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26 Mar 2012 07:00
Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas
26 March 2012
Magnolia Petroleum Plc (`Magnolia' or `the Company') Quarterly Operations Update
Magnolia Petroleum Plc, the AIM quoted US focused oil and gas exploration and production company, announces a quarterly update on its operations across its portfolio of interests focused on proven and producing US onshore hydrocarbon formations, including the Bakken / Three Forks Sanish Formations in North Dakota and the Hunton / Woodford and Mississippi Formations in Oklahoma.
Achievements- Q1 2012
* Six new wells brought on stream during the quarter, four of which are now producing revenues * The total number of producing wells in which the Company has an interest now stands at 70, predominantly oil producing * Three wells currently being drilled and a further three wells are expected to be spud in the next 30 days * Acquisition of leases covering 1,564 net mineral acres located within the boundaries of the reopening Mississippi Formation, Oklahoma, with average net revenue interests of 79% * Participation with ExxonMobil (the operator) in a Nitrogen Rejection Unit at the Hawkins Field Unit, which is expected to significantly increase oil recovery rates * Oversubscribed £1.3 million placing completed - funds raised to be invested in further wells and on-going leasing activities
Outlook
* Expect to participate with Chesapeake in drilling three horizontal increased density wells targeting the Mississippi Formation within the same spacing unit as the successful Sundance well, in Woods County Oklahoma - the Sundance well recouped all costs in three months, a record for the Company * Target to operate first well later this year on Mississippi acreage acquired during the quarter * Targeting step change in production and revenues by the end of the year as a result of participating in wells with working and net revenue interests materially greater than the current averages * Expected upgrade in Magnolia's reserves (in Q1 2013) through the reclassification of the Company's Three Forks Sanish reserves from "possible" to "probable" following the successful drilling and subsequent production at the Skunk Creek 15H well and also the inclusion of recently acquired leases
Magnolia COO, Rita Whittington said, "Our operating cash flows are expected to increase further as a result of the new wells due to come on stream in the near future. Together with the proceeds of the recent fundraising, the Company is well positioned to take advantage of the numerous proposals we are receiving to participate in drilling in proven oil formations. In addition, we continue to evaluate further opportunities in both the Bakken and Mississippi oil plays. 2012 is shaping up to be a highly exciting year and we believe our target of a significant jump in production and revenues by the year end is realistic and achievable. In addition, we expect to announce in Q1 2013 an upgrade in Magnolia's reserves which will further underpin the Company's inherent value."
Update on New Wells
Well Formation Status NRI % Operator Skunk Creek 15H Three Forks Producing 0.44825 Kodiak Sanish Skunk Creek 14H Bakken Producing 0.44825 Kodiak Stocke 1-4-9H Bakken Producing 2.57 Hunt Oil Drone 1 Bakken Producing 1.00078 Slawson Eckelberg 14-23H Bakken Completed 0.400254 Marathon Eckelberg 14-23TF Three Forks Completed 0.400254 Marathon Sanish Drone 2-34-27H Bakken Planned 1.00078 Slawson Zenyatta 2-6 Hunton Completed 0.7929 Avalon Lois Rust 7-27-12 Mississippi Drilling 1.8678 Chesapeake 1H Thomason 10-27-12 Mississippi Completed 9.375 Chesapeake 1H Quill 2-12-3H Bakken Planned 0.2909 Hunt Oil * * ENDS * *
For further information on Magnolia Petroleum Plc visit www.magnoliapetroleum.com or contact the following:
Steven Snead Magnolia Petroleum Plc +01 918 449 8750 Rita Whittington Magnolia Petroleum Plc +01 918 449 8750 Antony Legge / James Thomas Daniel Stewart & Company Plc +44 (0) 20 7776 6550
John Howes / John-Henry Northland Capital Partners +44 (0) 20 7796 8800Wicks Limited Lottie Brocklehurst St Brides Media and Finance +44 (0) 20 7236 1177 Ltd Frank Buhagiar St Brides Media and Finance +44 (0) 20 7236 1177 Ltd Notes
Magnolia Petroleum Plc is an AIM quoted, US focussed, oil and gas exploration and production company. Its portfolio includes interests in 70 producing and non-producing assets, primarily located in the highly productive Bakken/Three Forks Sanish hydrocarbon formations in North Dakota as well as the substantial and proven Woodford and Hunton formations and the oil rich Mississippi formation, in Oklahoma.
As Magnolia currently participates in drilling with leading oil and gas companies, management does not have control over the timing of well proposals or drilling. As a result, management rely on receiving confirmation of field activity such as date of spudding or completion from the relevant operator. Expected timings of activity provided by the Company are therefore to be treated as estimations. Magnolia intends to operate its first well later this year and as operator the Company will be in a position to provide more accurate information regarding the timing of drilling.
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