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This presentation is being made by or on behalf of Magnolia Petroleum Plc (“Company”). This presentation has not been approved for issue as a financial promotion for the purposes of section 21 of the Financial Services and Markets Act 2000 (“FSMA”) and is being supplied in the United Kingdom only to (i) persons who have professional experience in matters relating to investments (being "investment professionals" within the meaning of Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "FPO")) or (ii) persons falling within Article 49(2) ("high net worth companies, unincorporated associations etc") of the FPO or (iii) persons who are otherwise permitted by law to receive it. The information contained in the presentation is not intended to be viewed by, passed on or distributed (directly or indirectly) to, any other category of persons . Daniel Stewart & Company plc (“DS”) is authorised and regulated by the Financial Services Authority and will be acting as nominated adviser and broker to the Company in connection with the proposed placing of ordinary shares in the capital of the Company and admission of those ordinary shares to trading on the AIM market of London Stock Exchange plc.

Neither the presentation, nor any part of it, nor anything contained or referred to in it, nor the fact of its distribution, should form the basis of or be relied on in any connection with or act as an inducement in relation to a decision to purchase or subscribe for or enter into any contract or make any other commitment whatsoever in relation to any such securities. Recipients of this presentation who decide to subscribe for the new ordinary shares in the Company are reminded that any application to so subscribe may only be made on the basis set out in the formal placing letters and not on the information contained in this presentation. In the particular, details included in this presentation are subject to updating, revision, verification and amendment and refer to events as having occurred which have not occurred at the date of this presentation but which are expected to happen in the future. This presentation does not constitute a recommendation regarding the securities of the Company.

No reliance may be placed for any purpose whatsoever on the information contained in this presentation or on its completeness. No representation or warranty, express or implied, is given by the Company or DS or their respective directors, officers, employees, agents or advisers as to the accuracy, fairness, sufficiency or completeness of the information, opinions or beliefs contained in this presentation and, save in the case of fraud, no responsibility or liability is accepted by any of them for any loss, cost or damage suffered or incurred as a result of the reliance on such information, opinions or beliefs. In particular, no representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on, any projections, targets, estimates or forecasts and nothing in this presentation is or should be relied on as a promise or representation as to the future. Offers may only be made , and applications accepted, for new ordinary shares in the Company on the basis of formal placing letters.

DS is acting exclusively for the Company in relation to matters described in this presentation and will not be responsible in respect of such matters to any other person for providing the protections afforded to customers of DS or for providing advice in relation to those matters.

This presentation is confidential. Neither this presentation nor any other material relating to the proposal described herein may be copied, reproduced, shown, distributed or issued to any other person at any time without the prior written consent of DS nor may the information contained herein be discussed with any other person without the prior written consent of DS.

This presentation does not constitute a prospectus or admission document and does not constitute, or form part of, an offer for sale or an invitation to subscribe for, or the solicitation of an offer to buy or subscribe for, securities in any jurisdiction where such an offer or solicitation is unlawful and is not for distribution in or into the United States of America or Canada or their respective territories and possessions, the Republic of Ireland, the Republic of South Africa, Japan or Australia. The securities of the Company have not been, and will not be, registered under the United States Securities Act of 1933 (as amended) or under the applicable securities law of the Republic of Ireland, the Republic of South Africa, Japan or Australia and, subject to certain exceptions, may not be offered for sale or subscription, or sold or subscribed directly or indirectly, within the United States, Canada, the Republic of Ireland, the Republic of South Africa, Japan or Australia or to or by any national, resident or citizen of such countries.

By receiving and/or attending this presentation, you agree to be bound by the restrictions in this disclaimer.

If you are in any doubt about the investment to which this presentation relates, you should consult a person authorised under FSMA who specialises in advising on the acquisition of shares and other securities.


Magnolia Petroleum Plc is an AIM listed oil and gas exploration and production companythat acquires and develops oil and gas properties located onshore in the United States in proven fields including the Bakken / Three Forks Sanish Formations located in North Dakota and the Mississippi Lime and Hunton / Woodford Formations located in Oklahoma

  • AIM quoted cash generative oil and gas exploration and production company focussed on oil
  • Strategy to acquire leases in US onshore hydrocarbon formations such as the Bakken (North Dakota) Mississippi Lime and Woodford/Hunton (Oklahoma) where technology has transformed recovery/flow rates
    • Holds 5,180 net acres on which there are currently 74 producing wells
  • Further significant growth in 2012 – to participate in and operate wells with larger working interests in the re-opening Mississippi Lime Formation (Oklahoma)
  • Commercial relationships with leading oil and gas companies such as ExxonMobil, Marathon Oil and Chesapeake Energy
  • Highly experienced management team skilled in the acquisition and development of oil and gas properties – leases secured at discounts to market value
existing interests
Existing Interests

