Magnolia Petroleum Plc Q2 2017 Operations Update

 
TIDMMAGP 
 
Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas 
 
3 August 2017 
 
             Magnolia Petroleum Plc ('Magnolia' or 'the Company') 
 
                           Q2 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 Q2 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. 
 
Q2 Highlights to 30 June 2017 
 
  * 5 new wells commenced production during the Quarter - 159 producing wells 
    in the Company's portfolio as at end of Q2 2017 
  * 42 new wells proposed - 3 wells currently at various stages of development 
    including in the prolific SCOOP and STACK plays in Oklahoma 
  * 25% increase in the value ('NPV9') of total net PDP reserves as at April 
    2017 to US$4,300,000 (1 July 2016: US$3,445,180) - provides strong asset 
    backing 
      + PDP reserves as at 1 January 2017 stood at 282.686 Mbbl (1 July 2016: 
        133.31 Mbbl) and 2,343.116 MMCF gas (1 July 2016: 580.67 MMcf) 
  * Board and management team strengthened following appointment of Rita 
    Whittington as CEO, highly experienced geologist Lanny Woods as a technical 
    consultant and Derec Norman as CFO 
      + Board continues to be remunerated in shares of the Company in lieu of 
        cash as part of on-going strategy to minimise corporate and operating 
        expenses - 33% reduction in full year operating costs reported 
 
Outlook 
 
  * Entered into an exclusive agreement with Western Energy Development LLC 
    ('WED') to invest, on behalf of WED, up to US$18,500,000 into the Oklahoma 
    oil and gas market as part of US Immigrant Investor Scheme 
      + Provides additional revenue stream and rapid low risk, low cost 
        expansion of its asset base 
      + US$500,000 pilot programme since November 2016 to present has generated 
        in excess of US$200,000 value net to Magnolia in terms of fees, equity 
        in new wells, and uplift in reserves 
      + Commencement of roll-out of WED agreement has the potential to 
        fast-track the roll-out of Magnolia's strategy to acquire leases and 
        prove up the reserves via drilling 
  * The Company continues to appraise its existing well portfolio to realign 
    its forthcoming well investments into core counties in which WED can invest 
    to allow Magnolia to participate alongside the anticipated WED investments 
  * Significant increase in proposals being received to drill new and infill 
    wells on the Company's existing leases particularly within the SCOOP and 
    STACK, two highly active plays in Oklahoma where wells are economic at oil 
    prices around US$40 per barrel 
 
Magnolia CEO, Rita Whittington said, "Over the years, Magnolia has had great 
success acquiring and developing onshore US leases alongside leading operators, 
particularly when oil prices were trading at US$90 per barrel.  Since the 
downturn, we have worked hard to bring costs down and to focus more on areas 
which require low oil prices to breakeven so that we can have the same success 
at today's US$40-50 oil prices.  Our low cost, low risk model has generated 
substantial returns in the past for two previous companies I was a part of and, 
together with a highly experienced management team and Board, I am focused on 
doing the same with Magnolia.  Thanks to the agreement we have signed with WED, 
I am confident we can start to make material progress towards this objective in 
the near term." 
 
Well Developments 
 
The full list of well developments occurring in the quarter is set out below. 
A number of these include wells in which Magnolia has small interests.  This is 
in line with management's strategy to minimise exploration risk, which includes 
the evaluation of drilling data gained through its participation in wells in 
which it has very small interests. 
 
Well               Formation       Status          NRI %       Operator 
 
Bishop North 2/14/ Woodford,       Producing (IPR: 0.01025391  Bravo 
11H                Oklahoma        6002 mcf/d) 
 
Michelle Abel      Springer,       Producing (IPR: 0.00052778  Marathon 
1-11-2XH           Oklahoma        79 bopd; 13,066 
                                   mcf/d) 
 
Foree 1-18-7XH     Woodford,       Producing (IPR: 0.00029355  Continental 
                   Oklahoma        1411 bopd; 3900             Resources 
                                   mcf/d) 
 
Houses Quarter     Woodford,       Producing (IPR: 0.00029355  Continental 
10-7-6XH           Oklahoma        716 bopd; 1702              Resources 
                                   mcf/d) 
 
Fazio 1705 1-13MH  Mississippi     Producing:      0.00146484  Oklahoma 
                   Lime, Oklahoma  (IPR: 644 bopd;             Energy Acq. 
                                   1507 mcf/d) 
 
Crow 2             Woodford,       w/o spud        0.00195313  BP 
                   Oklahoma 
 
Crow 3             Woodford,       w/o spud        0.00195313  BP 
                   Oklahoma 
 
