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Update on Operated Leases in Oklahoma
Magnolia Petroleum Plc, the AIM quoted US onshore focused oil and gas exploration and production company, has provided fresh details concerning its operated leases in Oklahoma including a more than doubling of production at its 100% owned Roger Swartz #1 well following the successful completion of low cost stimulation work, and the drilling of additional vertical wells scheduled to commence in H1 2015. This update is in line with the Company’s strategy to rapidly build production through drilling and prove up the reserves on its leases.
Roger Swartz Vertical Well, Oklahoma
Production from the 100% owned Roger Swartz #1 vertical well has more than doubled to 12.2 bopd following the completion of a successful fracture stimulation exercise in November 2014. Prior to this, the Well had been producing between 4-5 bopd from the Mississippi Lime formation. Following the frac, production has remained stable at current rates and is not expected to experience significant decline. The total cost of the frac was US$79,400 and based on current production rates, payback is expected to be less than 12 months.
Roger Swartz is currently producing from the Mississippi Lime and Vertz formations from which the Company estimates a total of up to 56,500 barrels of oil equivalent are recoverable.
H1 2015 Two new vertical wells, Oklahoma
Magnolia has recently secured the necessary permits for two vertical wells in Oklahoma: the Roger Swartz #2 and the Shimanek #2. Both wells will be targeting multiple conventional payzones, including the Mississippi Lime/Chat, Redfork Sand and the Lower Skinner Sand. The total cost of drilling, completing and stimulating each well is estimated at US$700k. Following the farm-out of a 6% working interest to an industry partner, Magnolia has a 94% working interest and a 76.375% net revenue interest in each well. The Company is fully funded to drill these two new wells, with drilling anticipated to commence in H1 2015.
Rita Whittington, COO of Magnolia, said, “From the outset, it has always been our intention to drill our own vertical wells targeting proven conventional formations in Oklahoma. As the results of the latest frac of our 100% owned and operated Roger Swartz#1 well demonstrate, vertical wells provide low cost opportunities to grow production and prove up the reserves on our leases. We are preparing to spud two additional vertical wells in H1 2015, which thanks to our large interests, have the potential to significantly increase Magnolia’s production and reserves. Upon success, these two wells will set up additional well offsets.
“At the same time we continue to receive proposals to participate in drilling activity alongside leading operators. In our view this continued interest highlights the attractive returns still available through drilling and producing from Oklahoma’s historic formations even in the current oil price environment. With both an operated and non-operated drilling strategy in place for 2015, we remain focused on proving up the reserves on our leases and in the process generating significant value for our shareholders. I look forward to providing further updates on our progress during the year ahead.”
