MAGNOLIA PETROLEUM PLC: Operational Update
Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas
5 February 2013
Magnolia Petroleum Plc (`Magnolia' or `the Company')
Operational Update Magnolia Petroleum Plc, the AIM quoted US onshore oil and gas exploration and production company, is pleased to report an update on its activities in proven US onshore formations including the Bakken/Three Forks Sanish, North Dakota and the Mississippi Lime in Oklahoma. Thomason 10-27-12 (`Thomason') and Lois Rust 7-27-12 1H (`Lois Rust') wells, Oklahoma Following the announcement on 7 November 2012 of the commencement of work by Chesapeake Energy (`Chesapeake'), the operator, to increase the sales line capacity on the Thomason and Louis Rust wells, the Company has been informed by Chesapeake that production recommenced at the Thomason horizontal well on 30 January 2013. As part of the same work programme, production at Lois Rust is due to recommence by the end of this week. The impact of the work by the operator will be known in the forthcoming weeks. Montana Acreage Following Magnolia's acquisition of 7,886 net mineral acres in Montana in November 2012 and January 2013, the Company notes that Apache Corporation (`Apache') has recently filed with the Montana Oil and Gas Commission applications to space a further 23 sections in Daniels County in preparation for possible future drilling activity. One of these spaced units is located on Magnolia's acreage. The remaining spaced units are either surrounding and/or adjacent to Magnolia's leases. Apache had previously announced that Phase one of its planned drilling operations targeting the Bakken formation in Daniels County, Montana, would consist of five horizontal wells. The Magnolia Directors believe that Phase one has been completed, however the results may not be known for some time. Existing Well Updates Production has commenced at the Transpro operated Walker 2-29 vertical well in the Viola formation, Oklahoma, in which Magnolia has a 1.1113% working interest (`WI') and 0.8335% NRI. This is an increased density well to the Walker 1-29 to optimise the recovery of all the reserves. * Gross initial production rate at 17 boepd (0.14 boepd net) * Expected payout (recovery of costs) in 23 months on costs of US$8,539
The Company has been informed also by the relevant operators of a change in status in the following wells:
Well Formation Status NRI % Operator
Bessie Todd Estate Cotton Completed, now 0.17306 Anadarko GU 31H Valley waiting on Initial
Gustafson 31-30H Bakken, Drilled and 4.071 Marathon Oil
North completed, now Dakota waiting on fracture stimulation
Campbell 1-H* Woodford Completing 0.026025 Newfield
*From time to time, the Company elects to participate in wells with relatively small working/net revenue interests. This allows Magnolia to gain access to critical well information which is then used to further enhance its understanding of the relevant formation.
Magnolia COO, Rita Whittington said, "The successful drilling of the Walker well to the Viola formation highlights the multiple producing reservoirs in Oklahoma, alongside the better known Mississippi Lime and Woodford/Hunton that can be targeted and commercially produced. Over the last twelve months, we have acquired over 4,300 net mineral acres in Oklahoma, and we will continue to participate in drilling wells on our leases to prove up our reserves and, in the process, create value.
"We are closely monitoring Apache's progress in Montana where we have acquired 7,886 net mineral acres in an area we believe has the potential to become a significant extension for production from the prolific Bakken/Three Forks Sanish formations. Our Montana acreage is in line with our strategy of identifying new plays early, providing Magnolia with material exposure at affordable valuations. Combined with further production news due soon, this is an exciting period for the Company and I look forward to providing updates on our progress."
** ENDS **
`bopd' means barrels of oil per day
`boe' means barrels of oil equivalent: a unit of energy based on the approximate energy released by burning one barrel (42 US gallons or 158.9873 litres) of crude oil.
There are 42 gallons (approximately 159 liters) in one barrel of oil, which will contain approximately 5.8 million British Thermal Units (MBtus) or 1,700 kilowatt hours (kWh). The value is necessarily approximate as various grades of oil have slightly different heating values. BOE is used by oil and gas companies in their financial statements as a way of combining oil and natural gas reserves and production into a single measure.
`boepd' means barrels of oil equivalent per day
For further information on Magnolia Petroleum Plc visit www.magnoliapetroleum.com or contact the following:
Steven Snead Magnolia Petroleum Plc +01 918 449 8750
Rita Whittington Magnolia Petroleum Plc +01 918 449 8750
Antony Legge / James Thomas Daniel Stewart & Company Plc +44 (0) 20 7776 6550
John Howes / John-Henry Northland Capital Partners +44 (0) 20 7796 8800 Wicks Limited
Lottie Brocklehurst St Brides Media and Finance +44 (0) 20 7236 1177
Frank Buhagiar St Brides Media and Finance +44 (0) 20 7236 1177
Magnolia Petroleum Plc is an AIM quoted, US focussed, oil and gas exploration and production company. Its portfolio includes interests in 91 producing and non-producing assets, primarily located in the highly productive Bakken/Three Forks Sanish hydrocarbon formations in North Dakota as well as the oil rich Mississippi Lime and the substantial and proven Woodford and Hunton formations in Oklahoma.
Summary of Wells
Category Number of wells
Being Drilled / Completed 15
Elected to participate / waiting to spud 16
This table excludes four out of six wells acquired as part of the acquisition of 800 gross acres with a 100% working interest in Osage County, Oklahoma, as announced on 10 February 2012. These four wells are currently `shut in' and will require a workover programme at some point in the future to bring back into production.
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