magp selling off their wells7 Jun 2018 16:40
The portfolio of wells to be sold from the Target Assets is likely to include its interests in wells in North Dakota and certain properties in Oklahoma, however, the specific interests in wells subject to the Disposal may change. The Company�s current portfolio comprises interests in 108 wells and further details of the interests in wells and their economics were included in the Company�s operations update on 16 April 2018. The Company expects current PDP reserves to be approximately $3,300,000 and it is anticipated that the Disposal will result in approximately 50 per cent of its wells being sold by number.
Pursuant to Rule 15 of the AIM Rules for Companies, the proposed sale of the Target Assets will exceed 75 per cent. in at least one of the class tests, resulting in a fundamental change of business requiring the Company to obtain the consent of Shareholders at a general meeting prior to completing the Disposal. Accordingly, a notice of the General Meeting is included at the end of this document. Whilst the Disposal is not considered at this stage to have the effect of divesting the Company of substantially all of its trading assets, to the extent that the sale of Target Assets, subject to Shareholder approval, is considered to have this effect then Magnolia will be regarded as a AIM Rule 15 cash shell as defined in the AIM Rules for Companies.
There is likely to be more than one buyer for the wells making up the Target Assets (the market for working interests in wells in North Dakota and Oklahoma is relatively liquid) and it is expected all buyers will be arm�s length third party cash buyers (not �connected persons� or �related parties� of the Company or the Directors, as such terms are defined in the Act and the AIM Rules for Companies respectively). At this stage, the identity of the specific wells to be sold, and the profits and/or losses and/or costs attributable to such wells, cannot be confirmed. Further, the identity of buyers of particular wells (or regional portfolios that are likely to be packaged together) is not known, and the final consideration the Company will receive for a particular well or portfolio of wells, and for the Disposal as a whole, is unknown. The Company will endeavour to achieve the best possible price for each well as part of the disposal programme and will make a further announcement after the Disposal has been competed (subject to Shareholder approval) to confirm details of Target Assets sold (and the portfolio of assets retained by Magnolia Inc), buyers (to the extent the same can be publicly disclosed), net consideration received by the Group, and the results of the debt reduction with the Bank.
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