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Magnolia Petroleum (AIM:MAGP), an AIM quoted US focused oil and gas exploration and production company, has released a quarterly update on its operations across proven and producing US onshore hydrocarbon formations, including the Bakken/Three Forks Sanish in North Dakota and Montana, and the Mississippi Lime and the Hunton/Woodford in Oklahoma.
Quarter Highlights:
· IPRs reported for 12 new wells during Q4 2013 – total number of producing wells now stands at 140
· Initial production rates (‘IPRs’) for new wells reported during Q4 2013 totalled 233 boepd net to Magnolia (note existing production from each of these wells will be lower due to decline rates)
– Next Competent Person’s Report (‘CPR’) expected to show significant increase in daily production on 214 boepd level as at 1 August 2013
· Elected to participate in 13 new wells including those with larger than average interests such as the Parmley 1-1WH well (12.187%) in the Mississippi Lime Formation
– Average interest in portfolio of 184 wells at various stages of development is over 3% compared to 0.6% at time of AIM Admission in November 2011
· Leasehold position in Oklahoma increased to 5,800 net mineral acres
-US$5m credit facility secured to accelerate drilling activity and prove up reserves on leases covering over 13,500 net mineral acres in proven US onshore formations
Outlook:
– New wells due to come into production in Q1 2014 – several with higher than average interests including the Parmley 1-1WH well
– Further participations in new wells with leading operators expected
– On track for major increase in full year 2013 revenues following strong H1 performance, excellent initial production of new wells in H2, a number with larger net interests
– On-going lease acquisition and management activity in line with strategy to grow and diversify portfolio
– Updated CPR to be commissioned in Q1 2014 – to include estimates for the Company’s average production rates and reserves in the 1P, 2P and 3P categories
– Further strong growth expected in Magnolia’s 2P reserves which as at 1 August 2013 stood at 1,437 Mbbl of oil and condensate and 5,124 MMcf of gas which were assigned a value of US$47 million
– Only nine of 45 new wells announced between 1 January 2013 and 1 August 2013 included in 2P reserves
– Reserves estimate covers approximately 5,500 net acres out of total of over 13,500 in proven formations, such as the Bakken/Three Forks Sanish, North Dakota, and the Mississippi Lime, Woodford, Oklahoma
Magnolia COO, Rita Whittington said, “As illustrated by the excellent IPRs of the four Statoil operated Jake wells and also the Great White well, which combined added over 200 boepd net to Magnolia, Q4 2013 has seen further considerable progress achieved in terms of rapidly growing net production on our leases in proven US onshore formations. The combination of the higher revenues generated by the increased production and the recently secured US$5million credit facility will allow us to accelerate our drilling activity alongside leading operators such as Devon Energy.
“We therefore expect the strong momentum behind the business seen in 2013 to continue in the year ahead, as we focus on our objective to prove up the reserves on our leases and in the process generate significant value for all our shareholders.”
