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Magnolia Petroleum doubles production at US projects
By Darshini Shah | Fri, 5th July 2013 - 09:26
Magnolia Petroleum (MAGP) has announced "excellent" production at its Helgeson well in the Bakken Formation, North Dakota.
The well, in which the AIM-listed oil and gas company holds a 4.071% net revenue interest, reported an initial production rate of 1,401 barrels of oil equivalent per day (boepd).
In addition, the US onshore-focused firm announced its participation in seven new wells in producing US formations in Oklahoma, in line with its strategy to "rapidly build production and reserves".
"Based on the initial production rates, the two Bakken wells, Helgeson and Gustafson, have together increased our daily production by 107 barrels of oil in the space of a week," pointed out chief operating officer Rita Whittington. "This represents a near doubling of the 122.5 boepd reported in the competent person's report as at 31 December 2012."
She expected the strong momentum to be "maintained if not built upon", stating: "The seven new wells announced [on Friday] bring the total number in which Magnolia has an interest that are at various stages of development or waiting to spud to 47.
"As with Helgeson and Gustafson, Magnolia holds larger-than-average interests in a number of these wells such as the Blaser and Great White. We are on course to build a significant US onshore oil and gas company."
"Great to see the 57 bopd from Helgeson but to be honest I am even more impressed that [Magnolia has] managed to invest a further $300,000 (£200,000) in new wells," said Interactive Investor discussion board user 'Rhubarb Rhubarb Rhubarb'. "It wasn't that long ago since the last RNS which shows how much free cash flow they are throwing off to reinvest.
"Their overheads should be reasonably fixed, so as more wells come into production, the cash flow will increase at an exponential rate as they keep on reinvesting."
The user concluded: "I can't think of a better business model."
This article is delivered as part of Interactive Investor's Interface service, which brings companies enhanced exposure to Interactive Investor's audience of active retail investors. Companies pay a fee to be included in this service. For more on Interface click here.
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|Last Update: 16:35:26 (09/12/13)|