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$500,000 tranche of the WED Agreement, we are
currently deploying these funds into new leases and wells which, as
well as generating fees for Magnolia, will also provide us with a
free carry on the first wells drilled. As a result, I am
confident that going forward the value of our PDP reserves will
rise significantly, and I look forward to providing updates on our
progress.”
Summary Table of Magnolia’s Total Net
PDP Reserves as at 1 January
2018:
|
|
Net |
PV9 |
State |
Reserve
Category |
BBLs |
MCF |
US$ |
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
LLP |
+44207213 0880 |
Nick Bealer |
Cornhill Capital Limited |
+44207710 9610 |
Lottie Wadham |
St Brides Partners Ltd |
+44207236 1177 |
Frank Buhagiar |
St Brides Partners
Ltd |
+44207236
1177 |