Bakken / Three Forks Sanish Formations, North Dakota

Mississippi Lime / Woodford / Hunton Formations, Oklahoma

Gas wells

Oil wells

the bakken three forks sanish formations north dakota
The Bakken / Three Forks Sanish Formations (North Dakota)
  • The Bakken:
    • 3.0 - 4.3 billion boe estimated recoverable oil reserves (U.S. Geological Survey - USGS)
    • Covers 200,000 square miles of the subsurface
    • Horizontal drilling and fracture stimulation technology has reopened the play
    • Daily production estimated to exceed 700,000 bopd by 2013 and 1.2 MMbopd by 2019
    • 4,000 active wells – the majority drilled in last five years
    • Largest Bakken field produces circa 30,000 bopd from 60 wells
  • Three Forks Sanish (TFS):
    • Two billion boe estimated recoverable oil reserves (USGS)
    • A separate reservoir beneath the Bakken
    • At early stage of development
    • Three possible shelves
    • Initial production rate of first TFS well 2,303 bopd, a record for the Company
activity in the bakken three forks sanish
Activity in the Bakken / Three Forks Sanish

4 wells preparing to be drilled on Magnolia’s acreage – yet to elect to participate

magnolia s bakken three forks sanish land package
Magnolia’s Bakken / Three Forks Sanish Land Package
  • 33,920 gross acres across 28 sections – 557 net acres
  • Average working interest 1.46% – average net revenue interest 1.10%
  • Acreage acquired at $1,500 per net mineral acre – current price $7,000
    • Benefits of early mover advantage
  • 197 Proven development locations on current Bakken (92) and TFS acreage (105)
    • Low exploration risk
  • Scope to drill four wells per unit in each formation due to TFS lying beneath the Bakken
magnolia s current production in bakken tfs
Magnolia’s Current Production in Bakken / TFS
  • 21 oil and / or gas producing properties located in Bakken and TFS
      • Over 800 bopd – average initial production on wells drilled on this acreage in various drilling and completion stages
  • Seven new wells drilled
    • On course for significant step change in annualised daily production attributable to Magnolia by end of 2012
  • Working interests up to 3.12% – net revenue interests 2.35%
  • Majority of acreage in fairway of Marathon Oil’s Bakken Shale development
    • Marathon operator of majority of wells

“delivering on phase one”

In March 2012 North Dakota became the number 2 oil producing state after Texas

woodford hunton formations oklahoma
Woodford / Hunton Formations (Oklahoma)


Magnolia Project Area – Canadian, Pottawatomie, Grady, Cleveland, Seminole and Stephens Counties

the woodford hunton formations oklahoma
The Woodford / Hunton Formations (Oklahoma)
  • The Woodford contains 1,281 producing wells after only four years of active drilling – majority in the dry gas window
  • Horizontal drilling and fracture stimulation technology have reopened these reservoirs
  • Activity in the Woodford Oil window play increasing – Continental Resources and Newfield, two leading independent oil and gas companies, among the most active
    • Magnolia elected to participate in two wells with Cimarex, a leading independent oil and gas exploration and production company focussed on the US
  • Ability to drill multiple wells in each formation per unit

“These plays fit our criteria of good investment returns and solid long-term growth potential.”

Thomas Jorden, CEO of Cimarex Energy Co. (Source: Tulsa World)

magnolia s woodford hunton land package production
Magnolia’s Woodford / Hunton Land Package & Production
  • 57,600 gross acres across 87 sections – average working interests up to 2.65% – average net revenue interest 2.36%
  • 19 oil and / or gas producing properties located in Woodford / Hunton covering Oklahoma, Texas
    • 7 new wells now producing in the play
  • Formations not exploited to the same extent as the Bakken
  • 87 well proposals received on current acreage
    • Likely to be drilled over the next two to three years
    • Magnolia to focus on participating in wells targeting the oil play
  • Estimated Ultimate Recoverable Reserves (EUR) per well reported in excess of 400,000 boe
  • Initial production on well drilled on this acreage was over 300 bopd

“delivering on phase one”

magnolia s woodford hunton acreage
Magnolia’s Woodford/Hunton Acreage

Zenyatta 2-6 Well, operated by Avalon, targets the Hunton Formation. Magnolia has a 1.057% working interest

