Magnolia Petroleum Plc Q2 2017 Operations Update
03 August 2017 - 4:00PM
UK Regulatory
TIDMMAGP
Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas
3 August 2017
Magnolia Petroleum Plc ('Magnolia' or 'the Company')
Q2 2017 Operations Update
Magnolia Petroleum Plc, the AIM quoted US focused oil and gas exploration and
production company, is pleased to announce a quarterly update for Q2 2017 ('the
Quarter') on its operations across proven and producing US onshore hydrocarbon
formations, including the Bakken/Three Forks Sanish in North Dakota, and the
Woodford, Mississippi Lime and the Hunton in Oklahoma.
Q2 Highlights to 30 June 2017
* 5 new wells commenced production during the Quarter - 159 producing wells
in the Company's portfolio as at end of Q2 2017
* 42 new wells proposed - 3 wells currently at various stages of development
including in the prolific SCOOP and STACK plays in Oklahoma
* 25% increase in the value ('NPV9') of total net PDP reserves as at April
2017 to US$4,300,000 (1 July 2016: US$3,445,180) - provides strong asset
backing
+ PDP reserves as at 1 January 2017 stood at 282.686 Mbbl (1 July 2016:
133.31 Mbbl) and 2,343.116 MMCF gas (1 July 2016: 580.67 MMcf)
* Board and management team strengthened following appointment of Rita
Whittington as CEO, highly experienced geologist Lanny Woods as a technical
consultant and Derec Norman as CFO
+ Board continues to be remunerated in shares of the Company in lieu of
cash as part of on-going strategy to minimise corporate and operating
expenses - 33% reduction in full year operating costs reported
Outlook
* Entered into an exclusive agreement with Western Energy Development LLC
('WED') to invest, on behalf of WED, up to US$18,500,000 into the Oklahoma
oil and gas market as part of US Immigrant Investor Scheme
+ Provides additional revenue stream and rapid low risk, low cost
expansion of its asset base
+ US$500,000 pilot programme since November 2016 to present has generated
in excess of US$200,000 value net to Magnolia in terms of fees, equity
in new wells, and uplift in reserves
+ Commencement of roll-out of WED agreement has the potential to
fast-track the roll-out of Magnolia's strategy to acquire leases and
prove up the reserves via drilling
* The Company continues to appraise its existing well portfolio to realign
its forthcoming well investments into core counties in which WED can invest
to allow Magnolia to participate alongside the anticipated WED investments
* Significant increase in proposals being received to drill new and infill
wells on the Company's existing leases particularly within the SCOOP and
STACK, two highly active plays in Oklahoma where wells are economic at oil
prices around US$40 per barrel
Magnolia CEO, Rita Whittington said, "Over the years, Magnolia has had great
success acquiring and developing onshore US leases alongside leading operators,
particularly when oil prices were trading at US$90 per barrel. Since the
downturn, we have worked hard to bring costs down and to focus more on areas
which require low oil prices to breakeven so that we can have the same success
at today's US$40-50 oil prices. Our low cost, low risk model has generated
substantial returns in the past for two previous companies I was a part of and,
together with a highly experienced management team and Board, I am focused on
doing the same with Magnolia. Thanks to the agreement we have signed with WED,
I am confident we can start to make material progress towards this objective in
the near term."
Well Developments
The full list of well developments occurring in the quarter is set out below.
A number of these include wells in which Magnolia has small interests. This is
in line with management's strategy to minimise exploration risk, which includes
the evaluation of drilling data gained through its participation in wells in
which it has very small interests.
Well Formation Status NRI % Operator
Bishop North 2/14/ Woodford, Producing (IPR: 0.01025391 Bravo
11H Oklahoma 6002 mcf/d)
Michelle Abel Springer, Producing (IPR: 0.00052778 Marathon
1-11-2XH Oklahoma 79 bopd; 13,066
mcf/d)
Foree 1-18-7XH Woodford, Producing (IPR: 0.00029355 Continental
Oklahoma 1411 bopd; 3900 Resources
mcf/d)
Houses Quarter Woodford, Producing (IPR: 0.00029355 Continental
10-7-6XH Oklahoma 716 bopd; 1702 Resources
mcf/d)
Fazio 1705 1-13MH Mississippi Producing: 0.00146484 Oklahoma
Lime, Oklahoma (IPR: 644 bopd; Energy Acq.
