Magnolia Petroleum Plc / Index: AIM /
Epic: MAGP / Sector: Oil & Gas
14 December 2017
Magnolia Petroleum
plc
(‘Magnolia’ or
‘the Company’)
Gilchrist Well IP
Rates Exceed Expectations
Magnolia Petroleum plc, the AIM quoted US focused oil and gas
exploration and production company is pleased to announce that the
Initial Production (‘IP’) rates for the Gilchrist 2016 1-36H well
(‘Gilchrist’ or ‘the Well’) in Oklahoma significantly exceed the Company’s
projections, producing 652 BOPD with 1,178 MCFD or 770 BOEPD with
an associated flowing tubing pressure of 120 PSI.
Gilchrist is operated by SandRidge Energy and Magnolia has a
carried working interest in the Well through its agreement with
Western Energy Development LLC (‘WED’). Gilchrist is the first well
to be drilled on the spacing unit and the excellent IP rates, which
are 35% higher than Magnolia’s pre-drill estimates of 570 BOEPD,
are expected to result in the drilling of infill wells in due
course to maximise the recovery of reserves.
As announced on 3 November 2017,
Magnolia and WED elected to take their proportionate share of any
interests in the lease that became available as a result of the
non-participation of leaseholders in a forced pooling order.
This resulted in WED and Magnolia increasing their combined Working
Interest (‘WI’) to 1.57% in the spacing unit on which the Gilchrist
Well is located and where additional increased density wells are
expected to be drilled in the future. Under the terms of its
agreement with WED, Magnolia is carried for 25% WED’s WI in the
Gilchrist Well at no cost.
Magnolia CEO, Rita Whittington
said, “This excellent IP rate has exceeded our
expectations. At 770 BOEPD Gilchrist is producing 200 BOEPD
more than we originally projected. The results of Gilchrist
validate our decision to increase our interest in the lease via the
forced pooling order and importantly they significantly de-risk the
spacing unit. We anticipate participating in any infill wells that
may be drilled in the future, as we look to increase our total
production and reserves across our portfolio of interests in proven
US onshore formations.
“In the meantime, with the first US$500,000 tranche of the US$18.5million WED agreement now in place we are
looking to invest this sum on behalf of WED’s clients which, based
on the successful pilot programme, has the potential to add 27
potential wells to our inventory. We are currently evaluating
several deals for this initial US$500,000 and I look forward to providing
further updates on this matter in due course.”
Further Information on Western Energy
Regional Center LLC
WED is an affiliate of Western Energy Regional Center LLC, a
United States Citizenship and Immigration Services
(‘USCIS’)-designated Regional Center which can accept investment in
job-creating projects from foreign nationals through the Immigrant
Investor Program.
Magnolia entered into an exclusive agreement with WED to invest,
on behalf of WED, up to US$18,500,000
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 of a spacing unit. The
Gilchrist Well forms part of a successful pilot programme under
which Magnolia invested US$500,000 on
behalf of WED into qualifying oil and gas properties in
Oklahoma. To date, this pilot programme has generated a rate
of return of 100%; a return on investment of 3.26 times;
US$75,500 in value for Magnolia
(lease bonus plus a carried interest for 25% in the first well,
within each spacing unit); and US$127,982 uplift in the PV9 value of Magnolia’s
reserves.
* * 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 / Liam
Murray |
Cairn Financial Advisers
LLP |
+44207213 0880 |
Nick Beeler |
Cornhill Capital Limited |
+44207710 9610 |
Lottie Wadham |
St Brides Partners Ltd |
+44207236 1177 |
Frank Buhagiar |
St Brides Partners
Ltd |
+44207236
1177 |