MAGNOLIA PETROLEUM PLC: Interim Results

Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas       
10 September 2013 
         Magnolia Petroleum Plc (`Magnolia' or `the Company')               


                                Interim Results                                 


Magnolia Petroleum Plc, the AIM quoted US focused oil and gas exploration and
production company, announces its interim results for the six month period
ended 30 June 2013.

Highlights

  * 223% increase in H1 2013 revenues to US$910,721 (H1 2012: US$282,208) and
    27% up on the revenues for full year (FY 2012: US$709,395)
      * 
      + Monthly run rate increasing - June 2013 revenues 1.5 times higher than
        January 2013


   
  * US$237,552 EBITDA (after removing gain on foreign exchange) compared to 


    loss of US$485,464 during six months to 30 June 2012 (after removing loss
    on foreign exchange)
      * Interests in 128 wells as at 30 June 2013 in proven US onshore formations
    such as the Bakken/Three Forks Sanish, North Dakota, and the Mississippi
    Lime, Woodford/Hunton, Oklahoma - 27% increase since 31 December 2012
      * 
      + 117 producing and 11 drilling/completing


   
  * 75% increase in daily production to 214 boepd as at 1 August 2013 (1 


    January 2013: 122.5boepd)
      * Reported initial production rates (`IPRs') for 25 wells including the
    Gustafson 31-30H well (50boepd net) and the 100% owned Roger Swartz #1 (17
    bopd)
      * Elected to participate in 40 new wells - total investment of US$2,764,183
    in drilling during the period
      * Invested US$1,583,193 in acquiring new leases during the period
      * Participating in wells with higher than average net revenue interests as
    per strategy: Blaser (9.375%); Great White (7.5%)
      * Significant increase in 2P reserves to 1.437m barrels of oil and condensate
    and 5,124 MMcf of natural gas (1 August 2013) compared to 68,700 barrels
    and 249.8 MMcf as at AIM Admission (November 2011)
      * 2P reserves valued at US$47million underpinning market valuation - 21 fold
    increase since Admission to AIM
      * 
      + Only includes approximately 5,500 net acres out of a total of 13,500 in
        proven formations - substantial upside potential


   
  * Strong pipeline of opportunities across all formations both as participant 


    and operator - over 600 potential drilling locations on existing acreage
      * £1.5 million capital raised during the period to participate in wells with
    leading operators such as Marathon Oil and Statoil


