Magnolia Petroleum Plc Q1 2017 Operations Update

 
TIDMMAGP 
 
Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas 
 
10 April 2017 
 
             Magnolia Petroleum Plc ('Magnolia' or 'the Company') 
 
                           Q1 2017 Operations Update 
 
Magnolia Petroleum Plc, the AIM quoted US focused oil and gas exploration and 
production company, is pleased to announce a quarterly update for Q1 2017 ('the 
Quarter') on its operations across proven and producing US onshore hydrocarbon 
formations, including the Bakken/Three Forks Sanish in North Dakota, and the 
Woodford, Mississippi Lime and the Hunton in Oklahoma. 
 
Q1 Highlights to 31 March 2017 
 
  * 5 new wells commenced production during the Quarter - 156 producing wells 
    in the Company's portfolio as at end of Q1 2017 
  * 33 new wells proposed - 13 wells currently at various stages of development 
    including in the prolific SCOOP and STACK plays in Oklahoma 
  * Independent Reserves Report showed an increase in net proved developed 
    producing reserves ('PDP') due to new wells commencing production 
      + 112% increase in total net PDP oil and condensate reserves to 282.686 
        Mbbl as at 1 January 2017 (1 July 2016: 133.31 Mbbl) 
      + 303% increase in total net PDP gas reserves to 2,343.116 MMCF (1 July 
        2016: 580.67 MMcf) 
      + Value (NPV9) of total net PDP reserves as at 1 January 2017 increased 
        to US$4,026,000 (1 July 2016: US$3,445,180) 
  * Borrowing base limit of US$6 million Credit Facility increased to 
    US$2,214,300 from US$1,894,849 due to net PDP reserves growth and higher 
    oil prices 
  * Board changes: appointment of Ron Harwood, an existing non-executive 
    Director of Magnolia, as Chairman of the Company on an interim basis 
    following the resignation of Thomas Wagenhofer 
  * Board continues to be remunerated in shares of the Company in lieu of cash 
    as part of ongoing strategy to minimise corporate and operating expenses 
  * Further cost reductions - 45% year on year reduction in Q1 operating costs 
    building on 31% reduction in corporate overheads and operating costs at the 
    time of the half year results as at 30 June 2016 
 
Outlook 
 
  * Significant increase in proposals being received to drill new and infill 
    wells on the Company's leases 
  * Focus for 2017 will be proving up reserves within the SCOOP and STACK, two 
    highly active plays in Oklahoma where wells are economic at oil prices 
    around US$40 bbl 
      + Record production rates have been reported for wells in both plays as 
        the horizontal laterals are extended and the amount of pay in each well 
        has increased 
      + Drilling and completion costs have been significantly reduced 
      + Both areas exhibit lower initial decline rates during the first 12-18 
        months of production compared to other US play areas. 
 
Magnolia CEO, Rita Whittington said, "Unlike previous quarters, the standout 
feature over the period is not the number of new wells commencing production 
during the three months, but the significant jump in new well proposals we are 
receiving, a reflection of the improvement in sentiment among US onshore 
operators.  Increasingly proposals are for wells in the SCOOP and STACK plays, 
and for good reason: wells in these areas are prolific; decline more slowly 
than other US onshore plays; and are economic at oil prices well below current 
levels.  It is for this reason that Magnolia's priority in 2017 is to 
participate in drilling activity in these plays. 
 
"Magnolia has always been a low cost, asset backed US oil and gas company 
focused on US onshore formations. Thanks to further significant progress made 
in reducing our operating costs and an increase in the level and value of our 
proven developed producing reserves, we are even more so today. Together with a 
management team with a highly complementary skillset covering all areas of our 
business from securing leases to drilling wells, we are well placed to increase 
our exposure to the SCOOP and STACK, and in the process significantly increase 
production and profitability in the year ahead." 
 
Well Developments 
 
The full list of well developments occurring in the quarter is set out below. 
 
