Reserves Report & Production Update

Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas 30 January 2015 Magnolia Petroleum Plc ('Magnolia' or 'the Company') Reserves Report & Production Update Magnolia Petroleum Plc, the AIM quoted US onshore focused oil and gasexploration and production company, has received an independent Reserves Reportas at 1 January 2015, which includes a significant increase in net provenreserves on its leases in US onshore formations such as the Woodford andMississippi Lime, Oklahoma, and the Bakken and Three Forks Sanish, NorthDakota. In addition, the Company is pleased to report net daily productionstood at 281 boepd as at 1 January 2015, compared to 257 boepd as at 1 July2014. Reserves Report * Total net proved reserves ('1P') of 985 Mbbl of oil and condensate and 2,905 MMcf gas as at 1 January 2015 - up 37% and 39% respectively compared to 1 July 2014 + Net proved and developed producing reserves ('PDP') estimated at 178 Mbbl of oil and condensate and 572 MMcf gas as at 1 January 2015 - up 10% and 6% respectively compared to 1 July 2014 * Total net proved and probable reserves ('2P') of 1,044 Mbbl of oil and condensate and 3,114 MMcf gas - up 39% and 35% respectively compared to 1 July 2014 * Total net proved, probable and possible reserves ('3P') of 1,114 Mbbl of oil and condensate and 3,290 MMcf gas - up 27% and 29% respectively compared to 1 July 2014 * Valuations (NPV10) assigned to proven reserves categories as at 1 January 2015 reflect lower oil prices and are based on the 1 January 2015 NYMEX futures strip prices for WTI Oil and Henry Hub Gas: + 1P reserves estimated at US$26.653 million compared to US$31.832 million as at 1 July 2014 - PDP reserves estimated at US$6.703 million compared to US$9.143 million + 2P reserves estimated at US$28.361 million compared to US$34.693 million as at 1 July 2014 + 3P reserves estimated at US$29.726 million compared to US$35.884 million as at 1 July 2014 * Scope for further reserves growth: + Multiple potentially highly productive Mississippi Lime wedges identified by Magnolia on its leases in Oklahoma - permits secured to drill two low cost vertical wells targeting productive wedges in 2015 + Report does not reflect potential in the Woodford formation, Oklahoma, which underlies the Mississippi Lime and is at an earlier stage of development - viewed by operators as the more prospective of the two formations in certain areas Production Update * Net production stood at 281 boepd as at 1 January 2015 compared to 257 boepd on 1 July 2014 Credit Facility * US$6 million loan amount of Credit Facility remains in place - the borrowing base limit has been adjusted to US$3,284,210 from US$4,596,944 to reflect the effect of lower oil prices on the value of Magnolia's net reserves - all other terms remain the same (see announcement dated 9 September 2014 for further details) + Funds remain available to the Company at the revised borrowing base level + The next Reserves Update is due in July 2015 but the Company has the option to request an evaluation at an earlier date Rita Whittington, COO of Magnolia, said, "With our proven reserves up byapproximately one third across all three categories, the last six months haveseen further excellent progress made towards delivering on our objective toprove up the reserves on Magnolia's leases, which cover over 13,500 net mineralacres in producing US onshore formations. Even after taking into account loweroil prices, at US$26.653 million the value of our proven reserves far outstripsMagnolia's current market valuation, and as a result provides considerableasset backing. "We have permits in place to drill, as operator, two low cost vertical wells inOklahoma in 2015 in which we have a 76.375% net revenue interest in each.Subject to the results, these two wells, along with our continued participationin new drilling alongside established operators, provide scope for asignificant increase in net reserves and production in the year ahead. I lookforward to providing further updates on our progress in due course." Summary of Magnolia Reserves As of 1 January 2015, Magnolia's net reserves, future net cash flow and netpresent value discounted at 10% per annum ('NPV10') have been estimated to beas follows: Grand Total as of January 1, 2015 Gross Reserves Net Reserves Net Cash Flow Oil & Natural Oil & Natural Future Future Future Future NPV Condensate Gas Condensate Gas Net Net Net Net Disc @ (Mbbl) (MMcf) (Mbbl) (MMcf) Revenue OPEX & Capital Cash 10% ($000) Taxes ($000) Flow ($000) Reserve Class/ ($000) ($000) Category Proved Developed 15,394 103,473 178 572 15,331 4,970 - 10,362 6,703Producing Proved Developed 947 5,697 12.8 15 1,021 270 5 746 551BehindPipe Proved Shut In - - - - - - - - - Proved Undeveloped 19,241 171,350 795 2,317 75,149 16,425 18,651 37,073 19,399 Total Proved 35,582 280,520 985 2,905 88,502 21,665 18,656 48,181 26,653 Probable Behind - - - - - - - - -Pipe Probable 818 7,577 59 209 5,778 1,476 1,342 2,959 1,708Undeveloped Total Probable 818 7,577 59 209 5,778 1,476 1,342 2,959 1,708 Total 2P 36,400 288,097 1,044 3,114 94,280 23,141 19,998 51,140 28,361 Possible Behind - - - - - - - - -Pipe Possible 3,541 22,763 70 176 6,089 1,572 1,708 2,809 1,365Undeveloped Total Possible 3,541 22,763 70 176 6,089 1,572 1,708 2,809 1,365 Total 3P 39,941 310,860 1,114 3,290 100,368 24,713 21,706 53,949 29,726 The estimates shown in this report