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Sale of Non-Core Assets in Alabama, Texas and Florida
Magnolia Petroleum Plc, the AIM quoted US onshore focused oil and gas exploration and production company, has announced the sale of 24 smaller interests in non-core wells for a total consideration of US$240,750, a 190% increase on the US$83,000 value assigned to the combined proved and developed producing reserves (`PDP’) of these wells in the latest Reserves Report as at 1 July 2014. In line with the Company’s strategy, the proceeds will be reinvested into developing and proving up the reserves on its leases in proven US onshore formations such as the Bakken/ Three Forks Sanish in North Dakota and the Woodford/ Mississippi Lime in Oklahoma.
The 24 non-operated wells are all located in Alabama, Florida and Texas and were sold in five individual packages. Magnolia held minority interests in the wells ranging between 0.0068% and 1.54%. The sale is part of the Company’s on-going management of its portfolio of leases covering over 13,500 net mineral acres in proven US formations.
Rita Whittington, COO of Magnolia, said, “We are delighted with the US$240,750 sale proceeds for these wells which, at a multiple of almost three times the value ascribed to their PDP reserves, provide a ready-made example of how the market values non-operated properties in the US. The positive read across of today’s disposal on our portfolio of US onshore leases is clear. The value of our PDP reserves for our producing wells now stands at over US$9 million, while our proven reserves have been independently valued at US$31.832 million.
“With a remaining 147 producing wells, 79 additional wells at various stages of development and over 600 potential drilling locations on our acreage, there remains considerable scope for further significant growth, as we prove up the reserves on our leases through drilling.”
