Magellan Petroleum Outlines Montana Field Consolidation, Changes to Existing Warrant Agreement, and Australian Gas Sales Update
March 11 2010 - 12:04PM
PR Newswire (US)
PORTLAND, Maine, March 11 /PRNewswire-FirstCall/ -- Magellan
Petroleum Corporation ("Magellan" or the "Company") announced the
completion of a transaction in North America, the amendment of a
warrant agreement, and an update on gas sales flow updates in
Australia. Montana consolidation In Montana, the Company has
completed a consolidation of interests at the East Poplar Unit and
North West Poplar fields in Roosevelt County, Montana. On March 9,
2010, the Company entered into a Purchase and Sale Agreement with
Hunter Energy LLC under which the Company assumed Hunter's 25.05%
average working interests in those Montana fields. Magellan, itself
and through its subsidiaries, now controls a 93.80% average working
interests there. As previously disclosed, on October 15, 2009, the
Company acquired an approximate 83.5% controlling member interest
in Nautilus Poplar, LLC ("Nautilus"), which holds a 68.75%
undivided working interest in the East Poplar Unit and varied
interests ranging from 60-75% in the Northwest Poplar field.
Nautilus will continue to serve as the operator of the Poplar
Fields. Magellan's President and Chief Executive Officer, William
H. Hastings said, "The 93.80% working share gives Magellan a
considerable controlling interest in this 23,000 acre structure.
Work continues to consolidate the smaller remaining interests. We
believe there remains redevelopment potential in this area using
primary infill and enhanced recovery techniques. The Poplar Field
transactions are consistent with our previously stated plans and
add value. The Hunter purchase will also boost our current efforts
to introduce new development partners and philosophies into area
and field operations and to extend the scope of our investments in
Montana and surrounding states." Warrant Amendment On July 9, 2009,
the Company executed and delivered to Young Energy Prize S.A.
("YEP") a Warrant Agreement entitling YEP to purchase 4,347,826
shares of the Company's Common Stock (the "Warrant Shares") at an
exercise price of $1.15 per Warrant Share. The Warrants were issued
as part of a PIPE (Private Investment in Public Equity), which was
conducted at a premium to the market share price at the time. At
their issuance, the Warrants contained anti-dilution provisions
that required the Warrants to be carried at fair value each
quarter. The Company recorded non-cash charges of approximately
$1.4 million and $986,000 related to the increase in the value of
the YEP Warrants for the Company's first and second fiscal quarters
ended September 30, 2009 and December 31, 2009. On March 11, 2010,
YEP and the Company agreed to amend the Warrant Agreement to remove
certain anti-dilution provisions. As a result, carrying the
Warrants at fair value is no longer required and there will be no
revaluation subsequent to March 11, 2010 Australian (Mereenie) Gas
Sales update In a prior communication dated December 29, 2009,
Magellan stated that natural gas sales to Power and Water
Corporation (PWC) continued under the "reasonable endeavours"
provision of the Mereenie Sales Agreement No. 4 (MSA4) with volumes
at or slightly below historical volume levels. These sales took
place into mid/late February, 2010 at which point volumes from the
Blacktip field, PWC's other gas supplier, began to flow in earnest.
PWC's most recent advisory to the Mereenie Producers (Magellan and
Santos) states that Mereenie gas was no longer required. Under the
provisions of that same MSA4 Sales Agreement, the Mereenie
Producers have advised PWC that pursuant to the terms of the
Agreement, Mereenie Producer obligations to PWC under the current
MSA4 Agreement will cease effective on September 5, 2010. Magellan
is currently engaged, through intermediaries, in discussions with
the Northern Territories Government regarding Mereenie's continued
intent and ability to provide surety of supply in all circumstances
when its obligations end after the first part of September 2010.
Gas sales from Magellan's Palm Valley field continue to flow at
100% nomination. Forward-Looking Statements Statements in this
press release which are not historical in nature are intended to
be, and are hereby identified as, forward looking statements for
purposes of the "Safe Harbor" Statement under the Private
Securities Litigation Reform Act of 1995. The Company cautions
readers that forward looking statements are subject to certain
risks and uncertainties that could cause actual results to differ
materially from those indicated in the forward looking statements.
Among these risks and uncertainties are pricing and production
levels from the properties in which the Company has interests and
the extent of the recoverable reserves at those properties. The
Company continues gas sales negotiations with no assurance of a
viable, economic conclusion. In addition, the Company has a large
number of exploration permits and faces the risk that any wells
drilled may fail to encounter hydrocarbons in commercially
recoverable quantities. The Company undertakes no obligation to
update or revise forward-looking statements, whether as a result of
new information, future events, or otherwise. DATASOURCE: Magellan
Petroleum Corporation CONTACT: William H. Hastings, President and
CEO of Magellan,+1-207-619-8501, William E. Begley, Chief Financial
Officer of Magellan,+1-207-619-8505 Web Site:
http://www.magellanpetroleum.com/
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