Magnolia Petroleum Plc New Leases Acquired as part of $18.5M Agreement

 
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     [phone] 
                           LLP 
 
Nick Bealer                Cornhill Capital Limited     ++4402037002500 
 
Lottie Wadham              St Brides Partners Ltd       [phone] 
 
Frank Buhagiar             St Brides Partners           [phone] 
                           Ltd 
 
 
 
END 
 

(END) Dow Jones Newswires

February 13, 2018 02:00 ET (07:00 GMT)