Well               Formation       Status          NRI %     Operator 
 
Sympson 10-6H      Woodford,       Drilled -       0.44      Continental 
                   Oklahoma        waiting on                Resources 
                                   completion 
 
Sympson 2-7-6XH    Woodford,       Drilled -       0.40      Continental 
                   Oklahoma        waiting on                Resources 
                                   completion 
 
Sympson 4-6-7XH    Woodford,       Drilled -       0.40      Continental 
                   Oklahoma        waiting on                Resources 
                                   completion 
 
Chalfant 2-7H      Woodford,       Drilled -       0.36      Continental 
                   Oklahoma        waiting on                Resources 
                                   completion 
 
Sympson 8-7-6H     Woodford,       Completing      0.40      Continental 
                   Oklahoma                                  Resources 
 
Sympson 3-7-6XH    Woodford,       Drilling        0.40      Continental 
                   Oklahoma                                  Resources 
 
Sympson 9-7-6XH    Woodford,       Drilling        0.40      Continental 
                   Oklahoma                                  Resources 
 
Sympson 5-6-7XH    Woodford,       Drilled -       0.40      Continental 
                   Oklahoma        waiting on                Resources 
                                   completion 
 
Sympson 7-6-7XH    Woodford,       Drilling        0.40      Continental 
                   Oklahoma                                  Resources 
 
Sympson 6-6-7XH    Woodford,       Drilling        0.40      Continental 
                   Oklahoma                                  Resources 
 
Hazel              Hunton,         Drilling        0.16      Marjo 
                   Oklahoma 
 
The information contained within this announcement constitutes inside 
information stipulated under the Market Abuse Regulation (EU) No. 596/2014. 
 
Glossary 
 
'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 
 
'NRI' means Net Revenue Interests 
 
'Proved Reserves' means those quantities of petroleum which, by analysis of 
geological and engineering data, can be estimated with reasonable certainty to 
be commercially recoverable, from a given date forward, from known reservoirs 
and under current economic conditions, operating methods, and government 
regulation - Proved reserves can be categorized as developed or undeveloped 
 
'Probable reserves' are those unproved reserves which analysis of geological 
and engineering data suggests are more likely than not to be recoverable. In 
this context, when probabilistic methods are used, there should be at least a 
50% probability that the quantities actually recovered will equal or exceed the 
sum of estimated proved plus probable reserves 
 
'Possible Reserves' are those unproved reserves which analysis of geological 
and engineering data suggests are less likely to be recoverable than probable 
reserves. In this context, when probabilistic methods are used, there should be 
at least a 10% probability that the quantities actually recovered will equal or 
exceed the sum of estimated proved plus probable plus possible reserves 
 
Reserve Status Categories 
 
'Unproved Reserves' are based on geologic and/or engineering data similar to 
that used in estimates of proved reserves; but technical, contractual, 
economic, or regulatory uncertainties preclude such reserves being classified 
as proved. Unproved reserves may be further classified as probable reserves and 
possible reserves 
 
Reserve status categories define the development and producing status of wells 
and reservoirs 
 
'Developed reserves' are expected to be recovered from existing wells including 
reserves behind pipe. Improved recovery reserves are considered developed only 
after the necessary equipment has been installed, or when the costs to do so 
are relatively minor. Developed reserves may be subcategorised as producing or 
non-producing. 
 
'Producing reserves' are expected to be recovered from completion intervals 
which are open and producing at the time of the estimate. Improved recovery 
reserves are considered producing only after the improved recovery project is 
in operation. 
 
'Non-producing reserves' include shut-in and behind-pipe reserves. Shut-in 
reserves are expected to be recovered from (1) completion intervals which are 
open at the time of the estimate but which have not started producing, (2) 
wells which were shut-in for market conditions or pipeline connections, or (3) 
wells not capable of production for mechanical reasons. Behind-pipe reserves 
are expected to be recovered from zones in existing wells, which will require 
additional completion work or future recompletion prior to the start of 
production. 
 
'Undeveloped reserves' are expected to be recovered: (1) from new wells on 
undrilled acreage, (2) from deepening existing wells to a different reservoir, 
or (3) where a relatively large expenditure is required to (a) recomplete an 
existing well or (b) install production or transportation facilities for 
primary or improved recovery projects. 
 
                                 * *S * * 
 
For further information on Magnolia Petroleum Plc visit 
www.magnoliapetroleum.com or contact the following: 
 
Rita Whittington           Magnolia Petroleum Plc       +01918449 8750 
 
Jo Turner / James Caithie  Cairn Financial Advisers     [phone] 
                           LLP 
 
Colin Rowbury              Cornhill Capital Limited     [phone] 
 

Lottie Brocklehurst        St Brides Partners Ltd       [phone] 
 
Frank Buhagiar             St Brides Partners           [phone] 
                           Ltd 
 
Notes 
 
Magnolia Petroleum Plc is an AIM quoted, US focused, oil and gas exploration 
and production company.  Its portfolio includes interests in 156 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                                                           156 
 
Being drilled / completed                                            13 
 
Elected to participate / waiting to                                  43 
spud 
 
TOTAL                                                               212 
 
 
 
END 
 

(END) Dow Jones Newswires

April 10, 2017 02:00 ET (06:00 GMT)