Magnolia CEO, Steven Snead said, "The combination of a 27% increase in the
number of wells in proven US onshore formations to 128 and a series of
excellent initial production rates such as the Gustafson well has resulted in a
75% jump in daily production to 214 boepd from 122.5 at the start of 2013 and a
223% increase in half yearly revenues to US$910,721 compared to the equivalent
period in 2012. The positive effect of drilling on the level of our proven and
probable reserves (`2P') is evident in our latest Reserves Report, which shows
the value of our 2P reserves stood at US$47m as at 1 August 2013, a 21 fold
increase since Magnolia's AIM Admission. Not only does this provide solid asset
backing to our current market capitalisation but also demonstrates the
potential of our low risk high return business model to generate significant
value for shareholders." 
Chief Executive's Statement 
The six month period under review has seen excellent progress made towards
achieving our overall objective: to build Magnolia Petroleum into a significant
oil and gas company focused on proven US onshore formations. We define a
significant oil and gas company as one that has reserves in the proven and
probable (2P) categories with a combined value running into the hundreds of
millions of dollars. Achieving this status firstly requires holding substantial
acreage in reopened liquids rich plays which Magnolia already has in place, and
secondly, drilling new wells to systematically prove up reserves which we
continue to do, as illustrated by the 27% increase in new wells over the half
year. 
Since our Admission to AIM in November 2011, we have acquired over 13,500 net
mineral acres in proven US onshore formations such as the Bakken/Three Forks
Sanish, North Dakota and the Mississippi Lime and Woodford, Oklahoma providing
us with the opportunity to participate in over 600 potential new wells,
alongside established operators such as Statoil and Marathon Oil. This is on
top of the 121 producing wells we currently have an interest in. Thanks to the
prime location of our acreage, we continue to receive multiple drilling
proposals, as evidenced by the 40 new wells that we have elected to participate
in during the review period. 
Being able to self-finance new drilling activity by re-cycling revenues
generated from existing production is a key milestone the Board has been
focused on from the outset. We have gone a long way to achieving this milestone
in the first half of the year with cash flow from operating activities of
US$855,463 being invested into new wells and leases. Once self-funding status
has been attained, Magnolia will be in a virtuous circle whereby growing
revenues are continually reinvested into new drilling opportunities to prove up
reserves and grow revenues further, enabling the investment/drilling cycle to
begin again. 
As a result of an excellent drilling success rate, which highlights the
transformational effect the application of modern techniques such as horizontal
drilling on proven liquids rich onshore US plays continues to have on recovery
rates, we have reported another major jump in revenues during the first half of
the year. This is as a result of our continuing increase in daily production
from just 7 boepd in November 2011 to 122.5 boepd as at 1 January and a further
75% increase in daily production to 214 boepd as at 1 August 2013. It is worth
noting that revenue to 30 June 2013 only included nine days of production on
the Gustafson well and nothing for the Helgeson and Jake wells announced after
the period end. Based on initial production rates these wells added an
aggregate 197.5 boepd to our net production which we expect to contribute to
another step up in revenues for the second half of the year. 
Over the course of the first six months of the year, we invested approximately
US$2.8m into new wells. As the cash flow statement to 30 June 2013 shows, we
are increasingly funding our share of new drilling costs from existing
production. The gap between our investment in new wells and cash flow from
operating activities is closing fast and with revenues due in the second half
from a number of wells that recently came into production, not to mention the
strong pipeline of drilling activity that is in place, we are highly confident
that this gap will continue to significantly narrow in a short space of time. 
The recently announced reserves report provides an indication of the progress
made. In this latest report, Moyes & Co. estimates Magnolia's 2P reserves as at
1 August 2013 stood at 1.437 million barrels of oil and condensate and 5,124
million cubic feet (`MMcf') of natural gas and assigns a Net Present Value of
approximately US$47.008 million after applying a 10% discount rate. Due to
timing issues this latest reserves upgrade does not fully reflect the results
of all the drilling activity announced during the half. For example only nine
of the 45 new wells announced between 1 January 2013 and 1 August 2013 (the
date of the CPR) commenced production during the period. We therefore expect
substantial growth in 2P reserves as and when the remaining 36 wells are
drilled and completed, not to mention new drilling that is likely to be
announced in the second half. 
Financial Review 
During the twelve month period, revenues of US$910,721 were generated from
continuing operations compared to US$282,208 in H1 2012 and US$709,395 for the
whole of 2012. As with our full year results, the monthly run rate has
continued to improve over the six months under review with June's revenues
being almost 1.5 times as much as those of January. As a result of continued
investment in new wells and additional leases, tangible assets during the half
year period increased to US$6,395,834 having been US$3,437,869 as at end
December 2012. Intangible assets (new leases and wells that are drilling but
not yet completed) grew to US$6,751,024 from US$6,200,828 during the same
period. 
Net cash inflow from operating activities was US$855,463 during the six months
to June 30 compared with a cash outflow of US$296,975 during the equivalent
period in 2012. Cash generated is being reinvested into growing the Company's
asset base through drilling and/or acquiring additional acreage. Administrative
costs continue to be tightly managed, allowing the vast majority of additional
revenues generated to be recycled into new wells or leases. During the period,
administrative expenses (excluding depreciation) totalled US$522,976 to 30 June
2013 compared with US$450,378 as at 30 June 2012, highlighting the capacity for
our business model to be scaled up without increasing the cost base
significantly. 
Outlook 
With 18 wells currently drilling or completing, a further 35 waiting to spud,
and numerous well proposals being received, a number of which with larger than
average working interests, we are looking forward to the next updated reserves
report at year end. At this point, we expect to see a major upgrade in our 2P
reserves and a further increase in net daily production, all of which will
demonstrate that we are moving ever closer to transforming Magnolia Petroleum
into a significant US onshore focused oil and gas company. 
Finally, I would like to thank the Board, management team and all our advisers
for their hard work and also to our shareholders for their continued support
over the period. 
Steven Snead 
Chief Executive Officer 
Chief Operations Officer's Report 
The Bakken / Three Forks Sanish Formations, North Dakota 
The number of wells producing from the Bakken/Three Forks Sanish in North
Dakota in which Magnolia has an interest currently stands at 30. During the
half year under review, the following five new wells came on stream: 
* Nicky Kerr 14-8 well (1,501 boepd) 


      * Curtis Kerr 24-8H well (1,496 boepd)
      * Gustafson 31-30H well (1,216 boepd)
      * BB Rice#2 well (2,060 boepd)
      * BB Rice#3 well (2,207 boepd) - Three Forks Sanish


