Operational Updates | General News | Reserves

Magellan Touts Results from Poplar Study; Updates Ops

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Magellan Petroleum Corporation provided updates on several of its projects.

Poplar

Magellan has completed a detailed reservoir engineering study using data from the CO₂-enhanced oil recovery pilot, and with the results of that study has estimated that approximately 80 to 100 MMboe may be recoverable from the B-1 and B-2 zones of the Charles formation at Poplar using the CO₂-EOR technique over approximately 40 years. This estimate, which does not constitute reserves as defined by the SEC, is approximately double the amount of previous estimates.

J. Thomas Wilson, President and CEO of the Company, commented, "The data now shows that Poplar is even larger than first thought in terms of the estimated amount of recoverable barrels of oil from CO₂-EOR. We continue to work through the economics of this project, in particular the capital costs associated with full field development and the efficiency of the CO₂ sweep across the formation to production wells. We believe that, subject to finalizing our economic evaluation, a project of this magnitude and duration should be economic even in the current oil price environment."

Utah CO2

On May 28, 2015, the partners in Utah CO2 LLC, in which the Company holds a 51% interest, elected to exercise Utah CO2's option to enter into an agreement for long-term CO₂supply from Farnham Dome, located in Carbon County, Utah. This election was made pursuant to the terms of the option agreement entered into between Utah CO2 and Savoy Energy on December 1, 2014, as amended.

Utah CO2 will now negotiate with Savoy to enter into a complete CO₂ purchase agreement based on the terms and conditions set forth in the Option Agreement. Under those terms, no upfront consideration is due to Savoy, and Utah CO2 will not be obligated to purchase CO₂ from Savoy until the third anniversary of the date of the CO₂ purchase agreement.

Mr. Wilson commented: "We remain very excited by the CO₂ potential of central Utah. We believe that the ability to purchase CO₂ at an attractive price from Farnham Dome is a valuable asset to the Company. We will continue to work to combine Farnham Dome's CO₂ with an oil field to create value for Utah CO2, its partners, and their shareholders."

Central Petroleum Limited

On June 4, 2015, Central, in which Magellan holds an 11% ownership stake, announced a definitive agreement to acquire operatorship of, and 50% of the working interest in, the Mereenie Field from Santos. The acquisition is subject to regulatory approvals and expansion of Central's existing debt facility.

Mr. Wilson commented, "This transaction will bring all the fields in the Amadeus Basin under one operator for the first time, allowing Central to realize tremendous operating flexibility and economies of scale. It will also allow Central to contribute substantial productive capacity toward the planned pipeline interconnect between Northern Territory and the eastern Australian gas markets. We believe this acquisition represents substantial value upside for Central in the short to medium term."

UK Horse Hill

On June 5, 2015, UK Oil & Gas Investments PLC (UKOG), an interest owner in the Horse Hill-1 well (HH-1) and PEDL 137, in which Magellan owns a 35% interest, announced that Schlumberger, one of the leading suppliers of technology, integrated project management, and information solutions to customers working in the global oil and gas industry, has independently assessed the petrophysics of HH-1. Shlumberger has estimated overall Oil In Place for the Jurassic section of the well to be approximately 271 MMboe per square mile, consisting of 16.2 MMboe per square mile for the conventional Upper Portland Sand reservoir discovery and 255.2 MMboe per square mile for the tight limestone and mudstone plays of the Kimmeridge, Oxford Clay, and Liassic.

Mr. Wilson commented, "We are encouraged by the consistency of the potential OIP in the Upper Portland and Kimmeridge formations estimated by several reputable consulting firms, including Schlumberger, Nutech, and Xodus. These estimates also support our view of the very large oil potential of the Kimmeridge in the Weald Basin. We believe the outcome of the flow test of the Upper Portland is the next critical step, which, if successful, could allow us to move the license into the production period and start producing oil from HH-1. Our strategy is also focused on establishing the potential of the Kimmeridge and Liassic formations in the Weald Basin, which we believe could contain significant hydrocarbon prospects."

Next Steps

Mr. Wilson commented, "The progress we made with several of the Company's projects will put us in a position to evaluate the most appropriate options and alternatives to create value for the Company's shareholders."