17th Feb 2014 12:36
LONDON (Alliance News) - Magnolia Petroleum PLC Monday said it expects strong production growth after Devon Energy Corp proposed drilling eight wells on a single lease in Oklahoma.
The US-focused onshore oil and gas production company, which takes small stakes in multiple wells in highly prospective shale plays, said the operator of its 4.1% interest Marion 1-23 HW well, has informed Magnolia that it plans to drill a total of eight wells on the same lease unit as the Marion well.
Devon told Magnolia it plans the eight wells to maximise the recovery of reserves from both the Mississippi Lime formation and the lower lying Woodford zone.
Magnolia said it expects to receive similar proposals for other leases and is therefore confident that the strong growth in production and reserves seen to date will continue.
The company said it has also elected to take a 4.1% net revenue interest and 5.41% working interest in the Rothermel 2MH well on the same spacing unit, which will also be drilled by Devon Energy. The estimated costs are USD3.7 million, with Magnolia's share of costs estimated at USD198,486.
"This has the potential to significantly increase the number of drilling locations on our leases in Oklahoma, as was the case with our North Dakota leases, which in turn has positive implications for our production and reserves growth going forward," Chief Operating Officer Rita Whittington said in a statement.
Magnolia Petroleum shares were up 4.2% to 2.29 pence Monday.
By Tom McIvor; [email protected]; @TomMcIvor1
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