Post period end, the Company reported initial production rates for the
following wells: 
* Helgeson 41-30H well (1,401 boepd) 


      * Jake 2-11#1H well (3,928 boepd)
      * Jake 2-11 2TFH well (2,244 boepd) - Three Forks Sanish


A further four wells targeting the Bakken/ Three Forks Sanish all at various
stages of drilling/completing are listed below: 
* Jake 2-11-4H operated by Statoil 


      * Jake 2-11-3TFH operated by Statoil
      * Jake 2-11-6H operated by Statoil
      * Jake 2-11-5TFH operated by Statoil


The Bakken is a reservoir in North Dakota which currently produces over 700,000
bopd and is estimated to hold mean undiscovered recoverable volumes of 3.65
Bbbls and 1.85 Tcf (2008 US Geological Survey). The Three Forks Sanish
formation in North Dakota is estimated to hold up to 2 billion barrels of
recoverable oil according to a state study evaluating oil reserves. 
Magnolia holds leases in respect of 11,520 gross acres across 28 sections,
equating to 421 net mineral acres within the boundaries of the Bakken/TFS
formations. As the Three Forks Sanish lies beneath the Bakken, the number of
wells which can be drilled per section doubles to eight (four per formation),
providing Magnolia with a total of 120 proven development locations on its
acreage, 60 on the Bakken and 60 on the Three Forks Sanish, as set out in the
Updated Reserves Report by Moyes & Co. dated 8 April 2013. 
In their latest report dated 1 August 2013, Moyes & Co. estimate Magnolia's
Bakken 2P reserves at 140,000 barrels of oil and condensate and 60 MMcf of
natural gas to which Moyes has assigned a value of US$2.751 million. Meanwhile,
Magnolia's 2P reserves in the Three Forks Sanish formation are estimated at
22,000 barrels of oil and condensate and 10 MMcf of natural gas which Moyes has
assigned a value of US$0.846 million. 
Mississippi Lime Formation, Oklahoma 
As at 30 June 2013, Magnolia had interests in 24 wells producing from the
historic Mississippi Lime formation, an increase of 17 since the year end.
Initial production rates were reported for 11 wells which are listed below: 
* Montecristo 6-1H (50 boepd) 


      * Peck 1-5H (630.76 boepd)
      * Wolf 1H-25 (195 boepd)
      * Nighswonger Farms 2815 1-13H (107 boepd)
      * Mack 10-27-17 1H (251.85 boepd)
      * McClure 36-2H (90 boepd)
      * Roger Swartz #1 Magnolia operated vertical well (17 bopd)
      * Flinders 1-25H (143 boepd)
      * Cordray-Ritter 4-28-14H (762 boepd)
      * Voise 1-10H (105 boepd)
      * Joan 1-21 vertical well (12 bopd)


Interests in a further six already producing wells were acquired as part of
Magnolia's on-going leasing activity, the details of these wells are listed
below: 
* Betty 22-24-10 1H 


      * Louis#7-1 WX
      * Ripley 1H-28
      * Wolf 1H-21
      * McSwain 1H-12
      * Grant 1H-10


Since 2012, Magnolia has acquired over 4,000 net mineral acres in the
Mississippi Lime formation, Oklahoma. The acquired acreage includes leases with
working interests of up to 100%, 74 proven undeveloped locations and an
additional 222 increased density locations in which Magnolia could propose and/
or operate. In total, there are 296 potential drilling locations on the
Company's acreage. 
In the updated Reserves Report dated 1 August 2013, Moyes & Co. estimated the
Company's Mississippi Lime 2P reserves at 1.25 million barrels of oil and
condensate and 4,505 MMcf with a value of US$41.956 million. 
The Mississippi Lime is an historic oil and gas system that has been producing
at depths ranging from 4,500 to 7,000 feet from several thousand vertical wells
for over 50 years. As with the Bakken, new technology and horizontal drilling
has reopened the oil play. Due to the relatively shallow depths and less tight
rock formation, drilling costs at between US$2.4 million and US$3.5 million per
well in the Mississippi Lime are considerably lower than those in the Bakken,
which should lead to shorter pay-out periods than with the Bakken wells. 
Woodford / Hunton Formations, Oklahoma 
Magnolia reported initial production rates for five wells in the Woodford/
Hunton formations during the period under review, bringing the overall total to
19: 
* Beebe 24-W1H targeting the Woodford (73 boepd) 


