8th Oct 2012 07:00
Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas
8 October 2012
Magnolia Petroleum Plc (`Magnolia' or `the Company') Quarterly Operations Update
Magnolia Petroleum Plc, the AIM quoted US focused oil and gas exploration and production company, announces a quarterly update on its operations across proven and producing US onshore hydrocarbon formations, including the Bakken/ Three Forks Sanish in North Dakota and the Mississippi Lime and the Hunton/ Woodford in Oklahoma.
Achievements - Q32012
* The total number of producing wells in which the Company has an interest now stands at 84, predominantly in oil and liquids rich plays * 10 wells currently being drilled/ completed and a further 14 waiting to be spud * Delivering on strategy to participate in wells with larger working/ net revenue interests: * + Prucha well - 25%/ 18.75% (highest to date) + Montecristo well - 6.77%/ 5.3486% + Brandt well - 4.21%/ 3.35496% + Otis well - 4.21%/ 3.370244% * £10 million Equity Financing Facility (`EFF') over a period of 36 months with Darwin Strategic Limited (`Darwin') secured to help fund strategy to grow production and reserves * Raised £2.58 million during the period including £1.8 million drawn down from EFF - based on existing projects the company has sufficient funding for the short-term
Outlook
* Q4 expected to see significant activity with numerous new wells due to come into production * Confident in meeting target of interests in 100 producing wells by end of 2012 * Preparations underway ahead of spudding Magnolia's first vertical well as operator on Mississippi Lime acreage before the end of the year * On track for major increase in full year production and revenues following strong H1 performance where total revenues for the six month period were substantially higher than those of the previous full year as a whole - in addition H2 revenues expected to be higher than H1 due to more wells coming on stream, a number of which have larger net interests * Updated Reserves Report to be commissioned in Q1 2013 which will include: * + an estimate on the Company's average production rates + an anticipated reserves upgrade due to reclassification of the Company's Three Forks Sanish reserves from "possible" to "proven undeveloped" and newly acquired Mississippi Lime acreage with multiple "proven undeveloped" locations * The company continues to see numerous opportunities and will consider and utilise funding mechanisms as appropriate
Well Developments
The full list of well developments occurring in the quarter is set out below.
Well Formation Status NRI % Operator Henry 2-29 Wilcox Producing 2.4373 Premier Bollinger 1-27H Hunton Producing 0.34 Cimarex
Brandt 31-28-12 1H Mississippi Producing 3.35496 Chesapeake
LaDonna 19-28-16 1H Mississippi Producing 0.08 Chesapeake * Prucha 1-23MH Mississippi Completed 18.75 Devon Energy Montecristo 6-1H Mississippi Completing 5.3486 Cisco Beebe 24-W1H Mississippi Completing 0.242188 Longfellow Energy Joan 2-21 Mississippi Completing 2.8125 Tessara Energy Otis 2-27-12 1H Mississippi Completing 3.370244 Chesapeake Sherri H1 Viola Recompleting 1.07152 Steve Nail Curtis Kerr 24-8H Bakken Completing 1.46677 Marathon Nicky Kerr 14-8 Bakken Drilling 1.46677 Marathon Jake 2-11 # 1H Bakken Planned 1.4648 Brigham Jake 2-11 # 2TFH Three Forks Planned 1.4648 Brigham Sanish Phenom 1-14H Mississippi Planned 1.72626 Territory Resources James 4-28-14 1H Mississippi Planned 0.597 Chesapeake Finders 1-25H Mississippi Planned 1.848256 Redfork Campbell 1-H* Woodford Planned 0.05 Newfield
*From time to time, the Company elects to participate in wells with relatively small working/ net revenue interests. This allows Magnolia to gain access to critical well information which is then used to further enhance its understanding of the relevant formation.
Magnolia COO, Rita Whittington said, "During the quarter, a number of notable milestones were achieved as we look to continue executing our strategy to grow Magnolia's production and reserves and, in the process, deliver on our objective to build a significant oil and gas company. Not only are we participating in our first well with a 25%/ 18.75% working/ net revenue interest, we secured a £10 million equity financing facility to help fund our growth strategy, and welcomed Henderson Global Investors onto our shareholder register. We have also staked our first well as operator and we are currently working on securing a drilling rig and preparing to spud before the end of the year. Looking ahead, we will continue to add to the number of wells we are participating in with leading operators in proven US onshore formations such as the Bakken/ Three Forks Sanish, North Dakota, and the Mississippi Lime, Oklahoma.
"As more and more wells are drilled into the reopening Mississippi Lime formation, we believe the value of the acreage we acquired in the first half of the year is rising. Indeed, Sandridge Energy, a leading operator in the play, recently sold a portion of their acreage for US$4,236 per acre. Furthermore, as the relevant leases are proved up, Sandridge is applying a Resource Net Asset Value of US$15,000 per acre. The positive implications for Magnolia's 4,000 plus net mineral acres in the play are clear.
"Looking ahead to Q1 2013, the Company will be commissioning an updated Reserves Report to take into account the reclassification of the Company's Three Forks Sanish reserves from `possible' to `proven undeveloped' and newly acquired Mississippi Lime acreage. The Company now has interests in over 600 possible drilling locations (`PUDs'), which is expected to lead to a significant increase in the value of Magnolia's reserves."
* * ENDS * *
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 Daniel Stewart & Company Plc +44 (0) 20 7776 6550 Thomas John Howes / Northland Capital Partners +44 (0) 20 7796 8800 John-Henry Wicks 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 84 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 84 Being Drilled / Completed 10 Elected to participate / waiting to 14spud TOTAL 108
This table 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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