further 50 are waiting to be drilled.
Magnolia shares were up 4.4% to 1.12 pence per share Friday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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