3rd Sep 2012 07:00
Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas
3 September 2012
Magnolia Petroleum Plc(`Magnolia' or `the Company') Positive Operations Update
Magnolia Petroleum Plc, the AIM quoted US onshore focused oil and gas exploration and production company, is pleased to announce an update on its activities across its portfolio of interests in proven oil plays including the Bakken/Three Forks Sanish, North Dakota and the Mississippi Lime and Woodford/ Hunton formations in Oklahoma, in line with its expansion strategy to rapidly grow production and revenues.
Overview:
* Participation in Curtis Kerr well with Marathon Oil targeting the Bakken, North Dakota, a prolific formation with an estimated 4.3 billion in recoverable reserves * Commencement of production at Brady 17-27-12 1H horizontal well in the Mississippi Lime formation, Oklahoma - 0.34375% working interest (`WI') and 0.2749% net revenue interest (`NRI') * + Gross initial production rate of 702.5 boepd (1.93 boepd net) - exceeding expectations * Commencement of production at LaDonna 19-28-16 1H horizontal well in the Mississippi Lime formation, Oklahoma - 0.103% WI and 0.08% NRI * + Gross initial production rate of 297 boepd (0.3 boepd net) - in line with expectations
Magnolia COO, Rita Whittington said, "Our participation in the Curtis Kerr well shows we continue to be highly active in the Bakken formation in North Dakota, where we already have interests in 21 producing wells operated by leading operators such as Marathon. The Bakken has almost singlehandedly propelled North Dakota to being the second most productive state in the US behind Texas, and provides a blueprint for reopening plays such as the Mississippi Lime, where we currently have 80 possible drilling locations on our 4,000 net acres on this formation.
"With the Brady and the LaDonna commencing production, we continue to make progress towards our target of 100 producing wells by the year end, with a corresponding increase in revenues. The Company continues to receive new drilling opportunities and we believe that, as these locations are progressively drilled, we remain on course to build a significant oil and gas company."
Further Information:
Participation in the Curtis Kerr 24-8H(`Curtis Kerr')
Magnolia has elected to participate in the Curtis Kerr, a horizontal well targeting the Bakken Formation, North Dakota. Magnolia holds a 1.95569% working interest and a 1.46677% net revenue interest in Curtis Kerr which is operated by Marathon Oil. The total estimated cost for the proposed work is US$8,530,000 with the Company's share estimated at US$166,879. This well will be drilled to the Middle Bakken Sandstone interval and is expected to be completed with a 30 stage frac.
Curtis Kerr is a second increased density well to be drilled within the same spacing unit as the Fred Hansen 34-8H well, which was drilled to the Middle Bakken Sandstone Interval by Marathon Oil Company. The Fred Hansen well was completed with a single stage frac with an initial production rate of 391 barrels of oil per day and 158 MCF of gas per day. In comparison, Curtis Kerr will be completed with a 30 stage frac, and as a result, the directors believe that production from this new well could be substantially higher.
Initial Productionfrom Brady 17-27-12 1H (`Brady')
Chesapeake Energy (`Chesapeake'), the operator of the Brady well, has reported an initial production rate of 702.5 boepd, which is above management's expectations. Brady is a horizontal well targeting the producing Mississippi Lime formation in Oklahoma, in which Magnolia has a 0.34375% working interest and a net revenue interest of 0.2749%. As a result, out of a total cost of US$3,612,855.00, the Company's share is US$12,419.00. Based on the initial production rates, which are similar to those of the Sundance well in which the Company also participated, Brady is expected to payout (recover its costs) in approximately under 12 months.
Initial Production from LaDonna 19-28-16(`LaDonna')
Chesapeake, the operator of the LaDonna well, has reported an initial production rate of 297 boepd, which is in line with management's expectations. LaDonna is a horizontal well targeting the producing Mississippi Lime formation in Oklahoma in which Magnolia has a 0.103% working interest and a net revenue interest of 0.08%. As a result, out of a total cost of US$4,270,035, the Company's share is US$4,398. Based on the initial production rates, the well is expected to payout (recover its costs) in approximately under 12 months.
Other Well Updates
The Otis 2-27-12 1H well, operated by Chesapeake and targeting the Mississippi Lime is now completing. Magnolia's WI/ NRI for Otis have now increased to 4.212805% and 3.370244% respectively.
The Redfork 1-25H well, operated by Redfork and targeting the Mississippi Lime has been renamed Flinders 1-25H (`Flinders'). In addition, Magnolia's WI/ NRI for Flinders have now increased to 2.31032% and 1.848256% respectively. The status of the well remains planned.
** 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
`bopd' means barrels of oil per day
`Mcf' means thousand cubic feet
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 focussed, oil and gas explorationand production company. Its portfolio includes interests in 83 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 83 Being Drilled / Completed 9 Elected to participate / waiting to 9spud TOTAL 101
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.
Related Shares:
Magnolia Petroleum