U.S. onshore-focused Magnolia Petroleum reported Tuesday that it has spud its first well as operator in the Mississippi Lime Formation, Oklahoma.
The company said that it began drilling Nov. 19 at the Roger Swartz No.1 well, located in Noble County, Oklahoma. Drilling is expected to last between eight and 10 days and cost an estimated $730,000. Its targeted total depth is 5,500 feet.
Magnolia's directors believe that a further seven potential well sites could exist in the vicinity of the well, which lies in 800 acres that Magnolia acquired in February this year. Magnolia, which currently has a 100-percent interest in the well, has made a farm-in deal in which third parties can acquire a 16.25-percent working interest once a pay-out has been achieved.
"The Roger Swartz is the first well we have drilled as operator in Oklahoma and we are delighted to have reached our previously announced target of drilling our first well as operator before the end of this year. Becoming an operator marks another development of our growth strategy. Other opportunities also exist in the same acreage, which we will look to exploit as appropriate going forward and could significantly add to net production due to Magnolia having larger working interests," Magnolia Chief Operating Officer Rita Whittington said in a company statement.
Investment bank Northland Capital Partners, which follows the progress of Magnolia's shares on London's Alternative Investment Market, commented in a brief research note that Tuesday's announcement marks the second phase in Magnolia's strategy to drill a number of wells in its own operated acreage and, as such, represents a "key milestone".
Northland's analysts added: "Magnolia has now also reached its target of 100 well participations set out at the start of the year with 16 of these still being drilled or completed."
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