Magnolia Petroleum Plc Participating in Three US Onshore Wells

 
TIDMMAGP 
 
Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas 
 
8 January 2018 
 
                            Magnolia Petroleum plc 
 
                         ('Magnolia' or 'the Company') 
 
      Participating in Three SandRidge Energy Operated Wells in Oklahoma 
 
Magnolia Petroleum plc, the AIM quoted US focused oil and gas exploration and 
production company, is pleased to announce that it has received notice from 
SandRidge Energy, the operator of the Gilchrist 2016 1-36H well ('Gilchrist') 
in Oklahoma, that three additional increased density wells are to be drilled on 
the same spacing unit to maximise the recovery of reserves.  This follows 
excellent Initial Production ('IP') rates for Gilchrist that were provided by 
the operator, which, at 652 BOPD and 1,178 MCFD or 770 BOEPD, significantly 
exceeded the Company's projections of 570 BOEPD. 
 
Together with Western Energy Development LLC ('WED'), Magnolia has a combined 
Working Interest ('WI') of 1.57% in the spacing unit on which Gilchrist is 
located and where the additional increased density wells are to be drilled. 
Under the terms of its agreement with WED, Magnolia was carried for 25% of 
WED's WI in the Gilchrist Well at no cost, but will fund its share of the costs 
of drilling the increased density wells.  It is the Company's intention to 
participate in all three new wells.  A date for the commencement of drilling 
operations has yet to be confirmed by the operator. 
 
Gilchrist and the additional increased density wells form part of a successful 
pilot programme under which Magnolia invested US$500,000 on behalf of WED into 
qualifying oil and gas properties in Oklahoma.  To date, this pilot programme 
has generated a rate of return of 100%; a return on investment of 3.26 times; 
US$75,500 in value for Magnolia (lease bonus plus a carried interest for 25% in 
the first well, within each spacing unit); and US$127,982 uplift in the PV9 
value of Magnolia's reserves.  Based on the success of the pilot programme, 
Magnolia entered into an exclusive agreement with WED to invest, on behalf of 
WED, up to US$18,500,000 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 of a spacing unit. 
 
Magnolia CEO, Rita Whittington said, "Thanks to Gilchrist's better than 
expected IP rates, these three new wells have been materially de-risked, 
specifically in terms of geological risk.  They therefore have the potential to 
significantly add to the US$200,000 of value generated for Magnolia by the 
successful US$500,000 pilot programme with WED.  We are focused on replicating 
this success many times over and with this in mind, we are currently investing 
the first US$500,000 tranche of capital received under the US$18.5 million WED 
agreement.  I look forward to providing further updates in due course, as we 
look to increase our total production and reserves across our portfolio of 
interests in proven US onshore formations." 
 
Further Information on Western Energy Regional Center LLC 
 
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. 
 
                                 * * 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 Beeler                Cornhill Capital Limited     [phone] 
 
Lottie Wadham              St Brides Partners Ltd       [phone] 
 
Frank Buhagiar             St Brides Partners           [phone] 
                           Ltd 
 
 
 
END 
 

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January 08, 2018 02:00 ET (07:00 GMT)