      * Kelly 1-2H targeting the Woodford (1,291 boepd)
      * Campbell 1-H targeting the Woodford (615 boepd)
      * Forrest 1-8H targeting the Woodford (1,272 boepd)
      * Condit 1-5H targeting the Woodford (1,546 boepd)


Post period end, initial production for the Sympson 1-6H in the Woodford
formation was reported at 758 boepd. 
In the updated Reserves Report, Moyes & Co. estimated the Company's Woodford /
Hunton 2P reserves at 7,000 barrels of oil and condensate and 405MMcf natural
gas with a value of US$553,000. 
Like the Bakken, the Woodford/Hunton formations in Oklahoma are established
reservoirs that have been reopened following the introduction of horizontal
drilling and stimulation technology. As a result the Woodford oil play in
particular is increasingly being drilled by leading operators. Magnolia holds
leases in respect of approximately 67,200 gross mineral acres (800 net mineral
acres), giving rights to participate in the drilling of wells in 87 sections
located in 26 counties in central Oklahoma. 
Montana 
During the period, Magnolia acquired a further 985 net mineral acres in the
Montana section of the Bakken/Three Forks Sanish formation, bringing the total
acreage acquired in Daniels County and three surrounding counties to 7,866. The
Company's acreage lies amongst, and is surrounded by, leases owned by Apache
Corporation (`Apache'), a leading international oil and gas exploration and
production company. 
In 2012, Apache acquired 320,000 net acres, an indication of the growing
interest in the Bakken in Montana. Apache believe there are over 1,900
potential drilling locations on its acreage and that sixteen horizontal wells,
eight for the Bakken and a further eight for the Three Forks Sanish, will be
required to optimise the recovery of reserves. According to Apache, the
Estimated Ultimate Recovery (`EUR') of reserves stands at 670MBo for the Bakken
and 377MBo for the Three Forks Sanish on each drilling location. 
There is currently no horizontal Bakken production in Daniels County, Montana,
though conventional oil has historically been recovered by vertical wells from
the Ratcliff, Madison, Mission Canyon and McGowan formations. In addition to
the Bakken/Three Forks Sanish, there is the potential for unconventional oil to
be recovered from the Mississippian aged Lodge Pole and Madison formations as
well as the deeper Devonian aged Nisku members. 
At 7,000-7,400ft, the Bakken in Daniels County lies at a shallower depth than
in North Dakota. As a result costs to drill horizontal wells to the Bakken in
Montana are estimated at US$7.5 million compared with US$10 million in North
Dakota. 
Reflecting the early stage nature of the play, Moyes & Co. classified the
Company's Montana leases as prospective resources and estimated these at 5.77
million barrels of oil and condensate and 2,885 MMcf of natural gas with a
value of US$12.267million. 
Summary 
Over the course of the last six months initial production rates were reported
for 25 wells in proven US onshore formations such as the Bakken and Mississippi
Lime. In addition the Company elected to participate in a further 40 new wells
alongside leading operators including Statoil and Marathon Oil. In line with
strategy, the level of Magnolia's interest in wells has also been steadily
rising as illustrated by the Blaser (9.375%) and Great White (7.5%), so that
the average working interest in the Company's portfolio of 121 producing wells
and 53 wells under development has increased to approximately 3%, compared to
0.6% at the time of Magnolia's IPO in November 2011. As these new wells come
into production, another major increase in production and 2P reserves, which as
at 1 August 2013 stood at 214 boepd and US$47m respectively, can be expected. 
Rita Whittington 
Chief Operations Officer 
Condensed Consolidated Statement of Comprehensive Income 
6 months ended 30 June 2013 


                                 Note              6 months to  6 months to    
                                                   30 June 2013 30 June 2012   
                                                   Unaudited    Unaudited      
                                                   US $         US $           


                                                                           
Continuing Operations                                                           
                                                                           
Revenue                                            910,721      282,208         
                                                                           
Operating expenses                                 (343,077)    (128,514)       


                                                                               
                                                   ______       ______         


                                                                           
Gross Profit                                       567,644      153,694         
                                                                           
Administrative expenses                            (734,704)    (475,932)       
                                                                           
Impairment of mineral leases                       (67,070)     (204,973)       
                                                                           
Profit on disposal of mineral                      208,705      -              
leases                                                                          
                                                                           
Gain/(loss) on foreign exchange                    669,999      (10,324)        


                                                                               
                                                   ______       ______         


                                                                           
Operating Profit/(Loss)                            644,574      (537,535)       
                                                                           
Finance income                                     -            -               
                                                                           
Finance costs                                      -            -               


                                                                               
                                                   ______       ______         


                                                                           
Profit/(Loss) from ordinary                        644,574      (537,535)      
activities before tax                                                           
                                                                           
