LONDON (Alliance News) - Magnolia Petroleum PLC Wednesday said its pretax loss narrowed in 2013 as its strategy to rapidly increase production led to a 48% increase in the number of wells on its leases and a more-than-tripling its revenues during the period.
The US-focused onshore oil and gas production company, which takes small stakes in multiple wells in highly prospective shale plays, said its pretax loss narrowed to USD281,817 from USD1.1 million the previous year as revenues increased to USD2.4 million from USD709,395.
The company said its revenues increased as the company saw a 48% increase in the number of wells on its leases to 149, with 140 producing and 9 either drilling or completing at the time.
Magnolia said that, as a result, it recorded full-year earnings before interest, taxation, depreciation and amortisation of USD975,622, compared to a loss of USD359,944 during 2012.
The company has started off 2014 strongly, it said, and already its well count that is producing or under development has increased 15% since year end to 171, with further growth in well count, production and revenues expected.
However, last week, the company suffered a significant downgrade in its proved and producing gas reserves following a reassessment of the Mississippi Lime region geology in the US, which showed that the formation is likely to be made up of multiple wedges of productive regions rather than a uniform resource it previously expected and, as such, production rates are likely to vary across the site.
Magnolia said the assessment on April 1 of its proved and developed producing reserves resulted in a 5.7% increase in its oil and condensate reserves to 167 million barrels but a 45% fall in its gas reserves to 450 million cubic feet, compared to a previous estimate on August 1, 2013.
Despite the reduction in gas reserves, Magnolia said the new estimate represents an increase in net present value at a 10% discount to USD8.4 million from USD7.2 million in the previous estimate.
The company also noted on Wednesday that it secured a USD5 million revolving credit facility during 2013 and raised GBP1.5 million in capital through a placing to continue acquiring acreage in proven onshore US formations such as the Bakken, North Dakota and to participate in wells with leading operators.
Magnolia Petroleum shares were up 2.6% to 1.30 pence, putting it among the top AIM ALL-Share risers during early trading on Wednesday.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
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