1507 mcf/d)
Crow 2 Woodford, w/o spud 0.00195313 BP
Oklahoma
Crow 3 Woodford, w/o spud 0.00195313 BP
Oklahoma
Crow 4 Woodford, w/o spud 0.00195313 BP
Oklahoma
Crow 5 Woodford, w/o spud 0.00195313 BP
Oklahoma
Condit Woodford, w/o spud 0.00025666 Continental
Oklahoma Resources
TBD 36/25 Woodford w/o spud 0.00653906 Trinity
Oklahoma
Veeder 4E MBH-ULW Bakken, North w/o spud 0.01164415 BP
Dakota
Gilchrist 2016 Mississippi, w/o spud 0.003094482 Sandridge
1-36H Oklahoma
Andrews 23-2 (a/k/ Woodford, w/o spud 0.002912109 Comanche
a Vergie) Oklahoma
Lohrmann 1-7-18XH Woodford, w/o spud 0.00029355 Continental
Oklahoma Resources
Lohrmann 2-7-18XH Woodford, w/o spud 0.00029355 Continental
Oklahoma Resources
Lohrmann 3-7-18XH Woodford, w/o spud 0.00029355 Continental
Oklahoma Resources
Lohrmann 4-7-18XH Woodford, w/o spud 0.00029355 Continental
Oklahoma Resources
Lohrmann 5-7-18XH Woodford, w/o spud 0.00029355 Continental
Oklahoma Resources
Lohrmann 6-7-18XH Woodford, w/o spud 0.00029355 Continental
Oklahoma Resources
Lohrmann 7-7-18XH Woodford, w/o spud 0.00029355 Continental
Oklahoma Resources
Houses Quarter Woodford, w/o spud 0.00029355 Continental
1-7-6XH Oklahoma Resources
Houses Quarter Woodford, w/o spud 0.00029355 Continental
2-7-6XH Oklahoma Resources
Houses Quarter Woodford, w/o spud 0.00029355 Continental
3-7-6XH Oklahoma Resources
Houses Quarter Woodford, w/o spud 0.00029355 Continental
4-7-6XH Oklahoma Resources
Houses Quarter Woodford, w/o spud 0.00029355 Continental
5-7-6XH Oklahoma Resources
Houses Quarter Woodford, w/o spud 0.00029355 Continental
6-7-6XH Oklahoma Resources
Houses Quarter Woodford, w/o spud 0.00029355 Continental
7-7-6XH Oklahoma Resources
Pauline 1-24/25/ Woodford, Drilling 0.002541797 Trinity
36H Oklahoma
Pauline 2-24/25H Woodford, Drilling 0.003938672 Trinity
Oklahoma
Pauline 3-24/25H Woodford, Drilling 0.005346094 Trinity
Oklahoma
Pauline 4-24/25H Woodford, Drilling 0.00534375 Trinity
Oklahoma
Jana 1-3/10H Woodford, Drilling 0.00585938 Trinity
Oklahoma
Jordan Mississippi, Drilling 0.00109863 Devon
10_15-14N-9W 1HX Oklahoma
JoAnn 2H-18X Woodford, Drilling 0.00110315 Newfield
Oklahoma
JoAnn 3H-18X Woodford, Drilling 0.00110315 Newfield
Oklahoma
Engle 18-05-36 Mississippi, Drilling 0.0015625 Chisholm Oil
Oklahoma & Gas
Please note Magnolia has previously announced it had elected to participate in
the drilling of the Pickle 2/9/4/33H well to the Woodford and Celesta 2 well to
the Springer in Oklahoma. However, the Company is no longer participating in
either of these two wells for the following reasons:
* Pickle 2/9/4/33H - verbal commitments to lease from mineral owner were not
honoured
* Celesta 2 - upon re-evaluation of the economics, it was determined that
estimated reserves were too small to warrant Magnolia participating in the
well
As a result of Magnolia not participating in the above two wells, the Company
will not be liable for its share of drilling costs, which have a combined total
of US$59,939.
The information contained within this announcement constitutes inside
information stipulated under the Market Abuse Regulation (EU) No. 596/2014.
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:
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
END
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