Magnolia Petroleum Plc Gilchrist Well Update, Oklahoma
November 03 2017 - 2:00AM
UK Regulatory
TIDMMAGP
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 +44207213 0880
LLP
Nick Beeler Cornhill Capital Limited +44207710 9610
Lottie Wadham St Brides Partners Ltd +44207236 1177
Frank Buhagiar St Brides Partners +44207236 1177
Ltd
END
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