Magnolia Petroleum Plc Q1 2018 Operations Update

 
TIDMMAGP 
 
Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas 
 
16 April 2018 
 
             Magnolia Petroleum Plc ('Magnolia' or 'the Company') 
 
                           Q1 2018 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 2018 ('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 2018 
 
  * 119 producing wells in the Company's portfolio as at end of Q1 2018 
  * 11 new wells proposed - 8 wells currently at various stages of development 
    including in the prolific SCOOP and STACK plays in Oklahoma 
  * Investment of first US$500,000 of US$18.5 million capital management 
    agreement with Western Energy Development LLC ('WED') into Oklahoma leases 
    that qualify under the US Immigrant Investor Programme 
      + Generates fees and equity in new wells for Magnolia 
  * Updated Reserves Report ('Reserves Report') as at 1 January 2018 as part of 
    six monthly redetermination of borrowing base limit of the Company's US$6 
    million credit facility 
  * Total net proved developed producing reserves ('PDP') of 274.475 Mbbl oil 
    and condensate and 1,692.497 MMCF of gas (1 January 2017: 282.686 Mbbl of 
    oil and condensate and 2,343.116 MMcf gas) 
  * US$4,002,000 value (NPV9) of total net PDP reserves (1 January 2017: 
    US$4,026,000) provides strong asset backing 
      + Change in total net PDP reserves due to the divestment of interests in 
        13 wells which were included in the January 2017 report 
  * Reserves Report does not include proved shut-in, proved undeveloped, 
    probable and possible reserve classes as well as Magnolia's interests in 
    undeveloped acreage 
  * Company is in the process of renegotiating its bank loan.  The Company has 
    previously announced that a request for an extension to its loan facility 
    was being processed by the bank. Since the last extension, the Company's 
    bank has been sold and negotiations are slower than previously experienced. 
  * Debt reduction programme ongoing and the Company is considering further 
    non-core disposals. 
  * Working capital continues to be managed carefully in light of future 
    planned participation in wells.  Following the rise in the price of oil, 
    the Company is producing positive cash flow from its existing operations 
    and this is expected to increase further since revenues lag oil prices by a 
    number of months. 
 
Outlook 
 
  * Acquire additional leases via the ongoing investment of the first tranche 
    of WED funds 
  * Based on successful pilot programme, each US$500,000 tranche is expected to 
    generate approximately 27 new drilling opportunities as well as fees net to 
    Magnolia 
      + US$500,000 pilot programme generated in excess of US$200,000 value net 
        to Magnolia in terms of fees, equity in new wells, and uplift in 
        reserves 
  * Receipt of additional US$500,000 tranches from WED agreement which has the 
    potential to fast-track the roll-out of Magnolia's strategy to acquire 
    leases and prove up the reserves via drilling 
 
Magnolia CEO, Rita Whittington said, "Activity during the quarter has been 
centred on investing the first US$500,000 of our exclusive US$18.5 million 
agreement with WED into qualifying leases in Oklahoma. As demonstrated by our 
successful pilot programme with WED, as well as fees, every US$500,000 invested 
has the potential to generate 27 new drilling opportunities for Magnolia. 
Together with the pick-up in activity we are seeing in our core areas of focus, 
specifically the low cost and prolific SCOOP and STACK plays in Oklahoma, we 
are putting in place a pipeline of new wells which, once drilled and subject to 
the results, will enable us to add to our proven reserves and build value." 
 
Well Developments 
 
The full list of well developments occurring are still ongoing and a list will 
be provided in due course.  A number of these include wells in which Magnolia 
has small interests and is being carried as part of the WED deal.  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. 
 
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 
 
Nick Bealer                Cornhill Capital Limited     [phone] 
 
Lottie Brocklehurst        St Brides Partners Ltd       [phone] 
 
Frank Buhagiar             St Brides Partners           [phone] 
                           Ltd 
 
 
 
END 
 

(END) Dow Jones Newswires

April 16, 2018 06:15 ET (10:15 GMT)