 shares surged on Wednesday morning, amid an announcement of a boost in reserves and production.){kind=link}
Magnolia Petroleum (LON:MAGP) shares surged on Wednesday morning, amid an announcement of a boost in reserves and production.
The oil and gas exploration company noted a 112 percent increase in net PDP oil reserves to 283,000, alongside a 303 percent rise in total gas reserves.
In addition, it valuated its reserves $4 million, which the company asserted will provide strong asset backing to current market capitalisation. The report was a part of the a six month assessment of company debt holdings, and uncovered the increase in its US reserve producing locations.
Rita Whittington, COO of Magnolia, commented: “At $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.” she continued.
With regards to future outlook, Mrs Whittington remained optimistic about growth. She added:
“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.”
Magnolia has interests in over 140 producing properties primarily in two major project areas of Bakken shale in North Dakota and the Woodford/Mississippi and Hunton formations in Oklahoma. The company boasts more than 100 years of combined experience within the oil and energy exploration industry.
Shares in Magnolia Petroleum are currently trading up 30.11 percent as of 10.42AM (GMT).
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