Magnolia Petroleum makes good progress in fourth quarter

US-focused oil and gas exploration and production company Magnolia Petroleum announced its quarterly update for Q4 2016 on Monday, covering its operations across US onshore hydrocarbon formations, including the Bakken-Three Forks Sanish in North Dakota, and the Woodford, Mississippi Lime and the Hunton in Oklahoma.

The AIM-traded firm said two new wells commenced production during the quarter, with 153 producing wells in the company’s portfolio at the end of the quarter.

It elected to participate in five new wells during the quarter, with nine wells currently at various stages of development.

Magnolia also raised £0.23m to fund drilling commitments on its US onshore leases during the period.

Looking ahead, a number of new wells were due to come into production in the first quarter, and Magnolia said it was participating with “leading operators” in new wells and infill drilling, which are commercial at lower oil prices.

Its updated reserves report for 1 January was due shortly as well.

On-going lease acquisition and management activity remained in line with the board’s strategy to grow and diversify portfolio, it added.

“Thanks to two new wells coming on stream during the quarter and following the divestment of 67 producing wells with little or no economic value in 2016, Magnolia ended the year with a portfolio of 153 producing wells located in proven US onshore formations,” said Magnolia COO Rita Whittington.

“With West Texas Intermediate consistently trading above the $50 level on the back of the recent OPEC meeting and our cost base almost a third lower than it was a year ago, Magnolia is well placed to step up our level of drilling activity once a recovery in sentiment has become firmly entrenched.”

Whittington said with that in mind, the board was encouraged by the noticeable pick up in planned drilling by operators in its areas of focus, adding that the near-10% month-on-month increase in the US rig count to 634 in December bodes well.

“Our strategy and objective remains the same: to drill alongside established operators to prove up the reserves on our leases, and in the process generate value for our shareholders.”