Taxation                                           -            -               


                                                                               
                                                   ______       ______         


                                                                           
Profit/(Loss) for the period                       644,574      (537,535)      
attributable to the equity                                                     
holders of the Company                             ______       ______          
                                                                           
Other comprehensive income:                                                     
                                                                           
Items that may be reclassified                     (696,713)    (18,282)       
subsequently to profit or loss                                                  
                                                                           
Exchange differences on                                                        
translating foreign operations                                                  


                                                                               
                                                   ______       ______         


                                                                           
Total comprehensive income for                     (52,139)     (555,817)      
the period attributable to the                                                 
equity holders of the Company                      ______       ______          
                                                                           
Earnings per share attributable    5               0.074        (0.14)         
to the equity holders of the                                                   
Company (expressed in cents per                    0.072        -              
share)                                                                          
                                                                           
- basic                                                                         
                                                                           
- diluted                                                                       
Condensed Consolidated Balance Sheet 
As at 30 June 2013 
ASSETS                                      Notes 30 June       31 December     


                                                  2013          2012           
                                                  Unaudited     Audited        
                                                  US $          US $           


                                                                           
Non-Current Assets                                                              
                                                                           
Property, plant and equipment         5           6,395,834     3,437,869       
                                                                           
Intangible assets                     6           6,751,024     6,200,828       


                                                                               
                                                  ________      ________       


                                                                           
Total Non Current Assets                          13,146,858    9,638,697       
                                                                           
Current Assets                                                                  
                                                                           
Trade and other receivables                       477,932       208,936         
                                                                           
Cash and cash equivalents                         1,641,488     2,293,151       


                                                                               
                                                  ________      ________       


                                                                           
Total Current Assets                              2,119,420     2,502,087       


                                                                               
                                                  ________      ________       


                                                                           
Total Assets                                      15,266,278    12,140,784      


                                                                               
                                                  ________      ________       


                                                                           
EQUITY & LIABILITIES                                                            
                                                                           
Equity                                                                          
                                                                           
Called up share capital                           1,481,396     1,390,244       
                                                                           
Share premium account                             13,954,026    11,888,717      
                                                                           
Warrants and options reserve                      66,603        66,603          
                                                                           
Merger reserve                                    1,975,950     1,975,950       
                                                                           
Reverse acquisition reserve                       (2,250,672)   (2,250,672)     
                                                                           
Translation reserve                               (649,413)     47,300          
                                                                           
Retained losses                                   (933,322)     (1,577,896)     


                                                                               
                                                  ________      ________       


                                                                           
Total Equity - Capital and                        13,644,568    11,540,246     
Reserves                                                                        


                                                                               
                                                  ________      ________       


                                                                           
Current Liabilities                                                             
                                                                           
Trade and other payables                          1,621,710     600,538         


                                                                               
                                                  _______       _______        


                                                                           
Total Current Liabilities                         1,621,710     600,538         


                                                                               
                                                  _______       _______        


                                                                           
Total Equity and Liabilities                      15,266,278    12,140,784      


                                                                               
                                                  _______       _______        
                                                                               

Condensed Consolidated Statement of Changes in Equity


             Share     Share     Merger    Warrants Reverse     Translation 
Retained              


                                               and      Acquisition             
                     
                                               Options                          
                     


             Capital   Premium   Reserve   Reserve  Reserve     Reserve     
Earnings    Total     
             US $      US $      US $      US $     US $        US $        
US $        US $      
                                                                             
                 
As at 1 January  926,128   2,218,877 1,975,950 66,603   (2,250,672) (126,624)   
(502,718)   2,307,544
2012                                                                             


                     
                                                                                


                 
Comprehensive                                                                    
                 
income                                                                           


                     
                                                                                


                 
Loss for the     -         -         -         -        -           -           
(537,535)   (537,535)
period                                                                           


                     
                                                                                


                 
Other                                                                            
                 
comprehensive                                                                    
                 
income                                                                           


                     
                                                                                


                 
Currency         -         -         -         -        -           (18,282)    
-           (18,282) 
translation                                                                      
                 
differences                                                                      


                     
                                                                                
                     


             ________  ________  ________  ______   ________    _______     
_______     ________  
                                                                             
                 
Total            -         -         -         -        -           (18,282)    
(537,535)   (555,817)
comprehensive                                                                    
                 
income for the                                                                   
                 
period                                                                           


                     
                                                                                
