Magnolia Petroleum sinks following proposed AIM exit

The AIM-quoted exploration and production firm was admitted to the market in November 2011 but stated that despite the recent rise in oil prices, the Magnolia's share price remained "depressed", making it difficult to put together capital to provide the business with the scale it requires through the market.

"To this extent, the directors consider that any future investment is likely to need to come from internally generated revenue or from other sources other than placing of new shares," Magnolia said on Wednesday.

Magnolia stated that as oil prices and asset prices continued to rise, its board was of the view that it was a "favourable time" to look at the disposal of certain interests in order to allow it to "significantly reduce, if not eliminate, debt" whilst maintaining a portfolio of revenue-producing working interests.

"The effect of these future disposals will not only reduce net debt but also reduce the company's revenue generating asset base and scale of the business placing further emphasis on the costs and benefits of maintaining the company's AIM quotation," the firm added.

As a result of the cancellation, Magnolia estimated recurring administrative costs savings to be roughly £100,000 a year.

Magnolia will cease trading on AIM at the close of business on 21 June.

As of 0830 BST, Magnolia shares had crashed 69.78% to 0.70p.