LONDON (Alliance News) - Magnolia Petroleum PLC Friday said it has received an independent persons report that has significantly increased the net proven reserves on its leases in its US onshore formations, but the value has decreased due to the current low oil price.
The report and reserve update is applicable to the Woodford and Mississippi Lime plays in Oklahoma and the Bakken and Three Forks Sanish plays in North Dakota.
Total net proved reserves has increased to 985 million barrels of oil and condensate and 2.90 billion cubic feet of gas. This represents a 37% increase in oil reserves and a 39% rise in gas from the old resource.
Total net proved and probable reserves stands at 1 billion barrels of oil and condensate and 3.11 billion cubic feet of gas, which is a similar increase to the net proved reserves.
Total net proved, probable and possible reserves is now 1.11 billion barrels of oil and condensate and 3.29 billion cubic feet of gas.
"With our proven reserves up by approximately one third across all three categories, the last six months have seen further excellent progress made towards delivering on our objective to prove up the reserves," said Chief Operating Officer Rita Whittington.
The report also took into account of the low oil prices, stating 1P reserves have a value of USD26.7 million, down from the initial estimate of USD31.8 million. 2P reserves are estimated at USD28.4 million from USD34.7 million and 3P reserves are estimated at USD29.7 million, down from USD35.9 million.
"Even after taking into account lower oil prices, at USD26.7 million the value of our proven reserves far outstrips Magnolia?s current market valuation, and as a result provides considerable asset backing," said Whittington.
Mangolia said that there is further room for expansion, with two wells to be drilled on the Mississippi Lime formation in 2015 to test it, whilst the updated reserve "does not reflect the potential in the Woodford formation," as it is at an earlier stage of development.
"We have permits in place to drill, as operator, two low cost vertical wells in Oklahoma in 2015 in which we have a 76.4% net revenue interest in each. Subject to the results, these two wells, along with our continued participation in new drilling alongside established operators, provide scope for a significant increase in net reserves and production in the year ahead," said Whittington.
In addition, Magnolia said production stood at 281 barrels of oil equivalent per day at January 1, compared to 257 barrels of oil equivalent per day on July 1, 2014.
Magnolia shares were up 6.2% to 0.600 pence per share on Friday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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