Magnolia Petroleum Plc Q1 2017 Operations Update
April 10 2017 - 1:00AM
UK Regulatory
TIDMMAGP
Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas
10 April 2017
Magnolia Petroleum Plc ('Magnolia' or 'the Company')
Q1 2017 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 2017 ('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 2017
* 5 new wells commenced production during the Quarter - 156 producing wells
in the Company's portfolio as at end of Q1 2017
* 33 new wells proposed - 13 wells currently at various stages of development
including in the prolific SCOOP and STACK plays in Oklahoma
* Independent Reserves Report showed an increase in net proved developed
producing reserves ('PDP') due to new wells commencing production
+ 112% increase in total net PDP oil and condensate reserves to 282.686
Mbbl as at 1 January 2017 (1 July 2016: 133.31 Mbbl)
+ 303% increase in total net PDP gas reserves to 2,343.116 MMCF (1 July
2016: 580.67 MMcf)
+ Value (NPV9) of total net PDP reserves as at 1 January 2017 increased
to US$4,026,000 (1 July 2016: US$3,445,180)
* Borrowing base limit of US$6 million Credit Facility increased to
US$2,214,300 from US$1,894,849 due to net PDP reserves growth and higher
oil prices
* Board changes: appointment of Ron Harwood, an existing non-executive
Director of Magnolia, as Chairman of the Company on an interim basis
following the resignation of Thomas Wagenhofer
* Board continues to be remunerated in shares of the Company in lieu of cash
as part of ongoing strategy to minimise corporate and operating expenses
* Further cost reductions - 45% year on year reduction in Q1 operating costs
building on 31% reduction in corporate overheads and operating costs at the
time of the half year results as at 30 June 2016
Outlook
* Significant increase in proposals being received to drill new and infill
wells on the Company's leases
* Focus for 2017 will be proving up reserves within the SCOOP and STACK, two
highly active plays in Oklahoma where wells are economic at oil prices
around US$40 bbl
+ Record production rates have been reported for wells in both plays as
the horizontal laterals are extended and the amount of pay in each well
has increased
+ Drilling and completion costs have been significantly reduced
+ Both areas exhibit lower initial decline rates during the first 12-18
months of production compared to other US play areas.
Magnolia CEO, Rita Whittington said, "Unlike previous quarters, the standout
feature over the period is not the number of new wells commencing production
during the three months, but the significant jump in new well proposals we are
receiving, a reflection of the improvement in sentiment among US onshore
operators. Increasingly proposals are for wells in the SCOOP and STACK plays,
and for good reason: wells in these areas are prolific; decline more slowly
than other US onshore plays; and are economic at oil prices well below current
levels. It is for this reason that Magnolia's priority in 2017 is to
participate in drilling activity in these plays.
"Magnolia has always been a low cost, asset backed US oil and gas company
focused on US onshore formations. Thanks to further significant progress made
in reducing our operating costs and an increase in the level and value of our
proven developed producing reserves, we are even more so today. Together with a
management team with a highly complementary skillset covering all areas of our
business from securing leases to drilling wells, we are well placed to increase
our exposure to the SCOOP and STACK, and in the process significantly increase
production and profitability in the year ahead."
Well Developments
The full list of well developments occurring in the quarter is set out below.
Well Formation Status NRI % Operator
Sympson 10-6H Woodford, Drilled - 0.44 Continental
Oklahoma waiting on Resources
completion
Sympson 2-7-6XH Woodford, Drilled - 0.40 Continental
Oklahoma waiting on Resources
completion
Sympson 4-6-7XH Woodford, Drilled - 0.40 Continental
Oklahoma waiting on Resources
completion
Chalfant 2-7H Woodford, Drilled - 0.36 Continental
Oklahoma waiting on Resources
completion
Sympson 8-7-6H Woodford, Completing 0.40 Continental
Oklahoma Resources
Sympson 3-7-6XH Woodford, Drilling 0.40 Continental
Oklahoma Resources
Sympson 9-7-6XH Woodford, Drilling 0.40 Continental
Oklahoma Resources
Sympson 5-6-7XH Woodford, Drilled - 0.40 Continental
Oklahoma waiting on Resources
completion
Sympson 7-6-7XH Woodford, Drilling 0.40 Continental
Oklahoma Resources
Sympson 6-6-7XH Woodford, Drilling 0.40 Continental
Oklahoma Resources
Hazel Hunton, Drilling 0.16 Marjo
Oklahoma
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.
* *S * *
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 +44207213 0880
LLP
Colin Rowbury Cornhill Capital Limited +44207710 9610
Lottie Brocklehurst St Brides Partners Ltd +44207236 1177
Frank Buhagiar St Brides Partners +44207236 1177
Ltd
Notes
Magnolia Petroleum Plc is an AIM quoted, US focused, oil and gas exploration
and production company. Its portfolio includes interests in 156 producing and
non-producing assets, primarily located in the highly productive Bakken/Three
Forks Sanish hydrocarbon formations in North Dakota as well as the oil rich
Mississippi Lime and the substantial and proven Woodford and Hunton formations
in Oklahoma.
Summary of Wells
Category Number of wells
Producing 156
Being drilled / completed 13
Elected to participate / waiting to 43
spud
TOTAL 212
END
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