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 2/14/11H |
Woodford, Oklahoma |
Producing (IPR: 6002 mcf/d) |
0.01025391 |
Bravo |
Michelle Abel 1-11-2XH |
Springer, Oklahoma |
Producing (IPR: 79 bopd; 13,066
mcf/d) |
0.00052778 |
Marathon |
Foree 1-18-7XH |
Woodford, Oklahoma |
Producing (IPR: 1411 bopd; 3900
mcf/d) |
0.00029355 |
Continental Resources |
Houses Quarter 10-7-6XH |
Woodford, Oklahoma |
Producing (IPR: 716 bopd; 1702
mcf/d) |
0.00029355 |
Continental Resources |
Fazio 1705 1-13MH |
Mississippi Lime, Oklahoma |
Producing: (IPR: 644 bopd; 1507
mcf/d) |
0.00146484 |
Oklahoma Energy Acq. |
Crow 2 |
Woodford, Oklahoma |
w/o spud |
0.00195313 |
BP |
Crow 3 |
Woodford, Oklahoma |
w/o spud |
0.00195313 |
BP |
Crow 4 |
Woodford, Oklahoma |
w/o spud |
0.00195313 |
BP |
Crow 5 |
Woodford, Oklahoma |
w/o spud |
0.00195313 |
BP |
Condit |
Woodford, Oklahoma |
w/o spud |
0.00025666 |
Continental Resources |
TBD 36/25 |
Woodford Oklahoma |
w/o spud |
0.00653906 |
Trinity |
Veeder 4E MBH-ULW |
Bakken, North Dakota |
w/o spud |
0.01164415 |
BP |
Gilchrist 2016 1-36H |
Mississippi, Oklahoma |
w/o spud |
0.003094482 |
Sandridge |
Andrews 23-2 (a/k/a Vergie) |
Woodford, Oklahoma |
w/o spud |
0.002912109 |
Comanche |
Lohrmann 1-7-18XH |
Woodford, Oklahoma |
w/o spud |
0.00029355 |
Continental Resources |
Lohrmann 2-7-18XH |
Woodford, Oklahoma |
w/o spud |
0.00029355 |
Continental Resources |
Lohrmann 3-7-18XH |
Woodford, Oklahoma |
w/o spud |
0.00029355 |
Continental Resources |
Lohrmann 4-7-18XH |
Woodford, Oklahoma |
w/o spud |
0.00029355 |
Continental Resources |
Lohrmann 5-7-18XH |
Woodford, Oklahoma |
w/o spud |
0.00029355 |
Continental Resources |
Lohrmann 6-7-18XH |
Woodford, Oklahoma |
w/o spud |
0.00029355 |
Continental Resources |
Lohrmann 7-7-18XH |
Woodford, Oklahoma |
w/o spud |
0.00029355 |
Continental
Resources |
Houses Quarter 1-7-6XH |
Woodford, Oklahoma |
w/o spud |
0.00029355 |
Continental
Resources |
Houses Quarter 2-7-6XH |
Woodford, Oklahoma |
w/o spud |
0.00029355 |
Continental
Resources |
Houses Quarter 3-7-6XH |
Woodford, Oklahoma |
w/o spud |
0.00029355 |
Continental Resources |
Houses Quarter 4-7-6XH |
Woodford, Oklahoma |
w/o spud |
0.00029355 |
Continental Resources |
Houses Quarter 5-7-6XH |
Woodford, Oklahoma |
w/o spud |
0.00029355 |
Continental Resources |
Houses Quarter 6-7-6XH |
Woodford, Oklahoma |
w/o spud |
0.00029355 |
Continental Resources |
Houses Quarter 7-7-6XH |
Woodford, Oklahoma |
w/o spud |
0.00029355 |
Continental Resources |
Pauline 1-24/25/36H |
Woodford, Oklahoma |
Drilling |
0.002541797 |
Trinity |
Pauline 2-24/25H |
Woodford, Oklahoma |
Drilling |
0.003938672 |
Trinity |
Pauline 3-24/25H |
Woodford, Oklahoma |
Drilling |
0.005346094 |
Trinity |
Pauline 4-24/25H |
Woodford, Oklahoma |
Drilling |
0.00534375 |
Trinity |
Jana 1-3/10H |
Woodford, Oklahoma |
Drilling |
0.00585938 |
Trinity |
Jordan 10_15-14N-9W 1HX |
Mississippi, Oklahoma |
Drilling |
0.00109863 |
Devon |
JoAnn 2H-18X |
Woodford, Oklahoma |
Drilling |
0.00110315 |
Newfield |
JoAnn 3H-18X |
Woodford, Oklahoma |
Drilling |
0.00110315 |
Newfield |
Engle 18-05-36 |
Mississippi, Oklahoma |
Drilling |
0.0015625 |
Chisholm Oil & 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
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 |