Magnolia Petroleum upbeat on production revenue boost
09 March 2010
Magnolia Petroleum, the onshore US oil and gas exploration company, today said that since its admission to Plus in October 2009, it had participated in seven wells in the prolific Bakken formation of North Dakota with an average working interest of 0.79%.
All the wells have been successfully tested by the operators, Marathon Oil and Hunt Oil, and have been completed and are producing at an average of around 490 barrels of oil per day.
In addition, Magnolia is also participating with Chesapeake Exploration LLC in another horizontal drilling play located in Woods County, Oklahoma. The formation being drilled has the potential of being a reservoir comparable to the Bakken in oil production.
In order to fund its participation in a wide range of Marathon's currently extensive drilling opportunities, Magnolia has signed an agreement with Hangtown Oil LLC to farm-out its interest in five proposed middle Bakken wells to be drilled by Marathon in central Dunn County, North Dakota.
Under the arrangement, Magnolia will not be required to make any contribution towards the cost of drilling and completing the wells, but will nevertheless receive 25% of the working interest revenue once the cost of drilling and completing has been recovered. Based on levels of production being achieved in Magnolia's remaining Bakken wells, it is expected that those costs will be recovered within nine to twelve months.
Magnolia said that its monthly oil and gas production revenues had increased from approximately $4,500 in September 2009 to over $40,000 in December 2009.
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