Magnolia Petroleum Plc / Index: AIM /
Epic: MAGP / Sector: Oil & Gas
21 July 2017
Magnolia Petroleum
Plc (‘Magnolia’ or ‘the Company’)
Divestment of
Wells
Magnolia Petroleum Plc, the AIM quoted US focused oil and gas
exploration and production company, is pleased to announce the
divestment of 19 new wells in North
Dakota and Oklahoma via two
separate transactions (‘the Transactions’) for a total of
US$411,000.
In addition to raising funds for the Company, the divestment
assists Magnolia in realigning its forthcoming well investments
into core counties in which Western Energy Development LLC (‘WED’)
can invest to allow the Company to participate alongside the
anticipated WED investments and, as a result, the carried interests
the Company will receive.
Transaction#1: Farm out of six
Marathon Oil-operated wells in North
Dakota
Further to its announcement of 20 May
2017, Magnolia has agreed to farm-out (‘the Farm-Out’) its
interest in six Marathon Oil-operated wells targeting the Bakken
and Three Forks Sanish formations in North Dakota for an upfront cash consideration
of US$150,000. Magnolia did not
incur any costs in relation to these interests.
In addition to receiving an upfront cash payment, Magnolia will
retain an interest in all six wells via a back-in after payout
arrangement, providing the Company with exposure to future
production and cash flow. As a result of the Farm-Out,
Magnolia will no longer be required to pay any of its share of the
costs for drilling and completing the six wells.
Transaction#2: Divestment of 13
Continental Resources-operated wells in Oklahoma
The Company has additionally divested its interest in the
thirteen Sympson wells, which it acquired in Q4 2015 and are only
now being drilled/completed by Continental Resources in
Oklahoma, for an upfront cash
consideration of US$261,000. To
date Magnolia has incurred US$200,000
in drilling costs in these wells and will no longer be required to
meet any of its share of the future costs in drilling or completing
these wells.
US$210,000 of the cash
consideration received will be used to reduce the Company’s reserve
based lending facility (‘the Facility’), which will fall to
US$2,353,080 following the
payment. The remaining funds will be used for working capital
and for future investment.
Magnolia CEO, Rita Whittington
said, “After securing what we regard as a game-changing
agreement with WED to invest and manage on their behalf up to
US$18.5 million of foreign capital
under the US Immigrant Investor Programme, today’s transactions are
part of a re-evaluation and realignment of our portfolio to
participate alongside WED. By providing Magnolia with an
additional revenue stream based on asset management services as
well as low risk expansion of our lease position and well count,
WED represents an excellent platform with which to fast-track our
objective to generate substantial value, and we intend to take full
advantage of this opportunity.
“The WED agreement and the multiple opportunities within our
existing leases and wells in Oklahoma are the building blocks we intend to
use to transform Magnolia into the significant US onshore oil and
gas company we believe it can become. This is an exciting period
for Magnolia and I look forward to providing further updates on our
progress.”
For further information on the WED capital management agreement
and the additional revenue stream and assets it is expected to
deliver to Magnolia, please refer to the Company’s announcement of
4 July 2017. In addition, the Company’s latest Investor
Presentation has been uploaded onto the corporate website
www.magnoliapetroleum.com
The information contained within this announcement constitutes
inside information stipulated under the Market Abuse Regulation
(EU) No. 596/2014.
* * ENDS * *
For further information on Magnolia Petroleum Plc visit
www.magnoliapetroleum.com or contact the following:
Rita Whittington |
Magnolia Petroleum Plc |
+01918449 8750 |
Jo Turner / James
Caithie |
Cairn Financial Advisers
LLP |
+44207213 0880 |
Colin Rowbury |
Cornhill Capital Limited |
+44207710 9610 |
Lottie Brocklehurst |
St Brides Partners Ltd |
+44207236 1177 |
Frank Buhagiar |
St Brides Partners
Ltd |
+44207236
1177 |