Magnolia Petroleum Acquires Additional Acreage in Oklahoma
Magnolia Petroleum Plc has acquired an additional 480 gross acres with an average 83.33 percent working interest in the oil producing Mississippi Lime Formation, Oklahoma.
- Acquisition via a Farm-Out Agreement of an average 83.33 percent working interest in 480 gross acres assigning Magnolia the right to drill in the Mississippi Lime Formation, Oklahoma - a proven commercial oil and gas system
- On course to drill one well in the Mississippi Lime Formation by the end of 2012 - Magnolia as operator
- This transaction has been completed at no upfront cost to the Company
Magnolia COO, Rita Whittington said, "I am delighted that we have acquired additional significant acreage with large working interests in the Mississippi Lime Formation in Oklahoma, a reopening oil play with huge potential where we already hold interests.
"The acquisition builds on our previous announcement of the acquisition of 800 net acres in the Mississippi Lime Formation, and underlines our commitment to acquiring assets in this exciting area. We are now advancing our plans to drill our first well as operator in the Mississippi Lime Formation later this year.
"At the same time, as reported in previous releases, we are currently participating in five wells in the Bakken / Three Forks Sanish formations, that are now in their completion stages, in North Dakota and I look forward to providing you with updates on our progress in due course."
Detail of the Farm-Out Agreement
The Company has acquired, for no cash cost, 480 gross acres with an average working interest of 83.33 percent, resulting in 400 acres net attributable to Magnolia in the Mississippi Lime Formation. These leases have been assigned to Magnolia with an 81.25 percent net revenue interest.
Under the terms of the Farm-Out Agreement, the Company will assign 16.25 percent of its working interest to the Farmor in the first well drilled in each unit, once all costs associated with drilling the first well have been recovered by the Company. Otherwise known as a "back-in after payout".
The signing of the Farm-Out Agreement follows the Company's intention to acquire material working interests as an operator and so control the timing of the drilling, proposing and producing of its oil and gas wells.