Magnolia Petroleum to participate in 16 new US onshore wells

Oil and gas explorer Magnolia Petroleum is to participate in 16 new onshore wells in the Scoop and Stack plays in Oklahoma, the US.

Magnolia recently participated in a new Continental Resources operated well, the Foree 1-18-7XH, which was drilled to the Woodford formation. The operator reported initial production rates of 1,411 barrels of oil per day and 3.9m cubic feet of gas per day - equivalent to 2,061 barrels of oil equivalent per day.

Due to the production rates and estimated reserves, an additional 13 increased density wells have also been proposed within the same unit.

Drilling has already started on the second well on the unit, Houses Quarter 10-7-6XH, with 12 wells left to be drilled back to back.

Magnolia’s share of the costs of drilling the initial foree well was fully carried and so it did not incur any cost, and the company will fund its share of the costs of the 13 increased density wells which is estimated at $45,000.

The AIM-listed company is also participating in the drilling of three initial wells operated by Comanche Exploration Co and Devon Energy, and will bear the costs of any increased density wells that may be proposed.

Chief executive Rita Whittington said: “In the space of a few weeks we have announced our participation in 28 new wells, the majority of which are increased density wells in the prolific Scoop and Stack plays. These infill wells have been substantially de-risked by the drilling of initial wells on the relevant spacing units.

“In our view, the free carry on a number of initial wells reported today is testament to the high standing of Magnolia’s management team and their negotiating skills which allows us to gain exposure to drilling activity without initially having to put any of the Company’s capital at risk.”

Shares in Magnolia Petroleum were down 4.35% to 0.11p at 0850 BST.