Magnolia Petroleum Regulatory News (MAGP)

Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas 7 February 2014 Magnolia Petroleum Plc(`Magnolia' or `the Company') Strong Production Growth Expected as Drilling Activity Increases on Already Producing US Onshore Leases Magnolia Petroleum Plc, the AIM quoted US onshore focused oil and gasexploration and production company, is pleased to report that the Company hasreceived a large number of proposals from operators such as Devon Energy,Newfield Exploration, Chesapeake Energy and Kodiak Exploration to drillincreased density or infill wells across its portfolio of producing leases inUS onshore formations, including the Bakken, North Dakota, and MississippiLime, Oklahoma. Infill wells maximise the recovery of reserves on leases that are held byproduction and, as a result of the growing number of these wells in whichMagnolia is participating and the multiple proposals it is receiving, theDirectors expect the strong growth in production and reserves seen to date tocontinue in the years ahead. Highlights * Elected to participate in nine increased density wells on leases held by production since 1 January 2014 * Additional 12 increased density wells in which Magnolia has an interest have been filed by the relevant operators since 1 January 2014 * + Magnolia has above average (3%) interests in several of these proposed wells * Multiple increased density wells on individual spacing units being drilled consecutively - leads to time and cost savings * Approximately 75% of 600+ proven development locations on Magnolia's leases in Oklahoma and North Dakota are increased density wells, representing a long pipeline of low risk production and reserves growth * Participating in increased density wells is a key part of the Company's strategy to maximise the recovery of and prove up the reserves on its leases covering over 13,500 net mineral acres in proven US onshore formations Rita Whittington, COO of Magnolia, said, "With production already establishedon the relevant leases, increased density wells are very much the low hangingfruit by which US onshore operators can rapidly increase production, maximiserecovery rates on individual spacing units, and upgrade reserves to the provendeveloped producing (`PDP') category. Significantly, PDP reserves are used bylenders to determine reserves based lending such as Magnolia's US$5 millioncredit facility which in turn helps fund further drilling. The combination ofthe above, along with the considerably lower exploration risk associated withincreased density wells, and the time and cost savings on offer throughdrilling multiple wells from the same pad or consecutively, helps explain thesurge in infill well proposals we have seen since the turn of the year. "With the above in mind, we expect the pick-up in the number of increaseddensity wells to continue to grow and this bodes well for those leases in whichMagnolia has above average interests such as the Thomason well (9.375% NRI)which is producing from the Mississippi Lime in Oklahoma. We are thereforeconfident 2014 will see us build upon the excellent momentum behind theCompany, specifically in terms of the excellent production and reserves growthseen to date, as we look to deliver on our objective and generate value for ourshareholders." Further Information Since 1 January 2014, Magnolia has elected to participate in nine increaseddensity wells. Four of these are the Skunk Creek wells targeting the Bakken andThree Forks Sanish formations in North Dakota as announced on 20 January 2014.In addition, the Company is participating in an increased density welltargeting the Woodford formation in Oklahoma alongside Continental Resources onthe same spacing unit as the producing Condit 1-5 well; and four increaseddensity wells on the same unit as the producing Kelly 1-2H well operated byEagle Rock Energy. Applications to drill a further twelve increased density wells have been lodgedby the relevant operators including several in which Magnolia has higher thanaverage interests, specifically more than 3%. Announcements detailing increaseddensity wells in which Magnolia has an interest greater than 1.5% will beprovided as and when it is appropriate to do so. Existing well update As a result of on-going leasing activity, Magnolia's WI/ NRI in the Marion 1-23well, operated by Devon Energy and targeting the Mississippi Lime formation,Oklahoma, have changed to 5.41% (previously 4.687%) and 4.10% (previously3.516%) respectively. The Company has been informed by the operator that theMarion 1-23 has commenced drilling. ** ENDS ** Glossary `NRI' means net revenue interest `WI' means working interest For further information on Magnolia Petroleum Plc visitwww.magnoliapetroleum.com or contact the following: Steven Snead Magnolia Petroleum Plc +01 918 449 8750 Rita Whittington Magnolia Petroleum Plc +01 918 449 8750 Jo Turner / James Caithie Cairn Financial Advisers LLP +44 20 7148 7900 John Howes / Alice Lane / Northland Capital Partners +44 20 7796 8800Luke Cairns Limited Lottie Brocklehurst St Brides Media and Finance Ltd +44 20 7236 1177 Frank Buhagiar St Brides Media and Finance Ltd +44 20 7236 1177 Notes Magnolia Petroleum Plc is an AIM quoted, US focused, oil and gas explorationand production company. Its portfolio includes interests in 142 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 Wells Category Number of wells Producing 142 Being Drilled / Completed 15 Elected to participate / waiting to 45spud TOTAL 202