Magnolia Petroleum Plc Participating in Three US Onshore Wells
08 January 2018 - 6:00PM
UK Regulatory
TIDMMAGP
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 +44207213 0880
LLP
Nick Beeler Cornhill Capital Limited +44207710 9610
Lottie Wadham St Brides Partners Ltd +44207236 1177
Frank Buhagiar St Brides Partners +44207236 1177
Ltd
END
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