Magnolia Petroleum plc, the US onshore focused oil and gas exploration and production company, announced Wednesday the commencement of a ten well drilling program targeting gas in the proven Woodford formation in the South-Central Oklahoma Oil Province.
Drilling has started on the Sympson 10-6H well, which is the first of five wells to be drilled in November. The remaining five wells of the program will be drilled by March 2016, with one well in January 2016, a further three in February 2016 and the last in March 2016. An estimated total of 3.2 billion barrels of conventional oil have been recovered from 60 reservoirs in the region, according to Magnolia, which holds a 0.525 percent working interest in each of the ten new wells that are operated by Continental Resources.
Rita Whittington, chief operating officer of Magnolia, commented in a company statement:
“With the ten Continental operated wells due to be drilled by March 2016 and a further ten non-Continental operated wells at various stages of drilling and completion, we continue to make excellent progress in rolling out our strategy to prove up the reserves on our leases through drilling. As at August 1, 2015 Magnolia’s proven reserves were independently valued at $21 million, which far outstrips our current market valuation and provides us with considerable asset backing. Combined with our internally generated revenues from production, which as at August 1, 2015 stood at 309 barrels of oil equivalent per day, we are well placed to maintain our strong track record of growth at $45 oil, as we look to deliver on our objective to build a significant US onshore focused oil and gas company”.
When pressed further on how the company is handling the current low oil price, Magnolia’s CEO and president, Steven Snead, told Rigzone:
“First of all we did what everyone else does and cut our expenses as much as we could, but our total operating cost to G&A and lease operating expenses is about $34 a barrel, so we’re still cash flow positive at this point in time.”
The Continental-operated drilling program forms part of Magnolia’s strategy to more evenly balance its oil and gas product mix, which currently stands at a ratio of 56 percent and 44 percent, respectively.
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