Magnolia Petroleum Regulatory News (MAGP)

30 Jul 2012 07:45

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

30 July 2012

Magnolia Petroleum Plc (`Magnolia' or `the Company') Quarterly Operations Updateand Update on Equity Financing Facility

Magnolia Petroleum Plc, the AIM quoted US focused oil and gas exploration and production company, announces a quarterly update on its operations across proven and producing US onshore hydrocarbon formations, including the Bakken/ Three Forks Sanish in North Dakota and the Mississippi and the Hunton/ Woodford in Oklahoma.

Achievements - Q22012

* 10 new wells brought on stream during the quarter * The total number of producing wells in which the Company has an interest now stands at 80, predominantly oil producing * Seven wells currently being drilled/completed and a further nine are waiting to be spud * Participating in wells with larger net revenue interests * + Thomason well is the highest to date at 9.375% * Operating wells for the first time following successful work over of two wells in Osage County, Oklahoma * Acquisition of leases covering 4,011.39 net mineral acres located within the boundaries of the reopening Mississippi Formation, Oklahoma, with an average net revenue interest of 16%

Outlook

* Anticipate meeting target of interests in 100 producing wells by end of 2012 * To drill first well as operator later this year on Mississippi acreage * On track for step change in full year production and revenues as a result of major increase in number of wells and size of working and net revenue interests * Company expects to commission a new Competent Person's Report in early 2013, which is anticipated to signal an increase in reserves, due to (i) the commencement of production from the Eckelberg 14-23TF and the Skunk Creek 15H wells, which is expected to lead to reclassification of the Company's Three Forks Sanish reserves from "possible" to "proven undeveloped" and (ii) newly acquired Mississippi acreage with multiple "proven undeveloped" locations

Well Developments

The full list of well developments occurring in the quarter, is set out below.

Well Formation Status NRI % Operator Eckelberg 14-23H Bakken Producing 0.400254 Marathon Eckelberg 14-23TF Three Forks Producing 0.400254 Marathon Sanish Zenyatta 2-6 Hunton Producing 0.7929 Avalon

Lois Rust 7-27-12 1H Mississippi Producing 1.8678 Chesapeake

Thomason 10-27-12 1H Mississippi Producing 9.375 Chesapeake

Quill 2-12-3H Bakken Producing 0.2909 Hunt Oil Brady 17-27-12 1H Mississippi Producing 0.2749 Chesapeake

Westline 30-28-16 1H Mississippi Producing 0.10075 Chesapeake

Osage Lynn Wayside Producing 75 Magnolia Solman Wayside Producing 75 Magnolia Henry 2-29 Wilcox Completing 2.4373 Premier Bollinger 1-27H Hunton Drilling 0.34 Cimarex SPS 6-26 Hunton Completed 0.62799 Paul Gillam & Co Montecristo 6-1H Mississippi Drilling 5.3486 Cisco Beebe 24-W1H Mississippi Planned 0.242188 Longfellow Energy Redfork 1-25H Mississippi Planned 1.52 Redfork Joan 2-21 Mississippi Drilling 2.8125 Tessara Energy Sherri H1 Viola Planned 1.07152 Steve Nail

Brandt 31-28-12 1H Mississippi Drilling 3.35496 Chesapeake

Otis 2-27-12 1H Mississippi Planned 3.35032 Chesapeake

LaDonna 19-28-16 1H Mississippi Completing 0.08 Chesapeake

Campbell 1-H Woodford Planned 0.05 Newfield

Update on Equity Financing Facility

The Company announced on 12 July 2012 that it had signed Heads of Terms with Darwin Strategic Limited (`Darwin') for the provision of a GBP10 million Equity Financing Facility over a period of 36 months. The Company is reviewing the documentation and now expects that the final agreement will be entered into, and an announcement will be released detailing the terms, within the next couple of weeks.

Magnolia COO, Rita Whittington said, "The quarter under review has seen Magnolia make great strides towards its goal of significantly growing revenues and production. The acquisition of leases in the first half has resulted in Magnolia receiving a large number of proposals to participate in new wells. The result has not only been an increase in the number of producing wells, but also a growing pipeline of new wells that will come on stream in due course. This momentum puts us securely on track for 100 producing wells by the year end with a consequential increase in monthly revenues, which will be leveraged further thanks to an increase in the average net revenue interests of the new wells.

"We continue to receive new well proposals and our ability to participate in these and future exciting opportunities require significant investment. I am therefore delighted with the recent signing of heads of terms with Darwin Strategic Limited which will help fund our capital expenditure programme. We look forward to providing a detailed update to shareholders in our interim results in September."

* * 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 Daniel Stewart & Company Plc +44 (0) 20 7776 6550 Thomas John Howes / Northland Capital Partners +44 (0) 20 7796 8800 John-Henry Wicks 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 NotesMagnolia Petroleum Plc is an AIM quoted, US focussed, oil and gas explorationand production company. Its portfolio includes interests in 80 producing andnon-producing assets, primarily located in the highly productive Bakken/ThreeForks Sanish hydrocarbon formations in North Dakota as well as the oil richMississippi Lime and the substantial and proven Woodford and Hunton formationsin Oklahoma.Summary of WellsCategory Number of wells Producing 80 Being Drilled / Completed 7 Elected to participate / waiting to 9spud TOTAL 96

This table excludes four out of six wells acquired as part of the acquisition of 800 gross acres with a 100% working interest in Osage County, Oklahoma, as announced on 10 February 2012. These four wells are currently `shut in' and will require a workover programme at some point in the future to bring back into production.