Production Update & Reserve Report

MAGNOLIA PETROLEUM PLC - Production Update & Reserve Report

PR Newswire

London, August 24

Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas

25 August 2015

Magnolia Petroleum Plc (‘Magnolia’ or ‘the Company’)

 Production Update & Reserve Report

Magnolia Petroleum Plc, the AIM quoted US onshore focused oil and gas exploration and production company, is pleased to provide an update on current production and an independent Reserves Report as at 1 June 2015, on its leases in US onshore formations such as the Woodford and Mississippi Lime, Oklahoma, and the Bakken and Three Forks Sanish, North Dakota.

Production Update

New Producing Wells

Reserves Report

Rita Whittington, COO of Magnolia, said, “Even with a reduction in oil price since our last reserve report and update, Magnolia remains cash generative and profitable. We continue to maintain a low break even oil price, with costs on producing non-operated wells, including capex averaging US$33 per barrel and as this report demonstrates, our proven reserves value at US$20.888 million remains well above our current market valuation. Wells that were listed on our past reserve reports, that were on the economic threshold may have fallen off of the current report; however, we believe once oil prices start to climb these “threshold” wells will be moved back onto the existing report and will add additional reserve value again.

“Since the start of the year the cost of drilling wells onshore US has dramatically decreased, and as a result recent well proposals we have received to drill into the Woodford and Mississippi Formations are approximately half the cost compared to eight months ago. With this in mind, we hope to spud the Roger Swartz #2 before year end at a lower cost. Additionally, in order to grow and diversify our portfolio we are taking advantage of low oil prices to increase our leasehold in future areas of development as we look to increase our reserves and production in the year ahead.”

Summary of Magnolia Reserves

As of 1 January 2015, Magnolia’s net reserves, future net cash flow and net present value discounted at 10% per annum (‘NPV9’) have been estimated to be as follows:

The estimates shown in this report are for proved developed producing, proved non-producing, proved shut-in, proved undeveloped, probable and possible reserve classes. This report does not include any value that could be attributed to interests in undeveloped acreage beyond those tracts for which undeveloped reserves have been estimated.

The future net revenue is based on the 1 June 2015 NYMEX futures strip prices for WTI Oil and Henry Hub Gas. The future net cash flow is the future net revenue, less estimated future net OPEX (well operating cost and production taxes) and future net capital. The total reserves are those defined as natural gas and liquid hydrocarbon reserves to Magnolia’s interest after deducting all royalties, overriding royalties, and reversionary interests owned by outside parties that become effective upon pay-out of specified monetary balances. All reserves estimates have been prepared using standard engineering practices generally accepted by the petroleum industry and conform to the guidelines adopted by the 2007 SPE/SPEE/WPC PRMS Guidelines.

The information contained in this announcement regarding the reserves analysis has been reviewed and approved by P. Dee Patterson on behalf of Moyes & Co. Mr. Patterson has 33 years of relevant experience in the oil industry and is currently Managing Director, with Moyes & Co. in Dallas, Texas.

New Producing Wells

The Company has received initial production (‘IP’) and current rates for a number of its new wells that have recently come online. Due to the nature of these wells, the IP rates tend to be very high allowing Magnolia to recover its well costs early. The decline rates will slow down after the first year to a flatter decline which will continue for 35-50 years.

The Buckner 1, Buckner 2, Nighswonger 2, and McLain 2 wells have all recently commenced production, bringing Magnolia’s total producing well count to 201 wells.

\* These wells have recently changed status to “producing”

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Glossary

‘1P’ means Proved Reserves

‘2P’ means Proved plus Probable Reserves

‘3P’ means Proved plus Probable plus Possible Reserves

‘BOE’ means barrels of oil equivalent, gas is converted at its energy equivalent of 6000 cubic feet per barrel of oil

‘BOEPD’ means barrels of oil equivalent per day,

‘BOPD’ means barrels of oil per day, Abbreviation for barrels of oil per day, a common unit of measurement for volume of crude oil. The volume of a barrel is equivalent to 42 US gallons

‘Contingent resources’ means quantities of petroleum estimated as of a given date, to be potentially recoverable from known accumulations by application of development projects, but which are not currently considered commercially recoverable due to one or more contingencies

 ‘M’ means Thousand

‘MBO’ means Thousand Barrels of Oil

‘Mcfd’ means Thousand Cubic Feet per Day

‘MM’ means million (thousand thousand not million million), as used in oilfield and heat content units such as MMSTB and MMBtu

‘MMBbl’ means Million barrels

‘MMcfd’ means Million Cubic Feet per Day

‘NRI’ means Net Revenue Interests

‘Proved Reserves’ means those quantities of petroleum which, by analysis of geological and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under current economic conditions, operating methods, and government regulation - Proved reserves can be categorized as developed or undeveloped

‘Probable reserves’ are those unproved reserves which analysis of geological and engineering data suggests are more likely than not to be recoverable. In this context, when probabilistic methods are used, there should be at least a 50% probability that the quantities actually recovered will equal or exceed the sum of estimated proved plus probable reserves

‘Possible Reserves’ are those unproved reserves which analysis of geological and engineering data suggests are less likely to be recoverable than probable reserves. In this context, when probabilistic methods are used, there should be at least a 10% probability that the quantities actually recovered will equal or exceed the sum of estimated proved plus probable plus possible reserves

Reserve Status Categories

‘Unproved Reserves’ are based on geologic and/or engineering data similar to that used in estimates of proved reserves; but technical, contractual, economic, or regulatory uncertainties preclude such reserves being classified as proved. Unproved reserves may be further classified as probable reserves and possible reserves

Reserve status categories define the development and producing status of wells and reservoirs

‘Developed reserves’ are expected to be recovered from existing wells including reserves behind pipe. Improved recovery reserves are considered developed only after the necessary equipment has been installed, or when the costs to do so are relatively minor. Developed reserves may be subcategorised as producing or non-producing.

‘Producing reserves’ are expected to be recovered from completion intervals which are open and producing at the time of the estimate. Improved recovery reserves are considered producing only after the improved recovery project is in operation.

‘Non-producing reserves’ include shut-in and behind-pipe reserves. Shut-in reserves are expected to be recovered from (1) completion intervals which are open at the time of the estimate but which have not started producing, (2) wells which were shut-in for market conditions or pipeline connections, or (3) wells not capable of production for mechanical reasons. Behind-pipe reserves are expected to be recovered from zones in existing wells, which will require additional completion work or future recompletion prior to the start of production.

‘Undeveloped reserves’ are expected to be recovered: (1) from new wells on undrilled acreage, (2) from deepening existing wells to a different reservoir, or (3) where a relatively large expenditure is required to (a) recomplete an existing well or (b) install production or transportation facilities for primary or improved recovery projects.

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For further information on Magnolia Petroleum Plc visit http://www.magnoliapetroleum.com/ or contact the following:

Notes

Magnolia Petroleum Plc is an AIM quoted, US focused, oil and gas exploration and production company. Its portfolio includes interests in 195 producing and non-producing assets, primarily located in the highly productive Bakken/Three Forks Sanish hydrocarbon formations in North Dakota as well as the oil rich Mississippi Lime and the substantial and proven Woodford and Hunton formations in Oklahoma.

Summary of Wells