Magnolia Petroleum Plc Updated Reserve Report
15 March 2017 - 6:00PM
UK Regulatory
TIDMMAGP
Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas
15 March 2017
Magnolia Petroleum Plc ('Magnolia' or 'the Company')
Updated Reserve Report
Magnolia Petroleum Plc, the AIM quoted US onshore focused oil and gas
exploration and production company, is pleased to announce the results of an
independent Reserves Report. The Report, which is part of the six-month bank
debt redetermination process, shows an increase in the Company's net proved
developed producing reserves ('PDP') across its leases in US onshore formations
such as the Woodford and Mississippi Lime, Oklahoma, and the Bakken and Three
Forks Sanish, North Dakota.
Overview:
* 112% increase in total net PDP oil and condensate reserves to 282.686 Mbbl
as at 1 January 2017 (1 July 2016: 133.31 Mbbl of oil and condensate)
* 303% increase in total net PDP gas reserves to 2,343.116 MMCF (1 July 2016:
580.67 MMcf gas)
* Significant increase in total net PDP reserves due to a number of new wells
commencing production over the period
* Value (NPV9) of total net PDP reserves as at 1 January 2017 increased to
US$4,026,000 (1 July 2016: US$3,445,180) provides strong asset backing to
current market capitalisation
* Further headroom created as borrowing base limit of US$6 million Credit
Facility adjusted up to US$2,214,300 from US$1,894,849 to reflect increase
in total net PDP reserves and positive effect of higher oil prices on their
value
* The Report only covers proved developed producing and proved developed
non-producing reserve classes and does not include proved shut-in, proved
undeveloped, probable and possible reserve classes as well as Magnolia's
interests in undeveloped acreage
Rita Whittington, COO of Magnolia, said, "At US$4million the value assigned to
our PDP reserves alone is almost double our current market capitalisation. We
are confident the true underlying value of the Company is greater still, as
this latest Report on our leases in Oklahoma and North Dakota did not cover
other classes of reserves, most notably in both the proved and probable
categories.
"With oil prices seemingly stabilising at the US$50 level and costs across the
sector significantly lower than those that were prevalent before the downturn,
activity among US onshore operators continues to pick up from 2016's lows. We
are seeing this for ourselves in the increase in the number of well proposals
we are receiving to drill wells on our leases. As the improved sentiment
translates into more drilling, we are confident that the substantial discount
the market is ascribing to our PDP reserves will narrow. In the meantime, the
resumption in PDP reserves growth is most welcome and I look forward to
providing further updates as we take advantage of the recovery to drill
alongside established operators on our leases to prove up our reserves, and in
the process generate value for our shareholders."
Summary Table of Magnolia's Total Net PDP and proved developed non-producing
('PDNP') Reserves as at 8 March 2017:
Net PV9
State Reserve BO MCF US$M
Category
Oklahoma PDP 124,773 2,207,617 $2,456
Oklahoma PDNP 833 0 $3
North Dakota PDP 157,913 135,499 $1,570
Total 283,519 2,343,116 $4,029
NPV9 valuations are based on the bank's price deck as of January 2017 and take
into account the future net cash flow which is defined as future net revenue,
less estimated future net OPEX (well operating cost and production taxes) and
future net capital. The total net PDP reserves are those defined as natural
gas and liquid hydrocarbon reserves to Magnolia's interest after deducting all
royalties, overriding royalties, and reversionary interests owned by outside
parties that become effective upon pay-out of specified monetary balances. All
reserves estimates have been prepared using standard engineering practices
generally accepted by the petroleum industry and conform to the guidelines
adopted by the 2007 SPE/SPEE/WPC PRMS Guidelines.
The information contained in this announcement regarding the reserves analysis
has been reviewed and approved by Mike Mabry on behalf of Sycamore Resources.
Mr Mabry has over 30 years of relevant experience in the oil industry and has a
B.S. in Petroleum Engineering from the University of Tulsa. He has previously
served as Chair of the SPE Improved Oil Recovery Symposium, presiding over 700
engineers from 65 counties. Over the course of his career, Mr Mabry has held
the position of Senior Petroleum Engineer at Apache Corporation, Petrohawk
Energy and MAPCO and is currently Managing Director of Sycamore Resources in
Tulsa, Oklahoma.
