Magnolia Petroleum Plc, the AIM quoted US onshore focused oil and gas exploration and production company, is pleased to announce the results of an independent Reserves Report. The Report, which is part of the six-month bank debt redetermination process, shows an increase in the Company's net proved developed producing reserves (‘PDP') across its leases in US onshore formations such as the Woodford and Mississippi Lime, Oklahoma, and the Bakken and Three Forks Sanish, North Dakota.
Rita Whittington, COO of Magnolia, said, “At US$4million the value assigned to our PDP reserves alone is almost double our current market capitalisation. We are confident the true underlying value of the Company is greater still, as this latest Report on our leases in Oklahoma and North Dakota did not cover other classes of reserves, most notably in both the proved and probable categories.
“With oil prices seemingly stabilising at the US$50 level and costs across the sector significantly lower than those that were prevalent before the downturn, activity among US onshore operators continues to pick up from 2016's lows. We are seeing this for ourselves in the increase in the number of well proposals we are receiving to drill wells on our leases. As the improved sentiment translates into more drilling, we are confident that the substantial discount the market is ascribing to our PDP reserves will narrow. In the meantime, the resumption in PDP reserves growth is most welcome and I look forward to providing further updates as we take advantage of the recovery to drill alongside established operators on our leases to prove up our reserves, and in the process generate value for our shareholders.”
Summary Table of Magnolia's Total Net PDP and proved developed non-producing (‘PDNP') Reserves as at 8 March 2017:
NPV9 valuations are based on the bank's price deck as of January 2017 and take into account the future net cash flow which is defined as future net revenue, less estimated future net OPEX (well operating cost and production taxes) and future net capital. The total net PDP reserves are those defined as natural gas and liquid hydrocarbon reserves to Magnolia's interest after deducting all royalties, overriding royalties, and reversionary interests owned by outside parties that become effective upon pay-out of specified monetary balances. All reserves estimates have been prepared using standard engineering practices generally accepted by the petroleum industry and conform to the guidelines adopted by the 2007 SPE/SPEE/WPC PRMS Guidelines.
The information contained in this announcement regarding the reserves analysis has been reviewed and approved by Mike Mabry on behalf of Sycamore Resources. Mr Mabry has over 30 years of relevant experience in the oil industry and has a B.S. in Petroleum Engineering from the University of Tulsa. He has previously served as Chair of the SPE Improved Oil Recovery Symposium, presiding over 700 engineers from 65 counties. Over the course of his career, Mr Mabry has held the position of Senior Petroleum Engineer at Apache Corporation, Petrohawk Energy and MAPCO and is currently Managing Director of Sycamore Resources in Tulsa, Oklahoma.