LONDON (Alliance News) - Magnolia Petroleum PLC Monday said by the end of the second quarter it had increased the number of wells it was interested in to 227, 155 of which are now producing with the remainder at various stages of development.
The US-focused onshore oil and gas production company, which takes small stakes in multiple wells in highly prospective shale plays, said that in the second quarter to June 30 it increased its number of producing wells by four.
The company said it has seen strong initial production rates from wells at the Woodford formation, which is increasingly being viewed as more prospective than the major Mississippi Lime formation, including 445 barrels of oil equivalent per day from the Parmley 1-1 well, in which the company has a 12.187% net interest.
Magnolia said that a range of new wells are due to come into production during the third quarter, including several infill wells on the company's leases held by production in North Dakota and Oklahoma.
It expects further participation in new wells and infill drilling with leading operators moving forward.
The company announced in May that its pretax loss had narrowed significantly in 2013 compared to the previous year as revenues jumped to USD2.4 million from USD709,395 and its full-year earnings before interest, taxation, depreciation and amortisation were significantly ahead of market expectations.
However, during April, 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 an assessment on April 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.
On Monday, the company said an updated reserves report has been commissioned to take into account changes to the expected resource in the Mississippi Lime region.
Magnolia shares were up 1.0% to 1.06 pence on Monday.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
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