** ENDS **
Glossary
'M' means Thousand
'MBO' means Thousand Barrels of Oil
'Mcfd' means Thousand Cubic Feet per Day
'MM' means million (thousand thousand not million million), as used in
oilfield and heat content units such as MMSTB and MMBtu
'MMBbl' means Million barrels
'MMcfd' means Million Cubic Feet per Day
'NRI' means Net Revenue Interests
'Proved Reserves' means those quantities of petroleum which, by analysis of
geological and engineering data, can be estimated with reasonable certainty to
be commercially recoverable, from a given date forward, from known reservoirs
and under current economic conditions, operating methods, and government
regulation - Proved reserves can be categorized as developed or undeveloped
'Probable reserves' are those unproved reserves which analysis of geological
and engineering data suggests are more likely than not to be recoverable. In
this context, when probabilistic methods are used, there should be at least a
50% probability that the quantities actually recovered will equal or exceed the
sum of estimated proved plus probable reserves
'Possible Reserves' are those unproved reserves which analysis of geological
and engineering data suggests are less likely to be recoverable than probable
reserves. In this context, when probabilistic methods are used, there should be
at least a 10% probability that the quantities actually recovered will equal or
exceed the sum of estimated proved plus probable plus possible reserves
Reserve Status Categories
'Unproved Reserves' are based on geologic and/or engineering data similar to
that used in estimates of proved reserves; but technical, contractual,
economic, or regulatory uncertainties preclude such reserves being classified
as proved. Unproved reserves may be further classified as probable reserves and
possible reserves
Reserve status categories define the development and producing status of wells
and reservoirs
'Developed reserves' are expected to be recovered from existing wells including
reserves behind pipe. Improved recovery reserves are considered developed only
after the necessary equipment has been installed, or when the costs to do so
are relatively minor. Developed reserves may be subcategorised as producing or
non-producing.
'Producing reserves' are expected to be recovered from completion intervals
which are open and producing at the time of the estimate. Improved recovery
reserves are considered producing only after the improved recovery project is
in operation.
'Non-producing reserves' include shut-in and behind-pipe reserves. Shut-in
reserves are expected to be recovered from (1) completion intervals which are
open at the time of the estimate but which have not started producing, (2)
wells which were shut-in for market conditions or pipeline connections, or (3)
wells not capable of production for mechanical reasons. Behind-pipe reserves
are expected to be recovered from zones in existing wells, which will require
additional completion work or future recompletion prior to the start of
production.
'Undeveloped reserves' are expected to be recovered: (1) from new wells on
undrilled acreage, (2) from deepening existing wells to a different reservoir,
or (3) where a relatively large expenditure is required to (a) recomplete an
existing well or (b) install production or transportation facilities for
primary or improved recovery projects.
* * ENDS * *
For further information on Magnolia Petroleum Plc visit
www.magnoliapetroleum.com or contact the following:
Steven Snead Magnolia Petroleum Plc +01918449 8750
Rita Whittington Magnolia Petroleum Plc +01918449 8750
Jo Turner / James Caithie Cairn Financial Advisers +44207213 0880
LLP
Colin Rowbury Cornhill Capital Limited +44207710 9610
Lottie Brocklehurst St Brides Partners Ltd +44207236 1177
Frank Buhagiar St Brides Partners +44207236 1177
Ltd
Notes
Magnolia Petroleum Plc is an AIM quoted, US focused, oil and gas exploration
and production company. Its portfolio includes interests in 154 producing and
non-producing assets, primarily located in the highly productive Bakken/Three
Forks Sanish hydrocarbon formations in North Dakota as well as the oil rich
Mississippi Lime and the substantial and proven Woodford and Hunton formations
in Oklahoma.
Summary of Wells
Category Number of wells
Producing 154
Being drilled / completed 14
Elected to participate / waiting to 46
spud
TOTAL 214
END
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