                     


             ________  ________  ________  ______   ________    _______     
_______     ________  
                                                                             
                 
Transactions                                                                     
                 
with Owners                                                                      


                     
                                                                                


                 
Proceeds from     174,272  1,980,507     -        -          -           -       
 -      2,154,779
share issue                                                                      


                     
                                                                                


                 
Share issue          -     (184,155)     -        -          -           -       
 -      (184,155)
costs                                                                            


                     
                                                                                
                     


             ________  ________  ________   ______   ________     _______   
  _______   ________  
                                                                             
                 
Total             174,272  1,796,352     -        -          -           -       
 -      1,970,624
contributions by                                                                 
                 
and                                                                              
                 
distributions to                                                                 
                 
owners of the                                                                    
                 
parent,                                                                          
                 
recognised                                                                       
                 
directly in                                                                      
                 
equity                                                                           


                     
                                                                                
                     


             ________  ________  ________   ______   ________     _______   
  _______   ________  
                                                                             
                 
As at 30 June    1,100,400 4,015,229 1,975,950  66,603  (2,250,672)  (144,906)  
(1,040,253) 3,722,351
2012                                                                             


                     
                                                                                
                     


             ________  ________  ________  ______   ________    _______     
_______     ________  
As at 1 January 1,390,244 11,888,717 1,975,950 66,603   (2,250,672) 47,300    
(1,577,896) 11,540,246
2013                                                                             


                    
                                                                                


                
Comprehensive                                                                    
                
income                                                                           


                    
                                                                                


                
Profit for the  -         -          -         -        -           -         
644,574     644,574   
period                                                                           


                    
                                                                                


                
Other                                                                            
                
comprehensive                                                                    
                
income                                                                           


                    
                                                                                


                
Currency        -         -          -         -        -           (696,713) -  
      (696,713) 
translation                                                                      
                
differences                                                                      


                    
                                                                                
                    


            ________  ________   ________  ______   ________    _______   
_______     ________   
                                                                             
                
Total           -         -          -         -        -           (696,713) 
644,574     (52,298)  
comprehensive                                                                    
                
income for the                                                                   
                
period                                                                           


                    
                                                                                
                    


            ________  ________   ________  ______   ________    _______   
_______     ________   
                                                                             
                
Transactions                                                                     
                
with Owners                                                                      


                    
                                                                                


                
Proceeds from      91,152 2,187,648  -         -        -           -         -  
      2,278,800 
share issue                                                                      


                    
                                                                                


                
Share issue     -         (122,339)  -         -        -           -         -  
      (122,339) 
costs                                                                            


                    
                                                                                
                    


            ________  ________   ________  ______   ________    _______   
_______     ________   
                                                                             
                
Total              91,152 2,065,309  -         -        -           -         -  
      2,156,461 
contributions                                                                    
                
by and                                                                           
                
distributions                                                                    
                
to owners of                                                                     
                
the parent,                                                                      
                
recognised                                                                       
                
directly in                                                                      
                
equity                                                                           


                    
                                                                                
                    


            ________  ________   ________  ______   ________    _______   
_______     ________   
                                                                             
                
As at 30 June   1,481,396 13,954,026 1,975,950 66,603   (2,250,672) (649,413) 
(933,322)   13,644,568
2013                                                                             


                    
                                                                                
                    


            ________  ________   ________  ______   ________    _______   
_______     ________   
                                                                             


                    

Condensed Consolidated Cash Flow Statement

6 months ended 30 June 2013
                                              6 months to 6 months to           
                                              30 June     30 June               
                                              2013        2012                  
                                              Unaudited   Unaudited             
                                              US $        US $                  
                                                                                

Cash inflow/(outflow) from operating                                            

activities                                                                      
                                                                                

Profit/(Loss) before tax                      644,574     (537,535)             
                                                                                

Profit on disposal of mineral leases          (208,705)   -                     
                                                                                

Depreciation and amortisation                 262,977     41,747                
                                                                                

Exchange difference                           (664,106)   (24,208)              
                                                                                

Impairment of mineral leases                  67,070      204,973               
                                                                                

(Increase)/decrease in trade and              (270,214)   (47,873)              

other receivables                                                               
                                                                                

Increase in trade and other payables          1,023,867   65,921                
                                                                                
                                              _______     _______               
                                                                                

Net cash inflow/(outflow) from                855,463     (296,975)             

operating activities                                                            
                                                                                
                                              _______     _______               
                                                                                

Cash flows from investing activities                                            
                                                                                

Purchases of intangible assets                (1,863,181) (1,415,471)           
                                                                                

