Magnolia Petroleum Plc Updated Reserves Report

 
TIDMMAGP 
 
Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas 
 
16 January 2018 
 
             Magnolia Petroleum Plc ('Magnolia' or 'the Company') 
 
                            Updated Reserves Report 
 
Magnolia Petroleum Plc, the AIM quoted US onshore focused oil and gas 
exploration and production company, announces the results of an independent 
Reserves Report ('the Report') as part of the six-month bank debt 
redetermination process. The Report covers the Company's net proved developed 
producing reserves ('PDP') across its leases in US onshore formations such as 
the Woodford and Mississippi Lime, Oklahoma, and the Bakken and Three Forks 
Sanish, North Dakota. 
 
Overview: 
 
  * Total net PDP oil and condensate reserves of 274.475 Mbbl as at 1 January 
    2018 (1 January 2017: 282.686 Mbbl of oil and condensate) 
  * Total net PDP gas reserves of 1,692.497 MMCF as at 1 January 2018 (1 
    January 2017: 2,343.116 MMcf gas) 
  * Change in total net PDP reserves due to: 
      + the divestment of interests in the 13 Sympson Wells to align portfolio 
        with counties that qualify for investment under the US$18.5m capital 
        management agreement with Western Energy Development LLC ('WED') and to 
        pay down debt - as these were increased density wells, all 13 had been 
        included in the January 2017 report 
      + the divestment of a number of non-core and low valued wells 
  * US$4,002,000 value (NPV9) of total net PDP reserves as at 1 January 2018 (1 
    January 2017: US$4,026,000) provides strong asset backing to current market 
    capitalisation 
  * The Reserves will be used to re-determine the borrowing base limit of the 
    Company's US$6 million credit facility in February 2018 
  * The Report only covers proved developed producing reserves and does not 
    include proved shut-in, proved undeveloped, probable and possible reserve 
    classes as well as Magnolia's interests in undeveloped acreage 
 
Rita Whittington, CEO of Magnolia, said, "The updated Reserves Report 
demonstrates the significant asset backing behind Magnolia, even after taking 
into account factors such as the realignment of our portfolio of producing 
wells over the period to those areas in Oklahoma where we will be focusing our 
activities under our US$18.5 million investment agreement with WED.  These 
areas include the prolific SCOOP and STACK plays where operating costs are 
relatively low, recovery rates are high, and activity levels are increasing. 
 
"Having recently received the first US$500,000 tranche of the WED Agreement, we 
are currently deploying these funds into new leases and wells which, as well as 
generating fees for Magnolia, will also provide us with a free carry on the 
first wells drilled.  As a result, I am confident that going forward the value 
of our PDP reserves will rise significantly, and I look forward to providing 
updates on our progress." 
 
Summary Table of Magnolia's Total Net PDP Reserves as at 1 January 2018: 
 
                                    Net                 PV9 
 
State         Reserve           BBLs         MCF        US$ 
              Category 
 
Oklahoma      PDP             92,446   1,537,668  1,739,490 
 
North Dakota  PDP            182,029     154,829  2,262,700 
 
Total                        274,475   1,692,497 $4,002,190 
 
NPV9 valuations are based on the current CME price deck for oil and the Henry 
Hub gas price deck as of January 2018 and take into account the future net cash 
flow which is defined as future net revenue, less estimated future net OPEX 
(well operating cost and production taxes) and future net capital.  The total 
net PDP reserves are those defined as natural gas and liquid hydrocarbon 
reserves to Magnolia's interest after deducting all royalties, overriding 
royalties, and reversionary interests owned by outside parties that become 
effective upon pay-out of specified monetary balances.  All reserves estimates 
have been prepared using standard engineering practices generally accepted by 
the petroleum industry and conform to the guidelines adopted by the 2007 SPE/ 
SPEE/WPC PRMS Guidelines. 
 
The information contained in this announcement regarding the reserves analysis 
has been reviewed and approved by Mike Mabry on behalf of Sycamore Resources. 
Mr Mabry has over 30 years of relevant experience in the oil industry and has a 
B.S. in Petroleum Engineering from the University of Tulsa.  He has previously 
served as Chair of the SPE Improved Oil Recovery Symposium, presiding over 700 
engineers from 65 counties.  Over the course of his career, Mr Mabry has held 
the position of Senior Petroleum Engineer at Apache Corporation, Petrohawk 
Energy and MAPCO and is currently Managing Director of Sycamore Resources in 
Tulsa, Oklahoma. 
 
The information contained within this announcement constitutes inside 
information stipulated under the Market Abuse Regulation (EU) No. 596/2014. 
 
                                  ** ENDS ** 
 
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 / Liam Murray    Cairn Financial Advisers     [phone] 
                           LLP 
 
Nick Bealer                Cornhill Capital Limited     [phone] 
 
Lottie Wadham              St Brides Partners Ltd       [phone] 
 
Frank Buhagiar             St Brides Partners           [phone] 
                           Ltd 
 
 
 
END 
 

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January 16, 2018 02:00 ET (07:00 GMT)