Magnolia Petroleum Ups Stake in Mississippi Formation
Magnolia Petroleum Plc announced a positive update across its portfolio of interests focused on proven and producing US onshore hydrocarbon formations, including the prolific Bakken / Three Forks Sanish Formations in North Dakota and the Hunton / Woodford and Mississippi Formations in Oklahoma.
- Acquisition of an oil and gas lease comprising a 12.5% working interest in 640 acres (80 net mineral acres), with a 9.375% net revenue interest. This lease is located in Oklahoma, within the boundaries of the prolific Mississippi play.
- Operator of the acreage is Chesapeake Energy Corporation (Chesapeake), who has already drilled, fracture stimulated and is currently completing one well covering this lease. Production rates to follow
- Cost of $587,120 for acquiring the acreage including share of cost of participation in Chesapeake well
- Participation in additional well targeting the Bakken, North Dakota, a proven formation with an estimated 4.3 billion in recoverable reserves
- Zenyatta 2-6 well spudded, targeting the oil producing Hunton Formation, Oklahoma - initial production rate to follow in the next few months
Magnolia COO, Rita Whittington said, "Today's land acquisition along with our participation in two further wells adds to our highly prospective portfolio of assets that comprises producing and non-producing interests in proven oil plays such as the Bakken / Three Forks Sanish, North Dakota and the Hunton and Mississippi Formations in Oklahoma. We currently have interests in 69 producing assets and with our recently raised funds, we are well placed to significantly increase this total and in turn achieve a step up in revenues generated."
The Mississippi Formation
Magnolia acquired a 12.5% working interest in 640 acres (80 net mineral acres) with a 9.375% net revenue interest. The Company has been informed that Chesapeake has already drilled and fracture stimulated a well covering this acreage. Chesapeake is currently finishing up the completion process and installing production equipment to place this well on line for production. The total cost of the acquisition is US $587,120 and includes Magnolia's share of the cost of the Chesapeake well.
The Mississippi Formation is a proven commercial oil and gas system that has been producing at shallow depths ranging from 4,500 to 7,000 feet below the surface from several thousand vertical wells for more than 50 years. New technology and horizontal drilling has reopened the oil play.
The Bakken, North Dakota
The Company has received a proposal and has elected to participate in the drilling of Quill 2-10-3H. The well is to be drilled on the same spacing unit as Quill 1 that is producing from the Bakken formation. The operator of the well is Hunt Oil Company. The total cost of drilling the well is estimated to be US $8,234,000. Magnolia has a 0.38786% working interest in the well and as a result the Company's share of the costs is estimated at US $31,936.47.
Quill 1 was completed with an eight stage frac with an initial production of 756 barrels of oil per day and 492 MCF of gas per day. By comparison, the Quill 2-10-3H will be completed with a 30 stage frac, and as a result, the directors believe that production from the new well should be substantially higher.
Hunton Formation, Oklahoma
Magnolia, with its 1.057% working interest, participated 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. Further to its announcement of February 21, 2012, the Company has been informed by the operator that the drilling of Zenyatta 2-6 has now been completed. Production figures for the well are expected to be received in due course.
The Zenyatta 1-6 well, located in Section 6-8N-2E, Pottawatomie County, Oklahoma was drilled in the Hunton Formation. Production was established in October 2011 during which time the well produced an average of 79.66 barrels of oil per day and 118.18 MCF of gas per day. The well has gross proved reserves of 77.90 Mbbl.