Magnolia Petroleum Plc, the AIM quoted US focused oil and gas exploration and production company, is pleased to announce the acquisition of additional acreage in the proven and producing US onshore hydrocarbon formations, the Mississippi and Woodford in Oklahoma, as well as an update on wells in which the Company is participating including the Quill 2-10-3H, targeting the prolific Bakken Formation, North Dakota.
- All the acquisitions have occurred since the last quarterly update and brings total acreage acquired this year to 16,515 total gross acres (3,000 net mineral acres) in the oil rich Mississippi play, Oklahoma with an average 18% working interest in over 70 units - considerably higher than historic levels
- Acreage acquired in the Mississippi Formation already has the following wells drilling, completing and/or about to spud:*
- Lois Rust 7-27-12H-drilled and waiting on completion, 2.29% working interest, 1.72% net revenue interest
- Redfork 1-25H, elected to participate and waiting on spud, 1.96% working interest, 1.52% net revenue interest
- Thomason 10-27-12 1H, completed and waiting on initial production results, 12.5% working interest, 9.375% net revenue interest
- Brady 17-27-12 1H, currently drilling, 0.3437% working interest, 0.2749% net revenue interest
- Quill 2-10-3H targeting the prolific Bakken Formation, North Dakota, currently being completed
Magnolia COO, Rita Whittington said, "So far this year, we have acquired 3,000 net mineral acres primarily in the proven Mississippi Formation, the reopening oil play in Oklahoma. We are delivering on our goal to acquire acreage with materially larger working interests than has historically been the case. This is a crucial step on the road to accelerating Magnolia's transformation into a significant US onshore oil and gas company, as participating in wells in which we hold material interests will result in substantially higher production and revenues attributable to the Company."
The Mississippi and Woodford Formations, Oklahoma
Magnolia recently closed a private negotiated acquisition of 1,191 net mineral acres in the Mississippi play in Oklahoma. The acquired leases provide Magnolia with the opportunity to participate in six drilling and spacing units with an average working interest of 31% and an average net revenue interest of 24.8%.
Additional leases totalling 245 net mineral acres within the boundaries of the Mississippi Formation and also the producing Woodford Formation in Oklahoma have been acquired as part of the Company's ongoing leasing activity, bringing the total acreage acquired since the turn of the year to 16,515 total gross acres (3,000 net mineral acres). The average working interest of these acquired leases combined is 18% in over 70 units, significantly above the Company's
The Company has acquired 2.2 net mineral acres with a 0.34375% working interest and a 0.2578% net revenue interest within the boundaries of the Mississippi oil play. The lease is operated by Chesapeake who has informed Magnolia that a well on the lease, the Brady 17-27-12 1H, has already been spud and is currently being drilled. The completed well costs are estimated at US$3,612,855 and Magnolia estimates the cost to the Company of participating in this well will be approximately US$12,420.
Chesapeake, as operator, has notified the Company that the Lois Rust 7-27-12 1H, a horizontal well targeting the Mississippi has now been drilled and is currently waiting on completion. Magnolia holds a 2.3% working interest and a 1.8676% net revenue interest in the well. The completed well costs are estimated at US$3,719,505 and Magnolia estimates the cost to the Company of participating in this well will be approximately US$85,548.
The Company has received a proposal and has elected to participate in the drilling of Redfork 1-25H, targeting the Mississippi formation, Oklahoma. The operator of the well is Redfork. Magnolia has a 1.96% working interest and a 1.52% net revenue interest in the well which is waiting on spud.
The Company is currently waiting to receive initial production results for the Thomason 10-27-12 1H that has already completed. Magnolia has a 12.5% working interest and a 9.375% net revenue interest in the well that is operated by Chesapeake.
The Company has been notified by, Hunt Oil Company, the operator, that the Quill 2-10-3H well has been drilled and is currently being completed. The well has been drilled on the same spacing unit as Quill 1 that is producing from the Bakken Formation. The total cost of drilling the well is estimated to be US$8,234,000. Magnolia has a 0.38786% working interest in the well and as a result the Company's share of the costs is estimated at US$31,936.47.
Quill 1 was completed with an eight stage frac with an initial production of 756 barrels of oil per day and 492 MCF of gas per day. By comparison, the Quill 2-10-3H will be completed with a 30 stage frac, and as a result, the directors believe that production from the new well should be substantially higher.
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