DENVER, Aug. 12, 2013 /PRNewswire/ -- Magellan
Petroleum Corporation ("Magellan" or the "Company") (NASDAQ: MPET)
today announced that on August 2,
2013, the Company obtained permits from the US Bureau of
Land Management to drill five wells on its leases at Poplar Dome
("Poplar") in Roosevelt County, Montana. These permits
represent the final regulatory requirement prior to commencing
drilling operations for the Company's previously announced
CO2-enhanced oil recovery ("CO2-EOR") pilot
program.
The Company also announced today that it has recently signed a
CO2 supply contract with Air Liquide Industrial U.S. LP
for the CO2 necessary to conduct the Company's
CO2-EOR pilot program for approximately two years.
Air Liquide is the world leader in gases for industry, health and
the environment.
As previously announced, the Company intends to conduct a
CO2-EOR pilot in the Charles formation at Poplar to increase production and validate the
reserves potential of this tertiary recovery technique on a
full-field basis. With drilling permits obtained and a
CO2 supply secured for the pilot program, the Company
has begun drill site preparation work, and drilling is expected to
occur between August and November of this year. The Company's
current plan is to arrange the five pilot wells in a "five-spot"
pattern, with a single CO2-injection well in the center
surrounded by four producing wells. All five wells will be
vertical and drilled to a depth of approximately 5,800 feet.
CO2 injection is expected to commence in October
2013. From the time of first injection, the Company expects
that it will take between 12 and 15 months to evaluate the
effectiveness of CO2-EOR and announce conclusive results
from the pilot. The estimated cash cost of the pilot,
including capital and certain operating expenditures and the cost
of CO2 over two years, will total approximately
$20 million, with most of these
expenditures incurred by March 2014. The pilot will be funded
by the Company's existing cash balances and the proceeds of the
Company's convertible preferred equity issuance to One Stone Energy
Partners completed in May 2013.
J. Thomas Wilson, President and
CEO of Magellan, stated, "After more than two years of extensive
engineering, modeling, and laboratory work, we are very excited to
begin the process of proving the technical and economic viability
of CO2-EOR at Poplar. With the results of the
CO2-EOR pilot in 12 to 15 months after the start of
CO2 injection, we hope to demonstrate that the
implementation of a full-field CO2-EOR program at
Poplar could result in the
recovery of approximately an additional 50 million barrels of
oil. Based on our own work, the production history of the
field to date, and reference to analogous CO2-EOR
projects in the Williston Basin, we believe that the Charles
formation at Poplar has 500 to 600
million barrels of oil in place and the recovery of an incremental
10% of this amount is an achievable objective. As such,
bringing Poplar to a full field
CO2-EOR development is the Company's top priority, and
conducting a safe and successful pilot is the next milestone in our
strategy of unlocking shareholder value from this asset."
CAUTIONARY INFORMATION ABOUT FORWARD LOOKING
STATEMENTS
Statements in this press release, including
forecasts or projections that are not historical in nature, are
intended to be, and are hereby identified as, forward-looking
statements for purposes of the Private Securities Litigation Reform
Act of 1995. The words "anticipate", "assume",
"believe", "budget", "estimate", "expect", "forecast", "intend",
"initial", "plan", "project", and similar expressions are intended
to identify forward looking statements. These statements about the
Company may relate to its businesses and prospects, planned capital
expenditures, increases or decreases in oil and gas production and
reserves, revenues, expenses, operating cash flows, and borrowings,
and other matters that involve a number of uncertainties that may
cause actual results to differ materially from expectations. Among
these risks and uncertainties are the following: the technical and
economic viability of CO2-EOR techniques at Poplar; our ability to enter into a long term
CO2 supply for our Poplar CO2-EOR project;
the uncertain nature of oil and gas prices in the United States; uncertainties inherent in
projecting future rates of production from drilling activities; the
uncertainty of drilling and completion conditions and results; the
availability and cost of drilling, completion, and operating
equipment and services; and other matters discussed in the "Risk
Factors" section of The Company's most recent Annual Report on Form
10K and most recent Quarterly Report on Form 10Q. Any
forward-looking information provided in this report should be
considered with these factors in mind. The Company assumes no
obligation to update any forward-looking statements contained in
this report, whether as a result of new information, future events,
or otherwise.
ABOUT MAGELLAN
Magellan Petroleum Corporation is an
independent oil and gas exploration and development company with
assets in the US, Australia, and
the UK. The Company is primarily focused on the development
of a CO2-enhanced oil recovery ("CO2-EOR")
program at Poplar Dome in eastern Montana. Historically
active in Australia, Magellan
operates two gas fields onshore Northern Territory and an
exploration block in the Bonaparte Basin, offshore Northern
Territory. Magellan also maintains a large acreage position
onshore the UK prospective for unconventional shale oil and gas
production. Magellan is headquartered in Denver, Colorado. The Company's mission
is to enhance shareholder value by maximizing the full potential of
existing assets. Magellan routinely posts important
information about the Company on its website at
www.magellanpetroleum.com.
For further information, please
contact:
Matthew Ciardiello, Manager,
Investor Relations at 720.484.2404 or IR@magellanpetroleum.com
SOURCE Magellan Petroleum Corporation