Magnolia Petroleum is an independent oil and gas company based in Tulsa, Oklahoma with non-operated interests in two of the most active unconventional resource plays in North America; the Bakken and the Woodford, and plans to acquire new acreage working as an operator in the nascent Mississippi Lime Play.
Earlier in 2011, Magnolia participated with Chesapeake in‘The Sundance Mississippian Lime’ well which paid back to Magnolia costs within three months of drilling.Magnolia’s recent funding which accompanied its move to AiM will allow the company to begin acquiring leases and to build a position in this upcoming play
An early entrant into the Bakken and Woodford, Magnolia captured early value and has just scored its most
successful well to date with the recent Drone 1-34-27H.This well has recorded excellent initial production rates of 1,199 barrels of oil per day and 441 MCF gas per day; albeit being ‘early days’, we believe it is sufficiently encouraging to suggest a near doubling of engineering projections for the well, with likely formal upgrades to follow.
An early estimate would be that this would generate between $146,000 and $228,000 of net revenue above
baseline engineering projections to Magnolia over the well life – all other things being equal.The interesting bit is that this was Magnolia’s first 32- stage frac well and if it turns out to be the case that the success seen in the Drone well is repeated as more complex completions are regularly applied and as evidenced by the Skunk Creek and Stocke well announcements. This may fundamentally improve the underlying valuation of the company.
Our post-money corporate valuation is £10.3m which equates to 1.8p/share based on a sum of the parts
FULL REPORT HERE:
Magnolia Petroleum Plc
Additional Wells Agreed and Production Update
20 December 2011
Magnolia Petroleum Plc (`Magnolia' or `the Company')
Participation in Four Additional Wells in the Bakken Formation, North Dakota
and Hunton Formation, Oklahoma and Production Update for Hunton Well
Magnolia Petroleum Plc, the AIM quoted US focussed oil and gas exploration and
production company, announces positive updates on certain non-producing assets
within the highly productive Bakken and Three Forks Sanish hydrocarbon
formations, North Dakota and in the Hunton Formation, Oklahoma and on the
producing Zenyatta 1-6 well in Oklahoma.
* Participating in the drilling of two new wells in the Bakken / Three Fork
Sanish Formations with leading US oil and gas operator, Marathon Oil
* Participating in the drilling of two new wells in the Hunton Formation,
* Production commenced from Zenyatta 1-6 well in Oklahoma with Avalon Oil &
Gas III, LLC, producing an average of 79.66 barrels of oil per day and
118.18 MCF of gas per day - production increasing
Rita Whittington, COO of Magnolia Petroleum, said, "This is an extremely
exciting time for the Company as we are now receiving multiple proposals for
wells on both the Three Forks Sanish and Bakken Formations acreage from leading
operators such as Marathon Oil Company. Today's news is in line with the
expected drilling for 2012, as set out in our Admission document and in this
regard I am delighted to report Magnolia is delivering on its strategic
"While the Bakken Formation, in which we are active, continues to excite strong
interest, our assets in Oklahoma are also looking highly promising and we
anticipate a steady flow of news as we move into 2012."
Bakken/Three Forks Sanish, North Dakota
The two new wells announced today in the Bakken/Three Forks Sanish Interest is
in line with the Admission Document of 15 November 2011, in which Magnolia
referred to participating in the drilling of four new wells on its acreage.
* Eckelberg 14-23H infill well in Dunn County, North Dakota (0.53367% working
interest) in partnership with Marathon Oil Company, located in Sections 14
& 23-146N-93W. This well will be drilled to the Middle Bakken Sandstone
interval and is expected to be completed with a 30 stage frac at a cost to
Magnolia of approximately US$43,232.
* Eckelberg 14-23TFH infill well in Dunn County, North Dakota (0.53367%
working interest) in partnership with Marathon Oil Company drilling to the
Three Forks Sanish Formation using the same pad as the above well. The
well, anticipated to spud on 12 January 2012, is expected to be completed
with a 30 stage frac at a cost to Magnolia of approximately US$44,933.
Both Eckelberg wells will be drilled within the same spacing unit as the Clive
Pelton 34-23H well, which was drilled to the Middle Bakken Sandstone Interval
by Marathon Oil Company and participated in by the Company in 2008. The Pelton
well was completed with a single stage frac with an initial production of 483
barrels of oil per day and 148 MCF of gas per day. In comparison, the two new
Eckelberg wells will be completed with 30 stage fracs, and as a result, the
directors believe that production from these two new wells should be
Hunton Formation, Oklahoma
Magnolia, with its 1.057% working interest, has elected to participate with
Avalon Oil & Gas III, LLC in an infill well, Zenyatta 2-6, located within the
same spacing unit as Zenyatta 1-6, to test the Upper Hunton interval. The
expected spud date is 15 January 2012.
In addition, Magnolia has elected to participate in a further Hunton well,
located in Pottawatomie County, Oklahoma with a 0.8333% working interest. This
well will be drilled by Paul Gillham Oil Company, which has had previous
successes in the area. Magnolia estimates that the cost to the Company of
participating in this well will be approximately US$11,745.
Magnolia recently participated with its 1.057% working interest in the drilling
and completion of the Zenyatta 1-6 well, located in Section 6-8N-2E,
Pottawatomie County, Oklahoma with Avalon Oil & Gas III, LLC. This well was
drilled in the Hunton Formation. Production was established in October 2011 and
is steadily climbing. The well is currently producing an average of 79.66
barrels of oil per day and 118.18 MCF of gas per day and has gross proved
reserves of 77.90 Mbbl.