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Magnolia Petroleum reveals significant reserves upgrade

Magnolia Petroleum has revealed a five-fold increase in the value of it oil reserves to US$94mln.

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Magnolia Petroleum (LON:MAGP) has revealed a five-fold increase in the value of it oil reserves to US$94mln.

A new competent person's report (CPR), prepared by Moyes & Co, estimates the group’s 3P – Proven, Probable and Possible - oil reserves at 2.8mln barrels of oil and condensate and 9.2mln cubic feet of gas.

These reserves are valued in the CPR at US$94mln and this underlines the value added to the company since it listed on AIM in November 2011; at that point its reserves were worth US18mln.

"The CPR provides an independent assessment of Magnolia's first full year on AIM, which saw excellent progress made towards delivering on our strategy to build a significant US onshore oil and gas company,” said chief operating officer Rita Whittington.

“In this time, the value of the company's net reserves and production as at 1 January 2013 increased by multiples of the figures reported at the time of the admission to AIM in November 2011.

“At US$94m the value of our 3P reserves provides considerable asset backing to our current market valuation, while at 122.5 boepd [barrels of oil equivalent per day], net production generates revenues that will be reinvested into new wells, as we look to build net production and proved reserves further.”

Additionally, Magnolia said it has contingent and prospective resources worth US$15mln.

The CPR also identified that there could be as many as 696 additional drilling locations within the 7,866 acres Magnolia has acquired in Montana, in what is believed to be an extension of the prolific Bakken formation.

Meanwhile, it estimated that daily production from the group’s current portfolio could rise to 625 barrels a day, and to as much as 1,067 barrels a day by 2017.

"The 625 boepd and 1,067 boepd production estimates provided by Moyes highlight the potential of our existing leases and as a result, they are a useful reference point for the future," Whittington said.

“These forecasts do not take into account our Montana acreage, on-going lease acquisition activity as well as the opportunities we are regularly seeing in our areas of interest and with this in mind, I look forward to providing updates on our progress in due course, as we look to continue to generate substantial value for all our shareholders."

Quick facts: Magnolia Petroleum PLC

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AIM:MAGP
Market: AIM
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