Purchases of property, plant and              (2,488,000) (941,279)             

equipment                                                                       
                                                                                

Proceeds from disposal of property,           698,602     -                     

plant and equipment                                                             
                                                                                
                                              _______     _______               
                                                                                

Net cash used in investing activities         (3,652,579) (2,356,750)           
                                                                                
                                              _______     _______               
                                                                                

Cash flows from financing activities                                            
                                                                                

Proceeds from issue of ordinary               2,278,800   2,154,779             

shares                                                                          
                                                                                

Issue costs                                   (122,339)   (184,155)             
                                                                                

Repayment of borrowings                       -           (35,000)              
                                                                                
                                              _______     _______               
                                                                                

Net cash from financing activities            2,156,461   1,935,624             
                                                                                
                                              _______     _______               
                                                                                

Net decrease in cash and cash                 (640,655)   (718,101)             

equivalents                                                                     
                                                                                

Cash and cash equivalents at the              2,293,153   874,037               

beginning of the period                                                         
                                                                                

Exchange (loss)/gain on cash and cash         (11,010)    3,640                 

equivalents                                                                     
                                                                                
                                              _______     _______               
                                                                                

Cash and cash equivalents at the end          1,641,488   159,576               

of the period                                                                   
                                                                                
                                              _______     _______               


Notes to the unaudited financial statements

 1. General information


The principal activity of the Group is the acquisition, exploration and
development of oil and gas properties primarily located onshore in the United
States. 
The address of its registered office is The Fitzpatrick Building, 188 -194 York
Way, London N7 9AS. 
 2. Basis of preparation 
These condensed consolidated interim financial statements have been prepared in
accordance with the requirements of the AIM Rules for Issuers. As permitted,
the Company has chosen not to adopt IAS 34 "Interim Financial Statements" in
preparing this interim financial information. The condensed interim financial
statements should be read in conjunction with the annual financial statements
for the year ended 31 December 2012, which have been prepared in accordance
with International Financial Reporting Standards (IFRS) as adopted by the
European Union. 
The interim financial information set out above does not constitute statutory
accounts within the meaning of the Companies Act 2006. It has been prepared on
a going concern basis in accordance with the recognition and measurement
criteria of International Financial Reporting Standards (IFRS) as adopted by
the European Union. Statutory financial statements for the year ended 31
December 2012 were approved by the Board of Directors on 10 May 2013 and
delivered to the Registrar of Companies. The report of the auditors on those
financial statements was unqualified. 
The preparation of consolidated interim financial statements requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the end of the reporting period. Significant items subject to such estimates
are set out in the Group's 2012 Annual Report and Financial Statements. The
nature and amounts of such estimates have not changed significantly during the
interim period. 
 3. Accounting policies 
The same accounting policies, presentation and methods of computation are
followed in this condensed consolidated financial information as were applied
in the preparation of the Company's annual audited financial statements for the
year ended 31 December 2012, except for the impact of the adoption of the
Standards and Interpretations described below. 
The presentational currency of the Group is US dollars. 
New and amended standards adopted by the Group: 
IAS 1 (Amended), "Presentation of Items of Other Comprehensive Income" became
effective during the period. Items in the consolidated statement of
comprehensive income that may be reclassified to profit or loss in subsequent
periods are now presented separately from items that will not be reclassified
to profit or loss in subsequent periods. 
IFRS 13, "Fair value measurement" became effective during the period. The
standard requires specific disclosures on fair values, some of which replace
existing disclosure requirements in IFRS 7, "Financial instruments:
Disclosures". The fair values of cash and cash equivalents, trade and other
receivables and trade and other payables approximate to their book values due
to the short maturity periods of these financial instruments. 
 4. Earnings per share - basic and diluted 
The calculation of earnings per share is based on a profit of $644,574 for the
6 months ended 30 June 2013 (6 months ended 30 June 2012: loss $537,535) and
the weighted average number of shares in issue in the period to 30 June 2013 of
865,258,486 (30 June 2012: 379,439,522). 
Diluted earnings per share in the period ended 30 June 2013 assumes that
options and warrants outstanding at 30 June 2013 were exercised at 1 January
2013 for options and warrants where the exercise price was less than the
average price of the ordinary shares during the period. A calculation is done
to determine the number of shares that could have been acquired at fair value
based on the monetary value of subscription rights to outstanding share options
and warrants. The number of shares calculated above is compared with the number
of shares that would have been issued assuming the exercise of the options and
warrants. On this basis, the calculation of diluted earnings per share is based
on the profit attributable to ordinary shareholders divided by 890,051,915
shares. 
 5. Property, plant and equipment 


