Magnolia Petroleum PLC (LON:MAGP) is to take part in a six well drilling programme to be undertaken by US giant Marathon.
The wells will target the Bakken and Three Forks Sanish formations in North Dakota and due to their location and size of stake mark a step up in the level of opportunities Magnolia has been seeing recently, said Rita Whittington, chief executive.
It has an opportunity to take a working/net revenue interest of up to 2%/1.5% for three of the wells and up to 1%/0.74% for the remainder.
“These six wells tick all the boxes: low risk due to being increased density wells; high impact as they are being drilled on leases which have already produced significant volumes of oil and gas; excellent address thanks to being located in the prolific Bakken and Three Forks Sanish formations; and highly attractive commercial returns as a result of having a low breakeven oil price of approximately US$40,” Whittington said.
“Furthermore, the read across from an approximate halving in drilling costs in recent years is effectively a doubling of the potential Return on Investment.
These wells therefore represent an excellent de-risked opportunity to rapidly scale up production and reserves, and we are looking to capitalise on this by either taking up our full participation rights or farming out a portion of our entitlement to interested parties.”