Magnolia Petroleum sells 19 wells in U.S. for $411,000
The group said it has agreed to farm-out its interest in six Marathon Oil-operated wells, targeting the Bakken and Three Forks Sanish formations in North Dakota, for an upfront cash consideration of $150,000. Magnolia said it did not incur any costs in relation to these interests.
In addition to receiving an upfront cash payment, Magnolia said it will retain an interest in all six wells via a back-in after payout arrangement, providing Magnolia with exposure to future production and cash flow.
As a result of the farm-out, Magnolia said it will not be required to pay any of the costs related to drilling and completing the six wells.
The group also said it has sold, for an upfront cash price of $261,000, its interest in the thirteen Sympson wells in Oklahoma which it acquired in 2015.
To date, Magnolia said it has incurred $200,000 in drilling costs for these wells, but will no longer be required to meet any of the future expenditure.
Magnolia said $210,000 of the consideration will be used to reduce the company's reserve-based lending facility, which will fall to $2.4 million following the payment. The remaining funds will be used for working capital and for future investment.
In addition to raising funds for the company, Magnolia said the divestment will assist the group in realigning its forthcoming well investments into core counties in which Western Energy Development LLC can invest. ■