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Magnolia Petroleum Plc, an AIM quoted US focused oil and gas exploration and production company, has issued a quarterly update on its operations.
The results focus on 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:
· 151 producing wells as at end of Q1 2014 – an increase of 11 during the period
· Elected to participate in 29 new wells including those with larger than average interests such as Rothermel 2MH (5.41%) in the Mississippi Lime Formation and Marion 1-23HW (5.41%) and Peters 1-27H (5.21%) targeting the Woodford Formation, Oklahoma
– Significant increase in infill well proposals on the Company’s leases held by production in North Dakota and Oklahoma to maximise recovery of reserves on individual spacing units
– First proposal received to drill eight wells on one spacing unit in Oklahoma targeting Mississippi Lime and lower lying Woodford formations
– Borrowing base limit of Credit Facility raised from US$1.6 million to US$2.1 million to accelerate drilling activity and prove up reserves on leases as a result of strong trading performance and increase in new well proposals
Outlook:
– New wells due to come into production in Q2 2014 – several with higher than average interests including the Parmley 1-1WH well
– Further participations in new wells and infill drilling with leading operators expected
– 240% expected increase in full year revenues to approximately US$2.4 million, in line with market expectation, with full year EBITDA expected to be ahead of market expectations
– On-going lease acquisition and management activity in line with strategy to grow and diversify portfolio
– Updated Reserves Report (‘CPR’) to be issued in Q2 2014 – to include estimates for the Company’s average production rates and PDP 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, “During the quarter we added 29 new wells at various stages of development to our US onshore focussed well inventory. As well as interests in 151 producing wells, a further 16 are being drilled or completed and 46 waiting to spud. Thanks to our excellent drilling success rate and a higher proportion of lower risk infill wells being drilled on already producing leases, our 62 wells undergoing development or waiting to spud represent a strong pipeline of future revenue growth, on top of the 240% increase for the year ended December 2013.
“With operators such as Devon Energy increasingly looking to drill eight wells per spacing unit in Oklahoma targeting the Mississippi Lime and Woodford formations, we are confident our well count will continue to rise strongly. In line with our strategy, the higher production and associated revenues, together with our increased credit facility, will fund further drilling activity on our leases as we continue to systematically prove up the reserves on our 13,500 net mineral acres in proven US onshore formations.”
