Magnolia Petroleum Plc First USD500,000 Received under USD18.5M Agreement
December 11 2017 - 2:00AM
UK Regulatory
TIDMMAGP
Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas
11 December 2017
Magnolia Petroleum plc ('Magnolia' or 'the Company')
First US$500,000 Received under US$18.5 million Capital Management Agreement
Magnolia Petroleum plc, the AIM quoted US focused oil and gas exploration and
production company, is pleased to announce Western Energy Development LLC
('WED') has received the first US$500,000 tranche of capital as part of its
exclusive US$18.5 million capital management agreement with Magnolia. Magnolia
will invest these funds into oil and gas properties in Oklahoma that qualify
under the US Immigrant Investor Programme and in return will earn fees and
equity in new wells and leases.
As announced on 4 July 2017, Magnolia entered into an exclusive agreement with
WED to invest, on behalf of WED, up to US$18.5 million 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 in each spacing unit. A pilot programme in
which Magnolia invested US$500,000 on behalf of WED into qualifying oil and gas
properties in Oklahoma, generated US$75,500 in value for Magnolia in terms of
lease bonus and the carried interest for 25% in the first well within each
spacing unit; plus an additional US$127,982 uplift in the PV9 value of
Magnolia's reserves. To date, the pilot programme has generated a rate of
return of 100% and a return on investment of 3.26 times.
Magnolia CEO, Rita Whittington said, "The first US$500,000 under the US$18.5
million agreement with WED represents a major milestone for Magnolia. Thanks
to the quantum of funds involved, the fees generated, and the 25% carried
interest in new wells, the WED agreement promises to accelerate our strategy
which is to generate value through the acquisition and development of leases in
productive US onshore formations alongside established operators such as Devon
Energy and Continental Resources. The management fees will complement the
revenues generated by our portfolio of interests in over 150 producing wells;
while our carried interest in new wells will provide de-risked, nil cost entry
into attractive leases."
Western Energy Development LLC CEO, Greg Neher said, "We expect today's
US$500,000 investment will be the first of many and we look forward to working
closely with the Magnolia team with a view to replicating the success of the
pilot programme on a much larger scale. We feel confident in our near-term
competitive position because amendments to the EB-5 programme currently being
considered by the US Congress have the potential to accelerate our growth.
Specifically, two changes contemplated in proposed bills: firstly a
dramatically shorter visa issuance wait for applicants that invest in rural
projects such as WED's compared to urban real estate projects; and secondly an
almost doubling in the EB-5 minimum investment amount - meaning we require
fewer investors to reach or exceed our targets."
Western Energy Development LLC
WED is an affiliate of Western Energy Regional Center LLC, a United States
Citizenship and Immigration Services - designated Regional Centre which can
accept investment in job-creating projects from foreign nationals through the
Immigrant Investor Programme.
* * 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 / James Caithie 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 Ltd +44207236 1177
END
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