LON:MAGP | MAGNOLIA PETROLEUM PLC - Newly Listed Junior About To Advance ?

22nd Dec '11 by Antone

11 comments 7410 reads

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
valuation.

FULL REPORT HERE:

http://dl.dropbox.com/u/11417805/Magnolia_December_2011.pdf

LATEST RNS

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.

Overview

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Antone

22nd Dec '11

RNS

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.

Overview

* Participating in the drilling of two new wells in the Bakken / Three Fork
Sanish Formations with leading US oil and gas operator, Marathon Oil
Company

* Participating in the drilling of two new wells in the Hunton Formation,
Oklahoma

* 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
targets.

"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."

Full Details

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
substantially higher.

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.

chinaman

When they hit the first 3 month pay back well, they actually received and banked their cheque before the drilling and completion invoices were in. That was admittedly an unusually good result, but there will be more of these and the joy is, the Magnolia then rolls this cash back into the next well and so with a little time and some more good fortune, this thing will snowball.

The asset value of the licenses is wonderful, but what I am keeping my eye on is the build up in the cash flow as the portfolio of producing wells keeps growing.

chinaman, yes that is a very good point and i was thinking much the same, from the current market cap which is
tiny they will soon be flying in my opinion. According to some stuff i read from the states the oklahoma wells
they currently conducting multi stage frac,s on are targeting 2500+ bopd each and possibly they could go far
higher so even on a small stake magnolia will be raking the cash in.

Just posted again here the link to the Hardmans&co report as the other link i posted seemed
not to work.

http://dl.dropbox.com/u/11417805/Magnolia_December_2011.pdf

OK - these things are moving. Volume is strong. People are going to keep buying this when they see the cash flows from the wells come in.

chinaman, there has been some rumours of a newsleak on its OKLAHOMA operations and they saying
its spectacular results..cannot confirm just relaying what other forums saying.

The previous RNS is a good read too - note the term "game changing "

Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas

7 December 2011

Magnolia Petroleum Plc (`Magnolia' or `the Company')

Operations Update in the Highly Productive Bakken/Three Forks Sanish
hydrocarbon formations, North Dakota

Magnolia Petroleum Plc, the AIM listed US focussed oil and gas exploration and
production company, is pleased to announce a positive update on its operations
in North Dakota where the Company has a portfolio of interests in the
potentially game-changing and highly productive Bakken/Three Forks Sanish
hydrocarbon formations.

Overview

* Successful drilling of the two Skunk Creek Wells located in the Bakken/
Three Forks Sanish formations, Dunn County, North Dakota

*
+ Magnolia participated with a 0.59% interest in the drilling of each
well with Kodiak Exploration

+ Highly encouraging initial shows and subsequent application made to
drill an additional three Bakken wells and three Three Forks Sanish
wells within the same 1,280 acre spacing unit

+ On completion of these further six wells, a substantial increase in
overall production attributable to Magnolia is expected

+ Completion of both wells expected to commence by end of 2011 - between
23 and 24 multi stage frac techniques are to be performed on the two
wells

* Stocke 1-4-9H well, located in McKenzie County, North Dakota, now reached
total depth, awaiting completion

*
+ Magnolia participating with Hunt Oil Company with a 3.17% working
interest

Magnolia Petroleum COO, Rita Whittington said, "We are delighted to be able to
provide our shareholders with such a positive update on our operations so close
to our listing on AIM last month. The successful drilling of the two wells at
Skunk Creek and reaching total depth in the Stocke well provides us with huge
encouragement as we continue to participate in drilling in the highly
productive Bakken/Three Forks Sanish formations. We are particularly excited
about the Skunk Creek Three Forks Sanish well, as Moyes & Co. our Competent
Person singled out this well as a trigger for a significant shift in Magnolia's
reserve categories once the well has been successfully drilled and is
producing.

"Modern technology such as multi-stage frac techniques used in the completion
of horizontal wells has increased production tremendously in non-conventional
oil and gas plays. Magnolia's participation in the Drone well, completed as a
30 stage frac, yielded an initial production of 1,199 barrels of oil per day,
and nearly trebled Magnolia's net production interests to approximately 20
barrels per day. We are extremely pleased with the Company's participation in
successful drilling programmes to date and our highly experienced Board
anticipates the Stocke and Skunk Creek wells will prove to be highly productive
and will add to our outstanding success rate to date. With this in mind, I very
much look forward to updating shareholders on our progress."

Detailed Information

Reports have now been received from the operator in respect to the Skunk Creek
Wells, located in Dunn County, North Dakota. Magnolia participated with a 0.59%
interest in the drilling of each of these two wells with Kodiak Exploration.
The primary targets for these wells were the Three Forks Sanish and the Bakken
Formations. Both wells have successfully been drilled and are awaiting
completion. According to the operator, they are highly encouraged by the shows
and have applied to the North Dakota Industrial Commission to drill an
additional three Bakken wells and three Three Forks Sanish wells within the
same spacing unit. Multi-stage frac techniques between 23 and 24 stages are to
be performed on these wells. This information is in line with Magnolia's
Competent Person's Report (announced 25 October 2011 and contained, in full in
the AIM admission document) which indicates that the Bakken is being infill
drilled to four wells per 1,280 acres spacing and the Three Forks Sanish is
also starting to be developed in the area at four wells per 1,280 acre spacing
unit. This infill drilling would allow for an additional 78 Bakken and 107
Three Forks Sanish locations for a total of 108 wells in the Bakken and 108
wells in the Three Forks Sanish. Once permission is obtained and these initial
six wells are drilled, the Company expects that its overall production
interests will increase substantially.

In addition, Magnolia participated with Hunt Oil Company in the drilling of the
Stocke 1-4-9H well, located in McKenzie County, North Dakota. The Stocke well
reached total depth on 2 December 2011 and is awaiting completion. This well
will have a 21 stage frac treatment. Magnolia has a 3.17% working interest in
this well, which is nearly two and a half times larger than Magnolia's 1.34%
working interest in the Drone well which yielded total initial production of
1,199 barrels of oil per day (as announced on 4 November 2011).

Completion on the Skunk Creek and Stocke wells described above are expected to
start by year-end.

23rd Dec '11

Volume good again today. I suspect this is now starting to be held quite widely, which means that more people will notice when the next RNS comes out. This is a good thing.

thechaplin

Early 2012 should be an interesting time for MAGP - seems to be getting a bit of attention around the forums and also the iii.

28th Dec '11

Quite a few small sellers around today. But still not too bothered. Keep the shares trading and the volume good, and soon the shares will be in the hands of people who want them. Next news I reckon will be in mid Jan and if it's any good, this could be 0.65 - 0.7p with a good surge of new volume.

5th Jan '12

Nice buying again today. Good volume, which is what I like to see. I hope this attracts more shareholders to the story. Still good value. Hoping for good news before long.

MAGNOLIA PETROLEUM PLC - Newly listed junior about to advance ?

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Antone

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