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Reserves Report & Production Update
Magnolia Petroleum Plc, the AIM quoted US onshore focused oil and gas exploration and production company, has received an independent Reserves Report as at 1 January 2015, which includes a significant increase in net proven reserves on its leases in US onshore formations such as the Woodford and Mississippi Lime, Oklahoma, and the Bakken and Three Forks Sanish, North Dakota.
In addition, the Company is pleased to report net daily production stood at 281 boepd as at 1 January 2015, compared to 257 boepd as at 1 July 2014.
Reserves Report
* Total net proved reserves (‘1P’) of 985 Mbbl of oil and condensate and
2,905 MMcf gas as at 1 January 2015 – up 37% and 39% respectively compared
to 1 July 2014
+ Net proved and developed producing reserves (‘PDP’) estimated at 178
Mbbl of oil and condensate and 572 MMcf gas as at 1 January 2015 – up
10% and 6% respectively compared to 1 July 2014
* Total net proved and probable reserves (‘2P’) of 1,044 Mbbl of oil and
condensate and 3,114 MMcf gas – up 39% and 35% respectively compared to 1
July 2014
* Total net proved, probable and possible reserves (‘3P’) of 1,114 Mbbl of
oil and condensate and 3,290 MMcf gas – up 27% and 29% respectively
compared to 1 July 2014
* Valuations (NPV10) assigned to proven reserves categories as at 1 January
2015 reflect lower oil prices and are based on the 1 January 2015 NYMEX
futures strip prices for WTI Oil and Henry Hub Gas:
+ 1P reserves estimated at US$26.653 million compared to US$31.832
million as at 1 July 2014 – PDP reserves estimated at US$6.703 million
compared to US$9.143 million
+ 2P reserves estimated at US$28.361 million compared to US$34.693
million as at 1 July 2014
+ 3P reserves estimated at US$29.726 million compared to US$35.884
million as at 1 July 2014
* Scope for further reserves growth:
+ Multiple potentially highly productive Mississippi Lime wedges
identified by Magnolia on its leases in Oklahoma – permits secured to
drill two low cost vertical wells targeting productive wedges in 2015
+ Report does not reflect potential in the Woodford formation, Oklahoma,
which underlies the Mississippi Lime and is at an earlier stage of
development – viewed by operators as the more prospective of the two
formations in certain areas
Production Update
* Net production stood at 281 boepd as at 1 January 2015 compared to 257
boepd on 1 July 2014
Credit Facility
* US$6 million loan amount of Credit Facility remains in place – the
borrowing base limit has been adjusted to US$3,284,210 from US$4,596,944 to
reflect the effect of lower oil prices on the value of Magnolia’s net
reserves – all other terms remain the same
+ Funds remain available to the Company at the revised borrowing base
level
+ The next Reserves Update is due in July 2015 but the Company has the
option to request an evaluation at an earlier date
Rita Whittington, COO of Magnolia, said, “With our proven reserves up by approximately one third across all three categories, the last six months have seen further excellent progress made towards delivering on our objective to prove up the reserves on Magnolia’s leases, which cover over 13,500 net mineral acres in producing US onshore formations. Even after taking into account lower oil prices, at US$26.653 million the value of our proven reserves far outstrips Magnolia’s current market valuation, and as a result provides considerable asset backing.
“We have permits in place to drill, as operator, two low cost vertical wells in Oklahoma in 2015 in which we have a 76.375% net revenue interest in each. Subject to the results, these two wells, along with our continued participation in new drilling alongside established operators, provide scope for a significant increase in net reserves and production in the year ahead. I look forward to providing further updates on our progress in due course.”
