20 June
2018
Magnolia Petroleum Plc / Index: AIM /
Epic: MAGP / Sector: Oil & Gas
Magnolia Petroleum
plc (‘Magnolia’ or ‘the Company’)
Proposed Disposal
of Oklahoma Assets and Issue of Equity
Magnolia Petroleum plc, the US focused oil and gas exploration
and production company announces it has signed a non-binding
agreement with Western Energy Development (‘WED’) for the sale of
13 wells in Oklahoma for a
consideration of $500,000.
The disposal is in line with the Company’s debt reduction
programme. Together with the proposed disposal of the North Dakota assets, both of which are subject
to shareholder consent and completion, the board estimates that the
proceeds will be sufficient to satisfy the outstanding US$2 million balance of the reserve-based lending
facility (‘the Lending Facility’) of its wholly owned operating
subsidiary, Magnolia Petroleum, Inc. (‘Magnolia Inc’). As detailed
in the Company’s announcement of 7 June
2018, the Company embarked on a debt reduction programme in
response to the Bank’s decision not to extend the Lending Facility
and its requirement that the full outstanding amount be repaid or
refinanced by 9 July 2018.
As previously advised, the Bank has placed restrictions on the
Company’s bank account until the Lending Facility is repaid. In the
meantime, the Company is carefully managing its working capital
which is severely constrained. While the disposal of the
North Dakota and Oklahoma assets, subject to shareholder
consent, is expected to repay the lending facility in full and
release the restrictions on the Company’s bank account, it is
likely that the Company will continue to need to carefully manage
its working capital in the short term until the costs of the
disposal and related legal work have been received. It should
be noted that the sale of the North
Dakota and Oklahoma assets
will materially reduce the Company’s revenue and further disposals
may be required to provide additional working capital.
In order to assist the Company with costs to allow for the
disposal and to provide a modest amount of additional working
capital, the Company has raised £26,950 by way of subscription for
7,700,000 new ordinary shares at 0.35p per share (‘Subscription
Shares’). WED has agreed to participate in the subscription
for 3,500,000 new ordinary shares which will increase its interest
in the Company to approximately 26.1 per cent. Murray Street
Investments LLC has subscribed for 4,200,000 new ordinary shares,
representing 9.86 per cent. of the enlarged issued share
capital.
As WED holds more than 10 per cent. of the Company’s ordinary
shares, the subscription and the disposal, subject to shareholder
consent, constitute related party transactions. The Directors
consider, having consulted with its nominated adviser, Cairn
Financial Advisers LLP, that the terms of the transactions are fair
and reasonable insofar as its shareholders are concerned.
The Proposed Disposal is conditional on the granting of approval
of the Board’s asset disposal programme at the Company’s general
meeting which is to be held at 15:30 p.m.
BST (09:30 a.m. local time) on
22 June 2018 at the offices of Pray
Walker P.C., 100 West Fifth Street, Suite 900, Tulsa, OK 74103, USA (‘the General Meeting’).
The Company reminds shareholders that, in the event that the
Lending Facility is not repaid or refinanced, it is expected that
either the Bank will repossess and sell assets to pay off the debt,
which is likely to be at a lower value for Shareholders than the
Company could achieve, or the Directors will be required to
commence Chapter 11 bankruptcy proceedings with respect to Magnolia
Inc. This would also likely lead to a loss of control of the debt
reduction programme and reduced value being achieved by the Company
for its portfolio of wells. In this scenario, shareholders are
unlikely to receive any value for the Company’s portfolio of wells
with all proceeds of sales being used to settle creditors and the
costs of the Chapter 11 proceedings.
Issue of Equity
The Subscription Shares will rank pari passu in all respects
with the Company's existing issued ordinary shares.
Application will be made for the admission of the
Subscription Shares to trading on AIM and it is expected that
admission will occur and that dealings will commence at
8.00 a.m. on or around 26 June 2018.
For the purposes of the Financial Conduct Authority's Disclosure
and Transparency Rules, the Company announces that, following the
issue of the Subscription Shares, the Company will have 42,606,992
ordinary shares in issue.
The Company has no ordinary shares held in treasury. The total
number of voting rights in the Company will therefore be
42,606,992. This figure may be used by shareholders in the Company
as the denominator for the calculations by which they will
determine if they are required to notify their interest in, or a
change in their interest in, the share capital of the Company under
the FCA's Disclosure and Transparency Rules.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
* * ENDS * *
For further information on Magnolia Petroleum Plc visit
http://www.magnoliapetroleum.com/ or contact the following:
Rita Whittington |
Magnolia Petroleum Plc |
+01918449 8750 |
Jo Turner / James
Caithie |
Cairn Financial Advisers
LLP |
+44207213 0880 |
Daniel Gee |
Cornhill Capital Limited |
+44207710 9610 |
Lottie Wadham |
St Brides Partners Ltd |
+44207236 1177 |
Frank Buhagiar |
St Brides Partners
Ltd |
+44207236 1177 |