Magnolia Petroleum Regulatory News (MAGP)

Magnolia Petroleum Plc - Operations Update

PR Newswire

London, May 18

Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas

19 May 2017

Magnolia Petroleum Plc (‘Magnolia’ or ‘the Company’)

Operations Update

Magnolia Petroleum Plc, the AIM quoted US focused oil and gas exploration and production company, is pleased to announce its participation in seven new wells in the prolific SCOOP and STACK plays in Oklahoma, including five increased density wells which are to be drilled on the same spacing unit as already producing wells and are therefore deemed to have been significantly de-risked. In addition, the Company is participating in the workover of eleven existing wells, all of which are low cost and are expected to increase both the level of production and the estimated recoverable reserves for each well.

Participating in seven new wells with an aggregate net cost of US$103,695

The four Pauline wells are increased density wells targeting the Woodford Shale in Hughes County, Oklahoma. These wells will offset two previously completed Woodford Shale wells: the Trinity-operated Clara 1-13/24H and Regina 1-25/24H. Both the Clara and Regina wells have been and continue to be prolific producers:

The four Pauline wells will have a longer horizontal section in the Woodford Shale compared to the Clara and Regina wells, and therefore they have the potential to generate even larger reserves than either of the two initial wells.

Participating in the workover of the following 11 wells at an aggregate net cost of US$38,930:

All the above wells are or have previously been producing. Adding an artificial lift to each well, either by installing a pumping unit or plunger lift, is expected to lead to an uplift in production and an upgrade to reserves which will be reflected in future reserves reports. 

Magnolia CEO, Rita Whittington said, “We are encouraged by the number of new proposals we are receiving to drill alongside established operators. In our view, this provides further evidence of a pick-up in activity and sentiment in the US onshore sector, as highlighted by a more than doubling in the latest Baker Hughes oil rig count to 712 from 318 a year ago. It also validates our strategy to focus our lease acquisition strategy on prolific plays, such as the SCOOP and STACK in Oklahoma, where the economics of drilling are attractive in the current oil price environment. Furthermore, all seven wells are deemed to be low risk due to either being drilled on the same spacing unit as an existing producer or as a result of Magnolia’s share of the drilling costs being fully carried.

“Working over an existing well provides a low cost, low risk opportunity to increase production rates and recoverable reserves. In a low oil price environment, this is an attractive proposition for operators and with a portfolio of 157 producing wells we expect to participate in additional workovers going forward. Workovers have positive implications for the overall level and value of our proven developed producing (‘PDP’) reserves which were recently independently valued at US$4,300,000. At this level, the value of our PDPs already outstrips our current market capitalisation. Workovers therefore have the potential to increase the already strong asset backing behind the Company.”

The information contained within this announcement constitutes inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014.

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For further information on Magnolia Petroleum Plc visit www.magnoliapetroleum.com or contact the following:

Notes

Magnolia Petroleum Plc is an AIM quoted, US focused, oil and gas exploration and production company. Its portfolio includes interests in 219 producing and non-producing assets, primarily located in the highly productive Bakken/Three Forks Sanish hydrocarbon formations in North Dakota as well as the oil rich Mississippi Lime and the substantial and proven Woodford and Hunton formations in Oklahoma.

Summary of Wells