Magnolia Petroleum is set to participate in three additional increased density wells in Oklahoma, US, following the successful Gilchrist 2016 1-36H well.
SandRidge Energy, the operator of the Gilchrist well, will drill the additional wells on the same spacing unit to maximise the recovery of reserves.
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The development comes after the operator achieved initial production (IP) rates of 770boepd for the well.
Magnolia, along with Western Energy Development (WED), has a combined working interest (WI) of 1.57% in the spacing unit that hosts Gilchrist and where the additional increased density wells are set to be drilled.
Magnolia Petroleum CEO Rita Whittington said: “Thanks to Gilchrist’s better than expected IP rates, these three new wells have been materially de-risked, specifically in terms of geological risk.
“They therefore have the potential to significantly add to the $200,000 of value generated for Magnolia by the successful $500,000 pilot programme with WED.
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By GlobalData“We are focused on replicating this success many times over and with this in mind, we are currently investing the first $500,000 tranche of capital received under the $18.5m WED agreement.”
Pursuant to the agreement with WED, Magnolia is required to fund its share of the costs of drilling the increased density wells.
Under a pilot programme, which comprises Gilchrist and the additional increased density wells, the company invested $500,000 on behalf of WED into qualifying oil and gas properties in Oklahoma.
Following the success of the programme, Magnolia reached an agreement to invest, on behalf of WED, up to $18.5m into the Oklahoma oil and gas market, in exchange for a 25% carried working interest in the first well of a spacing unit.
