Magnolia Petroleum Plc / Index: AIM /
Epic: MAGP / Sector: Oil & Gas
8 January 2018
Magnolia Petroleum
plc
(‘Magnolia’ or
‘the Company’)
Participating in
Three SandRidge Energy Operated Wells in Oklahoma
Magnolia Petroleum plc, the AIM quoted US focused oil and gas
exploration and production company, is pleased to announce that it
has received notice from SandRidge Energy, the operator of the
Gilchrist 2016 1-36H well (‘Gilchrist’) in Oklahoma, that three additional increased
density wells are to be drilled on the same spacing unit to
maximise the recovery of reserves. This follows excellent
Initial Production (‘IP’) rates for Gilchrist that were provided by
the operator, which, at 652 BOPD and 1,178 MCFD or 770 BOEPD,
significantly exceeded the Company’s projections of 570 BOEPD.
Together with Western Energy Development LLC (‘WED’), Magnolia
has a combined Working Interest (‘WI’) of 1.57% in the spacing unit
on which Gilchrist is located and where the additional increased
density wells are to be drilled. Under the terms of its
agreement with WED, Magnolia was carried for 25% of WED’s WI in the
Gilchrist Well at no cost, but will fund its share of the costs of
drilling the increased density wells. It is the Company’s
intention to participate in all three new wells. A date for
the commencement of drilling operations has yet to be confirmed by
the operator.
Gilchrist and the additional increased density wells form part
of a successful pilot programme under which Magnolia invested
US$500,000 on behalf of WED into
qualifying oil and gas properties in Oklahoma. To date, this
pilot programme has generated a rate of return of 100%; a return on
investment of 3.26 times; US$75,500
in value for Magnolia (lease bonus plus a carried interest for 25%
in the first well, within each spacing unit); and US$127,982 uplift in the PV9 value of Magnolia’s
reserves. Based on the success of the pilot programme,
Magnolia entered into an exclusive agreement with WED to invest, on
behalf of WED, up to US$18,500,000
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 of a spacing unit.
Magnolia CEO, Rita Whittington
said, “Thanks to Gilchrist’s better than expected IP rates,
these three new wells have been materially de-risked, specifically
in terms of geological risk. They therefore have the
potential to significantly add to the US$200,000 of value generated for Magnolia by the
successful US$500,000 pilot programme
with WED. We are focused on replicating this success many
times over and with this in mind, we are currently investing the
first US$500,000 tranche of capital
received under the US$18.5 million
WED agreement. I look forward to providing further updates in
due course, as we look to increase our total production and
reserves across our portfolio of interests in proven US onshore
formations.”
Further Information on Western Energy
Regional Center LLC
WED is an affiliate of Western Energy Regional Center LLC, a
United States Citizenship and Immigration Services
(‘USCIS’)-designated Regional Center which can accept investment in
job-creating projects from foreign nationals through the Immigrant
Investor Program.
* * 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 / Liam
Murray |
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 |