● Magnolia’s Acreage

magnolia s current producing assets
Magnolia’s Current Producing Assets
  • 74 oil and / or gas producing properties
  • Excellent success rate:
    • Prior to AIM admission - positive return on capital on 22 out of first 23 wells as per the CPR – US$503k invested in 23 wells – currently valued at US$1,512,000 (the last five wells not included as just completed)
  • $105,000 revenues per quarter generated which excludes new wells – revenues cover corporate overheads
  • 24 months average payout on wells drilled
    • 1st well in Mississippi Lime Formation – 3 months
  • Producing assets volumetrics (as per CPR, prior to AIM admission):
    • 46.6MBO and 198.2MMCF proved reserves
    • 68.7MBO and 249.8MMCF proved and probable reserves (2P)
    • 975.6MBO and 1,175 MMCF proved, probable and possible reserves (3P)

“delivering on phase one”

phase two the next play the mississippi lime formation
Phase Two: “The next play” – The Mississippi Lime Formation
  • An oil and gas bearing, liquids rich formation in central Oklahoma
  • Identified by management as the next big play in onshore US
  • Field has been producing from several thousand vertical wells for more than 50 years
  • Horizontal drilling and fracture stimulation technologies have reopened these fields
  • Short-term payouts with long-term reserve potential
    • Participated in a horizontal well with Chesapeake Energy – 3 month payout
  • Initial production on wells drilled on this acreage reported up to 750 bopd
the mississippi lime formation
The Mississippi Lime Formation
  • Exhibits good reservoir characteristics ideally suited to horizontal drilling
  • Horizontal wells and modern fracture stimulation treatments unlocks the commercial viability of identified prospects
  • Relatively low drill costs between $2.4-$3.5 million:
    • Horizontal wells have relatively short lateral lengths of between 2,500ft and 5,000ft
    • Fracture stimulated in 6-12 stages – less than those in the Bakken play
    • Relatively shallow depths – 4,500ft to 7,000ft below surface
    • Current drilling times approximately 17-28 days from spud to total depth
  • Magnolia’s operatorship allows control of timing the proposing, drilling, and producing of its wells in Oklahoma
magnolia s mississippi formation interests
Magnolia’s Mississippi Formation Interests
  • Acquired 3,540 net acres with larger average working interest through ongoing leasing activity
    • Plans to drill a minimum three vertical wells on this acreage in the near term
  • 2 wells currently producing
  • 1 new well
  • 3 wells in various stages of drilling and/or completion
  • 5 wells elected to participate and waiting to be spud
  • At least an additional 5 wells expected in 2012
magnolia s mississippi acreage
Magnolia’s Mississippi Acreage

● Magnolia’s Acreage

participating in four mississippi formation wells
Participating in Four Mississippi Formation Wells

Initial production rates awaited from operator Chesapeake for Thomason well in which Magnolia has 9.375% Net Revenue Interest

milestones to date
Milestones to date

  • Low risk / high return business model focused on proven onshore US oil plays with low overheads
    • US predicted to become “the world’s largest producer of hydrocarbon liquids by 2020” (Citi Global Perspective & Solutions, April 2012)
  • Already producing and generating revenues
  • Established commercial relationships with leading oil and gas companies including ExxonMobil, Marathon Oil and Chesapeake Energy
  • 74 producing wells – 3 further wells in drilling / completion – 7 waiting to spud
  • To operate first well in 2012 with larger working interest – expected to lead to step change in net production and revenues generated
  • Plenty of newsflow expected – drilling results; ongoing leasing activity
  • Highly experienced management team with proven track record

For further information please contact:

Rita Whittington

Chief Operating Officer

Magnolia Petroleum PLC

18452 E 111th St

Broken Arrow, OK 74011

T: +01 918 449 8750

F: +01 918 449 0180

Frank Buhagiar/Lottie Brocklehurst

St Brides Media & Finance Ltd

Telephone +44 20 7236 1177

appendix extracts from competent person s report
Appendix: Extracts from Competent Person’s Report

“A well diversified portfolio of producing properties that provide a stable long life cash flow to underpin the company. It has a small, but well positioned presence in two of the most active unconventional resource plays in North America.”

“A state study evaluating oil reserves in the Three Forks Formation in western North Dakota concluded that there could be as much as 2 billion barrels of recoverable oil… based on more than 200 well measurement logs and 85 sets of testimony from technical experts.”

“The development of the horizontal drilling technology and the multistage fracture stimulation… have transformed once known, but marginal plays into highly profitable plays.”

“The North Dakota leasehold position has the potential… to double the expected recovery of hydrocarbons from the existing asset base providing significant upside to Magnolia.”