27th Nov 2012 08:42
Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas
27 November 2012
Magnolia Petroleum Plc(`Magnolia' or `the Company') Operational Update
Magnolia Petroleum Plc, the AIM quoted US onshore oil and gas exploration and production company, is pleased to report an update on the Company's commercial activities in proven US onshore formations including the Bakken/Three Forks Sanish, North Dakota and the Mississippi Lime and Woodford/Hunton formations in Oklahoma.
Initial Production Rates
* Commencement of production at the Chesapeake Energy operated Otis 2-27-12 1H horizontal well in the Mississippi Lime formation, in which Magnolia has a 4.2128% working interest (`WI') and 3.370244% net revenue interest (`NRI') * + Gross initial production rate above expectations at 341 boepd (11.49 boepd net) based on first 10 days of production + Expected payout (recovery of costs) of less than 12 months on costs of US$157,628 * Commencement of production at the Paul Gillham & Co operated SPS 6-26 vertical well in the Hunton formation, in which Magnolia has a 0.8333% WI and 0.62799% NRI * + Gross initial production rate above expectations at 108 boepd (0.678 boepd net) + Expected payout of less than 12 months on costs of US$11,745
Existing Well Updates
* Roger Swartz #1 vertical well operated by Magnolia and targeting the producing Mississippi Lime formation, Oklahoma, reached targeted total depth on 26 November 2012 * + Completion is due to commence shortly * Campbell 1-H horizontal well targeting the Woodford Formation, Oklahoma, has commenced drilling. Magnolia holds a 0.0694% working interest in the well which is operated by Newfield Exploration. The total cost of the well has been estimated at US$9,500,568 with the Company's share estimated at US$6,593.
On-going Leasing Activity
* 143.55 acres acquired in the Mississippi Lime formation - total acreage in the formation now stands at 4,319.55 acres * 178 net mineral acres acquired in the Montana section of the Bakken/Three Forks Sanish formation - total acreage in this section of the formation now stands at 6,881 acres * 1.125 net mineral acres acquired in North Dakota providing 8 additional potential drilling locations targeting the Bakken/Three Forks Sanish formations
Magnolia COO, Rita Whittington said, "We are delighted with the initial production rates for the Otis and SPS wells, both of which have exceeded our expectations. At current rates, our participation costs for both wells will be recovered within 12 months. The quicker the payout the sooner we can recycle revenues into further wells, as well as continue to build our growing inventory of potential drilling locations in proven US onshore formations by acquiring additional leases, as announced today.
"Following the commencement of production at the Otis and SPS wells, Magnolia now has interests in 86 producing wells in proven US onshore formations including the prolific Bakken/Three Forks Sanish formations in North Dakota, with a further 15 wells currently drilling/completing and 13 waiting to spud. We believe the combination of our proven business model with the ever increasing number of opportunities we are seeing in our areas of interest, keep us on course to generate significant value for all shareholders."
Website Photos
New pictures of the Roger Swartz #1, along with the Prucha 1-23MH and Montecristo 6-1H wells have been uploaded onto the Company's website, under the "Operations" tab at www.magnoliapetroleum.com.
** ENDS **
Glossary
`boe' means barrels of oil equivalent: a unit of energy based on the approximate energy released by burning one barrel (42 US gallons or 158.9873 litres) of crude oil.
There are 42 gallons (approximately 159 litres) in one barrel of oil, which will contain approximately 5.8 million British Thermal Units (MBtus) or 1,700 kilowatt hours (kWh). The value is necessarily approximate as various grades of oil have slightly different heating values. BOE is used by oil and gas companies in their financial statements as a way of combining oil and natural gas reserves and production into a single measure.
`boepd' means barrels of oil equivalent per day
For further information on Magnolia Petroleum Plc visit www.magnoliapetroleum.com or contact the following:
Steven Snead Magnolia Petroleum Plc +01 918 449 8750 Rita Whittington Magnolia Petroleum Plc +01 918 449 8750 Antony Legge/James Thomas Daniel Stewart & Company Plc +44 (0) 20 7776 6550 John Howes/John-Henry Wicks Northland Capital Partners +44 (0) 20 7796 8800
Limited Lottie Brocklehurst St Brides Media and Finance +44 (0) 20 7236 1177 Ltd Frank Buhagiar St Brides Media and Finance +44 (0) 20 7236 1177 Ltd NotesMagnolia Petroleum Plc is an AIM quoted, US focused, oil and gas explorationand production company. Its portfolio includes interests in 86 producing andnon-producing assets, primarily located in the highly productive Bakken/ThreeForks Sanish hydrocarbon formations in North Dakota as well as the oil richMississippi Lime and the substantial and proven Woodford and Hunton formationsin Oklahoma.Summary of WellsCategory Number of wells Producing 86 Being Drilled/Completed 15 Elected to participate/waiting to spud 13 TOTAL 114
This summary excludes four out of six wells acquired as part of the acquisition of 800 gross acres with a 100% working interest in Osage County, Oklahoma, as announced on 10 February 2012. These four wells are currently `shut in' and will require a workover programme at some point in the future to bring back into production.
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