Magnolia Petroleum takes total well interests to 100

published 20 August 2012

Magnolia Petroleum, a US onshore-focused oil and gas exploration and production company, has said that it now has an interest in 100 wells, in line with its expansion strategy to rapidly grow production and revenues.

The Prucha 1-23MH well, in which it has a 25% working interest and 18.75% net revenue interest, has now been completed and the firm is waiting for details of initial production rates.

Production has begun at the Henry vertical well in the the Wilcox formation, Oklahoma, in which it has a 2.4373% working interest and 1.828% net revenue interest.

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The gross initial production rate is 35 barrels of oil per day, as anticipated, with expected payout of less than 12 months, ahead of the current portfolio average. Magnolia's share of the $0.56m costs is $13,612. The firm is now participating in two direct offsets of Henry well (Bowen 2-29 and Bowen 3-29).

Magnolia's Chief Operating Officer, Rita Whittington said: "Our participation in the Phenom and two Bowen wells brings the total in which we have an interest in to 100 (82 producing, 9 drilling, 9 waiting to spud). The speed with which we have reached this milestone is testament to the accelerating activity and interest in the proven oil formations in which we are active, including the prolific Bakken/ Three Forks Sanish, North Dakota and the Mississippi Lime and Woodford/Hunton, Oklahoma.

"Increasing the number of wells in which we participate along with the average size of our interests are the key drivers behind our successful strategy to grow Magnolia's revenues substantially. Furthermore, with 9 wells currently drilling/ completing and 9 waiting to spud, we are on track for our target of interests in 100 producing wells by the end of the year, and shows we are delivering on our objective to rapidly grow revenues and, in the process, build a significant oil and gas company."

The firm has also elected to participate in the Phenom well, a horizontal well to test the Mississippi Lime Formation, Oklahoma. Magnolia holds a 2.1484% working interest and a 1.72606% net revenue interest in the Phenom well, which is operated by Territory Resources. The total estimated cost for the proposed work is $3.0m, with the company's share estimated at $65,323.

The share price rose 1.09% to 2.33p by 08:26.