     
     
                                             Drilling    Motor                
                        Producing properties costs and   Vehicles   Total     
                                             equipment                        
                                    $            $          $          $       
                                                                             


                                                                          
Cost                                                                           
                                                                          
At 1 January 2013                883,767     2,964,086   15,254     3,863,107  
                                                                          
Additions                        141,506     2,342,689   3,805      2,488,000  
                                                                          
Transferred from intangible      119,272     711,467     -          830,739   
assets                                                                         
                                                                          
Disposals                        -           (97,797)    -          (97,797)   
                                                                          
At 30 June 2013                  1,144,545   5,920,445   19,059     7,084,049  
                                                                          
Depreciation                                                                   
                                                                          
At 1 January 2013                133,208     289,180     2,850      425,238    
                                                                          
Charge for the period            51,249      209,663     2,065      262,977    
                                                                          
At 30 June 2013                  184,457     498,843     4,915      688,215    
                                                                          
Net Book Amount at 31 December   750,559     2,674,906   12,404     3,437,869 
2012                                                                           
                                                                          
Net Book Amount at 30 June 2013  960,088     5,421,602   14,144     6,395,834  


                                                                              

 6. intangible assets
    Cost                                  Goodwill   Drilling    Mineral      Total
                                                    costs     leases          
                                             $          $          $          $ 
      


                                                                           
At 1 January 2013                      372,629    710,727  5,117,472  6,200,828 
                                                                           
Additions                                    -    421,494  1,441,687  1,863,181 
                                                                           
Transferred to property, plant and           -  (711,467)  (119,272)  (830,739)
equipment                                                                       
                                                                           
Exchange movements                    (23,076)          -          -   (23,076) 
                                                                           
Impairment                                   -          -   (67,070)   (67,070) 
                                                                           
Disposals                                    -             (392,100)  (392,100) 
                                                                           
As at 30 June 2013                     349,553    420,754  5,980,717  6,751,024 
                                                                           
Amortisation                                                                    
                                                                           
At 1 January 2013 and                        -          -          -          - 
                                                                           
At 30 June 2013                                                                 
                                                                           
Net Book Amount at 31 December 2012    372,629    710,727  5,117,472  6,200,828 
                                                                           
Net Book Amount at 30 June 2013        349,553    420,754  5,980,717  6,751,024 


                                                                               

Impairment review

Drilling costs and mineral leases represent acquired intangible assets with an
indefinite useful life and are tested annually for impairment. As disclosed
within Accounting Policies, expenditure incurred on the acquisition of mineral
leases is capitalised within intangible assets until such time as the
exploration phase is complete or commercial reserves have been discovered.
Exploration expenditure including drilling costs are capitalised on a well by
well basis if the results indicate the existence of a commercially viable level
of reserves.

The directors have undertaken a review to assess whether circumstances exist
which could indicate the existence of impairment as follows:

  * The Group no longer has title to the mineral lease.
      * A decision has been taken by the Board to discontinue exploration due to
    the absence of a commercial level of reserves.
      * Sufficient data exists to indicate that the costs incurred will not be
    fully recovered from future development and participation.


Following their assessment the directors recognised an impairment charge to the
cost of mineral leases of $67,070 (2012 - $204,973) in respect of expired
mineral leases. 
The Directors believe that no impairment is necessary on the carrying value of
goodwill. 
                             * * ENDS * *                                   
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   
                                                                        
Jo Turner / James Caithie  Cairn Financial Advisers LLP   +44 20 7148 7900   
                                                                        
John Howes / Alice Lane /  Northland Capital Partners     +44 20 7796 8800  
Luke Cairns                Limited                                           
                                                                        
Lottie Brocklehurst        St Brides Media and Finance    +44 20 7236 1177   
                       Ltd                                               
                                                                        
Frank Buhagiar             St Brides Media and Finance    +44 20 7236 1177   
                       Ltd                                               
Notes 
Magnolia Petroleum Plc is an AIM quoted, US focused, oil and gas exploration
and production company.  Its portfolio includes interests in 121 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 
                                                                         
Producing                                                                 121 
                                                                         
Being Drilled / Completed                                                  18 
                                                                         
Elected to participate / waiting to                                        35
spud                                                                          
                                                                         
TOTAL                                                                     174 
END 
-0- Sep/10/2013 06:00 GMT
 
 
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