Magnolia unveil quarterly figures

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Magnolia Petroleum (LSE:MAGP), a US focused oil and gas exploration and production company, has announced a quarterly update on its operations across proven and producing US onshore hydrocarbon formations, including the Bakken/Three Forks Sanish in North Dakota and Montana, and the Mississippi Lime and the Hunton/Woodford in Oklahoma.

Quarter Highlights:

  • Production as at 1 August 2013 stood at 214 boepd net to Magnolia – 75% increase since 1 January 2013
  • · Seven new wells commenced production during Q3 2013 bringing total to 124 producing wells
  • · Initial production rates (IPRs) reported for three wells (Helgeson 41-30H; Jake 2-11 #1H; Jake 2-11 2TFH) totalling 147.5 boepd net to Magnolia (note existing production from these wells will be lower due to decline rates)
  • · Elected to participate in 16 new wells
  • · On-going leasing activity resulted in increase in working interest in seven existing wells under development
  • US$47 million value assigned to Company’s 2P reserves as at 1 August 2013 based on upgraded net attributable oil and condensate 2P reserves of 1,437 Mbbl and net attributable gas 2P reserves of 5,124 MMcf

Only nine of 45 new wells announced between 1 January 2013 and 1 August 2013 contributed to the increase in 2P reserves – future upgrades expected as remaining and new wells are drilled.

Reserves estimate covers approximately 5,500 net acres out of total of over 13,500 in proven formations, such as the Bakken/Three Forks Sanish, North Dakota, and the Mississippi Lime, Hunton/Woodford, Oklahoma.

Outlook:

  • New wells due to come into production in Q4 2013, including several with higher than average interests being Blaser (9.375%) and Linda 1-4 (9.375%)
  • Further participations in new wells with leading operators expected
  • On track for major increase in full year revenues following strong H1 performance in which H1 revenues of US$910,721 were substantially higher than those of the previous full year as a whole – in addition H2 revenues expected to be higher than H1 due to more wells coming on stream, a number of which with larger net interests
  • On-going lease acquisition and management activity in line with strategy to grow and diversify portfolio
  • Updated CPR to be commissioned in Q1 2014 – to include estimates for the Company’s average production rates and reserves in the 1P, 2P and 3P categories as at year end 2013

Magnolia COO, Rita Whittington said, “By the end of this quarter, Magnolia had interests in 174 wells in proven US onshore formations, 124 of which are currently producing. Thanks to a 44% increase in the producing well count since January 2013 and our on-going strategy to raise the average size of our interest in new and existing wells, we reported a 75% jump in net production to 214 boepd as at 1 August 2013, compared to 122.5 boped in January 2013.

“We are increasingly using internally generated revenues to fund drilling activity to prove up the reserves on the 13,500+ net mineral acres we hold in liquids rich US onshore plays. With over 600 potential drilling locations on our existing acreage, there remains considerable scope for us to deliver on our objective and substantially grow Magnolia’s net proved and probable reserves which, as at 1 August 2013, were assigned a value of US$47m by our Competent Person.”

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