Magnolia Petroleum hails US production rates

Magnolia Petroleum was in demand after it announced production rates for the Otis and SPS wells in the USA had both exceeded expectations.

At current rates, the firm said its participation costs for both wells would be recovered within 12 months.

The gross initial production rate at Otis, in which Magnolia has a 4.2% working interest, was 341 Barrels of Oil Equivalent Per Day (boepd) based on the first 10 days of production.

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The SPS well, in which Magnolia has a 0.8333% working interest, showed gross initial production rate of 108 boepd.

The firm has spent $157,628 and $11,745 respectively on the wells.

The company also announced it had taken on over 300 acres of new leases, mainly in Mississippi and Montana.

Chief Operating Officer Rita Whittington said the quicker the payout the sooner the firm could recycle revenues into further wells, as well as continue to build its growing inventory of potential US drilling locations.

"Following the commencement of production at the Otis and SPS wells, Magnolia now has interests in 86 producing wells in proven US onshore formations," she said.

The firm also has a further 15 wells currently drilling/completing and 13 waiting to spud.

Shares were up 7.7% by 11:45 on tuesday following the announcement.