LONDON (Alliance News) - Magnolia Petroleum PLC on Tuesday said the Shimanek-2 well in Oklahoma has been drilled and has encountered hydrocarbons in targeted conventional zones but that high salt water saturations meant the well will be plugged.
Magnolia said the hydrocarbons were found in the Lower Skinner, Redfork Sand and Mississippi Lime/Chat targets at the site.
But it said that due to high salt water saturation levels and the costs associated with removing the water, the company has decided to plug the well and allocate the remaining funds in its drilling budget to new activity.
"Based on the salt water and reserve levels encountered, we believe Shimanek would at best have been a marginal producing well but with high costs associated with the salt water disposal," said Magnolia Chief Operating Officer Rita Whittington.
"We have multiple opportunities to drill more commercial wells on our leases, the USD400,000 set aside to complete the well has been reallocated to fund new drilling activity, either on our own or alongside established operators," Whittington added.
Shares in Magnolia were down 16% to 0.61998 pence on Tuesday.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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