Magnolia Petroleum Plc Increase in Value of Reserves
April 25 2017 - 2:00AM
UK Regulatory
TIDMMAGP
Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas
25 April 2017
Magnolia Petroleum Plc ('Magnolia' or 'the Company')
Increase in Value of Reserves
Magnolia Petroleum Plc, the AIM quoted US onshore focused oil and gas
exploration and production company, is pleased to announce an upgrade in the
value of its net proved developed producing reserves ('PDP') to US$4,300,000
across the Company's leases in proven US onshore formations such as the
Woodford and Mississippi Lime, Oklahoma, and the Bakken and Three Forks Sanish,
North Dakota.
On 15 March 2017, the Company announced the results of an independent reserves
report, which included:
* 112% increase in total net PDP oil and condensate reserves to 282.686 Mbbl
(1 July 2016: 133.31 Mbbl of oil and condensate)
* 303% increase in total net PDP gas reserves to 2,343.116 MMCF (1 July 2016:
580.67 MMcf gas)
* Increase in the value (NPV9) of total net PDP reserves to US$4,026,000 (1
July 2016: US$3,445,180)
Today's upgrade in the value of Magnolia's total net PDP reserves to
US$4,300,000 from US$4,026,000 in March 2017 follows a revaluation of the
operating costs and production profile of three wells in Oklahoma. Among
these three wells is the Magnolia-operated and 100% owned Roger Swartz #1,
which is producing from the Mississippi Lime formation, Oklahoma.
Following a successful 'refrac', the operating costs of the well have been
reduced, resulting in a significant increase in the value of Roger Swartz
to US$205,000 from US$50,000 previously. The remainder of the value
increase is due to production at the Chesapeake Energy-operated Gray
7-27-12 1H and Gray 7-27-12 2H wells, in which Magnolia holds a 1.86% net
revenue interest, exceeding expectations.
Rita Whittington, COO of Magnolia, said, "This upgrade to the valuation of
our PDP reserves to US$4,300,000 provides further asset backing to
Magnolia's current market capitalisation. Importantly, this valuation only
covers proved developed producing and proved developed non-producing
reserve classes. It does not include other reserve categories such as
proved shut-in, proved undeveloped, probable and possible reserve classes
as well as Magnolia's interests in undeveloped acreage. We therefore
believe the value of our portfolio of leases in the US onshore formations
is far greater than today's reported figure. As activity continues to pick
up and our participation in new wells alongside leading operators
increases, we are confident that the underlying value of our portfolio will
be realised."
Summary Table of Magnolia's Total Net PDP and proved developed
non-producing ('PDNP') Reserves as at 24 April 2017:
Net PV9
State Reserve BO MCF US$M
Category
Oklahoma PDP 124,773 2,207,617 $2,730
Oklahoma PDNP 833 0 $3
North Dakota PDP 157,913 135,499 $1,570
Total 283,519 2,343,116 $4,300
NPV9 valuations are based on the bank's price deck as of January 2017 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:
Steven Snead Magnolia Petroleum Plc +01 91 8449
8750
Rita Whittington Magnolia Petroleum Plc +01 91 8449
8750
Jo Turner / James Caithie Cairn Financial Advisers +4420 7213 0880
LLP
Colin Rowbury Cornhill Capital Limited +4420 7710 9610
Lottie Brocklehurst St Brides Partners Ltd +4420 7236 1177
Frank Buhagiar St Brides Partners +4420 7236 1177
Ltd
Notes
Magnolia Petroleum Plc is an AIM quoted, US focused, oil and gas exploration
and production company. Its portfolio includes interests in 212 producing and
non-producing assets, primarily located in the highly productive Bakken/Three
Forks Sanish hydrocarbon formations in North Dakota as well as the oil rich
Mississippi Lime and the substantial and proven Woodford and Hunton formations
in Oklahoma.
Summary of Wells
Category Number of wells
Producing 156
Being drilled / completed 13
Elected to participate / waiting to 43
spud
TOTAL 212
END
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