are for proved developed producing, provednon-producing, proved shut-in, proved undeveloped, probable and possiblereserve classes. This report does not include any value that could beattributed to interests in undeveloped acreage beyond those tracts for whichundeveloped reserves have been estimated. The future net revenue is based on the 1 January 2015 NYMEX futures stripprices for WTI Oil and Henry Hub Gas. The future net cash flow is the futurenet revenue, less estimated future net OPEX (well operating cost and productiontaxes) and future net capital. The total reserves are those defined as naturalgas and liquid hydrocarbon reserves to Magnolia's interest after deducting allroyalties, overriding royalties, and reversionary interests owned by outsideparties that become effective upon pay-out of specified monetary balances. Allreserves estimates have been prepared using standard engineering practicesgenerally accepted by the petroleum industry and conform to the guidelinesadopted by the 2007 SPE/SPEE/WPC PRMS Guidelines. The information contained in this announcement regarding the reserves analysishas 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 iscurrently Managing Director, with Moyes & Co. in Dallas, Texas. ** ENDS ** 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 energyequivalent 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, acommon unit of measurement for volume of crude oil. The volume of a barrel isequivalent to 42 US gallons 'Contingent resources' means quantities of petroleum estimated as of a givendate, to be potentially recoverable from known accumulations by application ofdevelopment projects, but which are not currently considered commerciallyrecoverable 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 inoilfield 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 ofgeological and engineering data, can be estimated with reasonable certainty tobe commercially recoverable, from a given date forward, from known reservoirsand under current economic conditions, operating methods, and governmentregulation - Proved reserves can be categorized as developed or undeveloped 'Probable reserves' are those unproved reserves which analysis of geologicaland engineering data suggests are more likely than not to be recoverable. Inthis context, when probabilistic methods are used, there should be at least a50% probability that the quantities actually recovered will equal or exceed thesum of estimated proved plus probable reserves 'Possible Reserves' are those unproved reserves which analysis of geologicaland engineering data suggests are less likely to be recoverable than probablereserves. In this context, when probabilistic methods are used, there should beat least a 10% probability that the quantities actually recovered will equal orexceed the sum of estimated proved plus probable plus possible reserves Reserve Status Categories 'Unproved Reserves' are based on geologic and/or engineering data similar tothat used in estimates of proved reserves; but technical, contractual,economic, or regulatory uncertainties preclude such reserves being classifiedas proved. Unproved reserves may be further classified as probable reserves andpossible reserves Reserve status categories define the development and producing status of wellsand reservoirs 'Developed reserves' are expected to be recovered from existing wells includingreserves behind pipe. Improved recovery reserves are considered developed onlyafter the necessary equipment has been installed, or when the costs to do soare relatively minor. Developed reserves may be subcategorised as producing ornon-producing. 'Producing reserves' are expected to be recovered from completion intervalswhich are open and producing at the time of the estimate. Improved recoveryreserves are considered producing only after the improved recovery project isin operation. 'Non-producing reserves' include shut-in and behind-pipe reserves. Shut-inreserves are expected to be recovered from (1) completion intervals which areopen 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 reservesare expected to be recovered from zones in existing wells, which will requireadditional completion work or future recompletion prior to the start ofproduction. 'Undeveloped reserves' are expected to be recovered: (1) from new wells onundrilled acreage, (2) from deepening existing wells to a different reservoir,or (3) where a relatively large expenditure is required to (a) recomplete anexisting well or (b) install production or transportation facilities forprimary or improved recovery projects. For further information on Magnolia Petroleum Plc visitwww.magnoliapetroleum.com or contact the following: Steven Snead Magnolia Petroleum Plc +01 918 449 8750 Rita Whittington Magnolia Petroleum Plc +01 918 449 8750 Jo Turner/James Cairn Financial Advisers LLP +44 20 7148 7900 John Howes/Alice Lane Northland Capital Partners +44 20 7796 8800 Limited Lottie Brocklehurst St Brides Partners Ltd +44 20 7236 1177 Frank Buhagiar St Brides Partners Ltd +44 20 7236 1177 Notes Magnolia Petroleum Plc is an AIM quoted, US focused, oil and gas explorationand production company. Its portfolio includes interests in 180 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 Wells Category Number of wells Producing 180 Waiting on first sales / IP rates 2 Being drilled / completed 6 Elected to participate / waiting to spud 27 TOTAL 215