Magnolia Petroleum Plc / Index: AIM /
Epic: MAGP / Sector: Oil & Gas
11 December 2017
Magnolia Petroleum
plc (‘Magnolia’ or ‘the Company’)
First US$500,000 Received under US$18.5 million Capital Management Agreement
Magnolia Petroleum plc, the AIM quoted US focused oil and gas
exploration and production company, is pleased to announce Western
Energy Development LLC (‘WED’) has received the first US$500,000 tranche of capital as part of its
exclusive US$18.5 million capital
management agreement with Magnolia. Magnolia will invest
these funds into oil and gas properties in Oklahoma that qualify under the US Immigrant
Investor Programme and in return will earn fees and equity in new
wells and leases.
As announced on 4 July 2017,
Magnolia entered into an exclusive agreement with WED to invest, on
behalf of WED, up to US$18.5 million
into the Oklahoma oil and gas
market. In return Magnolia receives cash fees as well as a 25%
carried working interest in the first well in each spacing unit. A
pilot programme in which Magnolia invested US$500,000 on behalf of WED into qualifying oil
and gas properties in Oklahoma,
generated US$75,500 in value for
Magnolia in terms of lease bonus and the carried interest for 25%
in the first well within each spacing unit; plus an additional
US$127,982 uplift in the
PV9 value of Magnolia’s reserves. To date, the
pilot programme has generated a rate of return of 100% and a return
on investment of 3.26 times.
Magnolia CEO, Rita Whittington
said, “The first US$500,000 under
the US$18.5 million agreement with
WED represents a major milestone for Magnolia. Thanks to the
quantum of funds involved, the fees generated, and the 25% carried
interest in new wells, the WED agreement promises to accelerate our
strategy which is to generate value through the acquisition and
development of leases in productive US onshore formations alongside
established operators such as Devon Energy and Continental
Resources. The management fees will complement the revenues
generated by our portfolio of interests in over 150 producing
wells; while our carried interest in new wells will provide
de-risked, nil cost entry into attractive leases.”
Western Energy Development LLC CEO, Greg Neher said, “We expect today’s
US$500,000 investment will be the
first of many and we look forward to working closely with the
Magnolia team with a view to replicating the success of the pilot
programme on a much larger scale. We feel confident in our
near-term competitive position because amendments to the EB-5
programme currently being considered by the US Congress have the
potential to accelerate our growth. Specifically, two changes
contemplated in proposed bills: firstly a dramatically shorter visa
issuance wait for applicants that invest in rural projects such as
WED’s compared to urban real estate projects; and secondly an
almost doubling in the EB-5 minimum investment amount — meaning we
require fewer investors to reach or exceed our targets.”
Western Energy Development LLC
WED is an affiliate of Western Energy Regional Center LLC, a
United States Citizenship and Immigration Services - designated
Regional Centre which can accept investment in job-creating
projects from foreign nationals through the Immigrant Investor
Programme.
* * 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 |
Nick Beeler |
Cornhill Capital Limited |
+44207710 9610 |
Lottie Wadham |
St Brides Partners Ltd |
+44207236 1177 |
Frank Buhagiar |
St Brides Partners
Ltd
|
+44207236
1177 |