Magnolia Petroleum Plc / Index: AIM /
Epic: MAGP / Sector: Oil & Gas
3 November 2017
Magnolia Petroleum
plc
(‘Magnolia’ or
‘the Company’)
Gilchrist Well
Update, Oklahoma
Magnolia Petroleum plc, the AIM quoted US focused oil and gas
exploration and production company is pleased to announce an update
on the Gilchrist 2016 1-36H well (‘Gilchrist’ or ‘the Well’) in
Oklahoma in which Magnolia has a
carried working interest through its agreement with Western Energy
Development LLC (‘WED’). The Gilchrist Well is currently
being completed by the operator SandRidge Energy, Inc and is
flowing back from the targeted Mississippi Lime formation in
Oklahoma.
Based on highly encouraging results being seen from an offset
well that has been drilled directly to the north of the Gilchrist
Well and which is projected to produce over 250 MBO and 2.5 BCF,
Magnolia and WED have elected to take their proportionate share of
any interests in the lease that become available as a result of the
non-participation of leaseholders in a forced pooling order.
This is expected to see WED and Magnolia increase their
combined 1.57% Working Interest (‘WI’) in the spacing unit on which
the Gilchrist Well is located and where additional increased
density wells are expected to be drilled in the future. Under the
terms of its agreement with WED, Magnolia is carried for 25% of the
1.57% WI in the Gilchrist Well at no cost.
As announced on 4 July 2017,
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. The
Gilchrist Well forms 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.
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. WED has informed the Company that it
expects the first tranche of US$500,000 of capital to be available for
investment under the Immigrant Investor Program in Q4 2017
following amendments to the terms of the Program.
Magnolia CEO, Rita Whittington
said, “The Gilchrist Well provides a readymade example of how
our agreement with WED provides Magnolia with risk free exposure to
new leases in Oklahoma, which we
can then look to increase if additional interests become available
and if results of nearby wells drilled to the same formations are
highly positive. Following the initiation of a forced pooling
order by the operator and excellent production rates being achieved
by a direct offset well, we are set to increase our interest in the
Gilchrist Well and any subsequent wells that are to be drilled on
the same spacing unit. With this in mind, we are eager to
receive the IP rates for Gilchrist from SandRidge and I look
forward to providing these to the market as and when they become
available.”
* * 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
LLP |
+44207213 0880 |
Nick Beeler |
Cornhill Capital Limited |
+44207710 9610 |
Lottie Wadham |
St Brides Partners Ltd |
+44207236 1177 |
Frank Buhagiar |
St Brides Partners
Ltd |
+44207236
1177 |