Crow 4             Woodford,       w/o spud        0.00195313  BP 
                   Oklahoma 
 
Crow 5             Woodford,       w/o spud        0.00195313  BP 
                   Oklahoma 
 
Condit             Woodford,       w/o spud        0.00025666  Continental 
                   Oklahoma                                    Resources 
 
TBD 36/25          Woodford        w/o spud        0.00653906  Trinity 
                   Oklahoma 
 
Veeder 4E MBH-ULW  Bakken, North   w/o spud        0.01164415  BP 
                   Dakota 
 
Gilchrist 2016     Mississippi,    w/o spud        0.003094482 Sandridge 
1-36H              Oklahoma 
 
Andrews 23-2 (a/k/ Woodford,       w/o spud        0.002912109 Comanche 
a Vergie)          Oklahoma 
 
Lohrmann 1-7-18XH  Woodford,       w/o spud        0.00029355  Continental 
                   Oklahoma                                    Resources 
 
Lohrmann 2-7-18XH  Woodford,       w/o spud        0.00029355  Continental 
                   Oklahoma                                    Resources 
 
Lohrmann 3-7-18XH  Woodford,       w/o spud        0.00029355  Continental 
                   Oklahoma                                    Resources 
 
Lohrmann 4-7-18XH  Woodford,       w/o spud        0.00029355  Continental 
                   Oklahoma                                    Resources 
 
Lohrmann 5-7-18XH  Woodford,       w/o spud        0.00029355  Continental 
                   Oklahoma                                    Resources 
 
Lohrmann 6-7-18XH  Woodford,       w/o spud        0.00029355  Continental 
                   Oklahoma                                    Resources 
 
Lohrmann 7-7-18XH  Woodford,       w/o spud        0.00029355  Continental 
                   Oklahoma                                    Resources 
 
Houses Quarter     Woodford,       w/o spud        0.00029355  Continental 
1-7-6XH            Oklahoma                                    Resources 
 
Houses Quarter     Woodford,       w/o spud        0.00029355  Continental 
2-7-6XH            Oklahoma                                    Resources 
 
Houses Quarter     Woodford,       w/o spud        0.00029355  Continental 
3-7-6XH            Oklahoma                                    Resources 
 
Houses Quarter     Woodford,       w/o spud        0.00029355  Continental 
4-7-6XH            Oklahoma                                    Resources 
 
Houses Quarter     Woodford,       w/o spud        0.00029355  Continental 
5-7-6XH            Oklahoma                                    Resources 
 
Houses Quarter     Woodford,       w/o spud        0.00029355  Continental 
6-7-6XH            Oklahoma                                    Resources 
 
Houses Quarter     Woodford,       w/o spud        0.00029355  Continental 
7-7-6XH            Oklahoma                                    Resources 
 
Pauline 1-24/25/   Woodford,       Drilling        0.002541797 Trinity 
36H                Oklahoma 
 
Pauline 2-24/25H   Woodford,       Drilling        0.003938672 Trinity 
                   Oklahoma 
 
Pauline 3-24/25H   Woodford,       Drilling        0.005346094 Trinity 
                   Oklahoma 
 
Pauline 4-24/25H   Woodford,       Drilling        0.00534375  Trinity 
                   Oklahoma 
 
Jana 1-3/10H       Woodford,       Drilling        0.00585938  Trinity 
                   Oklahoma 
 
Jordan             Mississippi,    Drilling        0.00109863  Devon 
10_15-14N-9W 1HX   Oklahoma 
 
JoAnn 2H-18X       Woodford,       Drilling        0.00110315  Newfield 
                   Oklahoma 
 
JoAnn 3H-18X       Woodford,       Drilling        0.00110315  Newfield 
                   Oklahoma 
 
Engle 18-05-36     Mississippi,    Drilling        0.0015625   Chisholm Oil 
                   Oklahoma                                    & Gas 
 
Please note Magnolia has previously announced it had elected to participate in 
the drilling of the Pickle 2/9/4/33H well to the Woodford and Celesta 2 well to 
the Springer in Oklahoma.  However, the Company is no longer participating in 
either of these two wells for the following reasons: 
 
  * Pickle 2/9/4/33H - verbal commitments to lease from mineral owner were not 
    honoured 
  * Celesta 2 - upon re-evaluation of the economics, it was determined that 
    estimated reserves were too small to warrant Magnolia participating in the 
    well 
 
As a result of Magnolia not participating in the above two wells, the Company 
will not be liable for its share of drilling costs, which have a combined total 
of US$59,939. 
 
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. 
 
                                 * * 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 / 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 
 
 
 
END 
 

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August 03, 2017 02:00 ET (06:00 GMT)