Magnolia Petroleum Plc New Leases Acquired as part of $18.5M Agreement
13 Febbraio 2018 - 8:00AM
UK Regulatory
TIDMMAGP
Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas
13 February 2018
Magnolia Petroleum plc ('Magnolia' or 'the Company')
New Leases Acquired in Oklahoma as part of US$18.5 Million Agreement
Magnolia Petroleum plc, the AIM quoted US focused oil and gas exploration and
production company, is pleased to provide an update on the ongoing investment
of the first US$500,000 tranche of capital it has received as part of its
exclusive US$18.5 million capital management agreement with Western Energy
Development LLC ('WED'). Under the terms of the agreement with WED, Magnolia
invests each US$500,000 tranche of capital into oil and gas properties in
Oklahoma that qualify under the US Immigrant Investor Programme in return for
fees and equity in new wells and leases.
The first tranche of capital under the WED Agreement was received in December
2017 and to date has been invested by Magnolia in the following units:
Unit Working 25% of Acquired Operator Status
Interest WI / NRI
('WI') / Net assigned to
Revenue Magnolia
Interest
('NRI')
Acquired
Bartenbach Unit 0.21%/0.167% 0.053%/0.0416% Tapstone First well approved
Energy and waiting to spud
Pickard Unit 0.13%/0.10% 0.0325%/0.0251% Newfield First well approved
Exploration and waiting to spud
Old Crab Unit 0.312%/0.234% 0.0781%/0.0586% Oklahoma 1506 1-24MH well
Energy already producing -
Acquisitions Six increased
density wells
approved and waiting
to spud*
*Six increased density wells: Old Crab 1506 2-24MH; 3-24MH; 5-25MH; 6-24MH;
7-24MH; and 9-24MH
Under the WED Agreement, Magnolia receives a cash fee of US$5,000 per each
US$500,000 tranche of capital invested; US$500 per each acre secured; a carried
25% working interest of WED's interest in the first well drilled in each unit;
and a sliding scale for overheads incurred. As a result, Magnolia will not be
required to fund its share of costs of drilling the first wells on each of the
three above units. Magnolia will be required to fund its share of costs for
any subsequent wells drilled on the units.
Magnolia CEO, Rita Whittington said, "Today's new units are the tip of the
iceberg in terms of the number of new leases and wells that we expect to
acquire via the investment of the first US$500,000 tranche of WED funds. In
all our US$500,000 pilot programme resulted in a total of 27 new drilling
opportunities, most of which were in the prolific and highly active SCOOP and
STACK plays in Oklahoma. In addition, the pilot programme demonstrated the
potential to earn impressive returns at the portfolio level, despite holding
relatively small interests in individual wells. Based on the fees and equity
in new wells and leases, the successful test generated US$200,000 in value for
Magnolia.
"Extrapolate the results of the pilot programme and the potential for our
ground-breaking US$18.5 million agreement with WED to move the needle and
generate significant value for our shareholders is clear. As new leases in
qualifying counties are acquired, new wells drilled, and additional funds
transferred under the WED Agreement, the next few months are expected to see a
step-up in activity, as we focus on scaling up Magnolia's net reserves across
our portfolio of interests in proven US onshore formations. With this in mind,
I look forward to providing further updates on our progress."
Further Information
Bartenbach Unit
Operated by Tappstone Energy the proposed well will be the first Mississippian
horizontal well test in the established two-section, 1,280 acre pooled unit.
The well is located close to recent 1-section, 640 acre Mississippian
completions that have reported substantial initial production rates ranging up
to 1,558 BO and 5,618 MCFD (Tappstone: Howard 5-19-17). Two miles east of the
proposed well is a one section Mississippi horizontal well, the Pruitt: Krows
19-19-17, this well had a production rate in January 2017 of 392 BO and 4,747
MCFD. Through July of 2017 the well has produced over 63,000 BO and 0.585 BCFG
and is currently producing 186 BOPD and 4339 MCFD. The proposed Bartenbach Unit
well, which will have a lateral section longer than these offsets, is
conservatively expected to have reserves of 260 MBO and 2.9 BCFG.
Pickard Unit
Operated by Newfield Exploration, the proposed well will be a 2-unit, 1,280
acre Woodford Shale horizontal well. This area of the SCOOP play has several
very good Woodford Shale completions such as the Continental Resources operated
McEvoy, a 2014 Woodford Shale completion which has produced 180 MBO and 0.496
BCF, is currently producing 85 BOPD and 235 MCFD and has a projected Estimated
Ultimate Recovery of over 500 MBO and 1.6 BCFG. Newfield has made a more recent
2-section Woodford completion just west of the proposed Pickard well: the
Newfield Deskins 1H-7X, which commenced production in January 2017 and has to
date produced 40 MBO and 0.085 BCF and is currently producing 380 BOPD and
1,076 MCFD.
Old Crab Unit
Operated by Oklahoma Energy Acquisitions (OEA) the Old Crab 1506 5-24MH well
has been drilled and is awaiting completion. A second well, the OEA Old Crab
1506-3-24MH was spud on 1 February 2017. Both wells are 640 acre horizontal
Mississippi tests. There are three additional permitted wells for the section.
The Mississippi has been proven economically viable in the immediate area with
the recent completions of the following wells: OES Three Wood 4-17MH, 12/2016
which had an initial production rate of 39 MBO and 0.146 BCF and is currently
producing 266 BOPD and 500 MCFD; the OES Dixson 3-16MH, 10/2016 completion,
which has made 50 MBO and 0.207 BCF and is currently producing 255 BOPD and
1082 MCFD. The proposed Old Crab wells are expected to recover 330 MBO and 1.4
BCFG per well.
WED Agreement
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.
As announced on 4 July 2017, Magnolia entered into an exclusive agreement with
WED to invest, on behalf of WED, up to US$18.5 million 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 in each spacing unit. A pilot programme in
which Magnolia invested US$500,000 on behalf of WED into qualifying oil and gas
properties in Oklahoma, generated US$75,500 in value for Magnolia in terms of
lease bonus and the carried interest for 25% in the first well within each
spacing unit; plus an additional US$127,982 uplift in the PV9 value of
Magnolia's reserves. To date, the pilot programme has generated a rate of
return of 100% and a return on investment of 3.26 times.
The information contained within this announcement constitutes inside
information stipulated under the Market Abuse Regulation (EU) No. 596/2014.
Glossary
'BOPD' means Barrels of oil per day
'BOEPD' means Barrels of oil equivalent per day
'BCF' means Billion Cubic Feet
'M' means Thousand
'MBO' means Thousand Barrels of Oil
'Mcfd' means Thousand Cubic Feet per Day
'MM' means million (thousand thousand not million million), as used in
oilfield and heat content units such as MMSTB and MMBtu
'MMBbl' means Million barrels
'MMcfd' means Million Cubic Feet per Day
* * 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 Bealer Cornhill Capital Limited ++4402037002500
Lottie Wadham St Brides Partners Ltd +44207236 1177
Frank Buhagiar St Brides Partners +44207236 1177
Ltd
END
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