20th Aug 2012 07:00
Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas
20 August 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:
* Prucha 1-23MH well, operated by Devon Energy, targeting the Mississippi Lime has now completed and initial production rates awaited - 25% working interest and 18.75% net revenue interest * Commencement of production at Henry 2-29 vertical well in the Wilcox formation, Oklahoma - 2.4373% working interest and 1.828% net revenue interest * + Gross initial production rate of 35 bopd - in line with expectations + Expected payout (recovery of costs) of less than 12 months, ahead of the current portfolio average + Based on success of Henry well, Magnolia is participating in two direct offsets (Bowen 2-29 and Bowen 3-29) * Participation in Phenom 1-14H well in Mississippi Lime Formation, Oklahoma (operated by Territory Resources LLC) with a net revenue interest of 1.72626%
Magnolia COO, Rita Whittington said, "Our participation in the Phenom and two Bowen wells brings the total in which we have an interest in to 100 (82 producing, 9 drilling, 9 waiting to spud). The speed with which we have reached this milestone is testament to the accelerating activity and interest in the proven oil formations in which we are active, including the prolific Bakken/ Three Forks Sanish, North Dakota and the Mississippi Lime and Woodford/Hunton, Oklahoma.
"Increasing the number of wells in which we participate along with the average size of our interests are the key drivers behind our successful strategy to grow Magnolia's revenues substantially. Furthermore, with 9 wells currently drilling/ completing and 9 waiting to spud, we are on track for our target of interests in 100 producing wells by the end of the year, and shows we are delivering on our objective to rapidly grow revenues and, in the process, build a significant oil and gas company."
Further Information:
Initial Production from Henry 2-29(`Henry well')
Basis (`Basis'), the operator of the Henry well, has reported an initial production rate of 35 bopd, which is in line with management's expectations. Henry 2-29 is a vertical well targeting the historically producing Wilcox formation in Oklahoma in which Magnolia has a 2.4373% working interest and a net revenue interest of 1.828%. As a result, out of a total cost of US$558,500, the Company's share is US$13,612. Based on the initial production rates, the well is expected to payout (recover its costs) in approximately under 12 months.
Following the success of the Henry well, Magnolia is participating with Basis in two additional direct offsets to the Henry, the Bowen 2-29 and Bowen 3-29, to optimise the recovery of all the reserves. As with the Henry well, Magnolia has a 2.4373% working interest in each Bowen well, resulting in its estimated share of drilling costs of US$13,612 each.
Participation in the Phenom 1-14H(`Phenomwell')
Magnolia has also elected to participate in the Phenom well, a horizontal well to test the Mississippi Lime Formation, Oklahoma. Magnolia holds a 2.1484% working interest and a 1.72606% net revenue interest in the Phenom well which is operated by Territory Resources LLC. The total estimated cost for the proposed work is US$3,040,550 with the Company's share estimated at US$65,323.18. The operator has notified the Company that the Phenom well was spud on 11 August 2012.
Other Well Updates
The Company has also been informed by the relevant operators of a change in status for the following wells:
Well Formation Net Revenue Status Operator Interest % Prucha 1-23MH Mississippi 18.75 Completed Devon Energy Montecristo 6-1H Mississippi 5.3486 Completing Cisco Bollinger 1-27XL Hunton 0.34462 Waiting Cimarex completion Sherri 1 Viola 1.07152 Recompleting Steve Nail ** ENDS ** Glossary
`bopd' means barrels of oil 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 focussed, oil and gas explorationand production company. Its portfolio includes interests in 82 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 82 Being Drilled / Completed 9 Elected to participate / waiting to 9spud TOTAL 100
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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