LONDON (Alliance News) - Magnolia Petroleum PLC saw its shares rise early Tuesday after it reported a strong increase in daily production, and said strong initial production rates from its Mississippi Line wells were highlighting the formation's potential.
Magnolia also said it has secured a new USD6 million credit facility with an initial borrowing base limit if USD4.6 million, funds it will use to accelerate drilling and prove up reserves on leases after an increase in the value of so-called PDP reserves, or proved and developed producing reserves.
In a quarterly operations update, the US-focused oil and gas explorer and producer said it had 161 producing wells at the end of September and a further 67 at various stages of development, while net daily production stood at 257 barrels of oil equivalent a day on July 1, up from 150 barrels on April 1.
It also said strong initial production rates from Mississippi Lime wells were highlighting the formation's potential. It is now achieving 525.52 barrels of oil equivalent a day at the Cummings 31-28-12 1H well.
"With our US$6 million credit facility in place and our rapidly growing revenues, which at the half year stage almost doubled year on year to US$1,755,459, we will continue to participate in new drilling activity alongside established operators such as Devon Energy, Magnolia Chief Operating Officer Rita Whittington said in a statement."
It said its net proved and developed producing reserves were estimated at 162 million barrels of oil and condensate and 540 million million cubic feet of gas with a net present value of of USD9.14 million in its reserves report as at July 1, up from USD8.42 million as at April 1.
In late August, Magnolia had sold 24 interests in non-core wells in Alabama, Texas and Florida in five individual packages for USD241,000 as part of its portfolio management programme.
In our view ... the sale of 24 small interests in non-core wells for three times the value of their PDP
reserves is the quarter's key event, as this demonstrates how the market values US onshore producing properties. The sale and the price achieved validates our business model which is focused on proving up the value of our US onshore reserves through drilling," Whittington said.
Magnolia Petroleum shares were up 3.4% at 1.11 pence early Tuesday.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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