Magellan Petroleum Corporation (MPET) (“Magellan” or the “Company”) today announced that it has concluded that the CO2-enhanced oil recovery (“CO2-EOR”) pilot project at Poplar (the “Pilot”) has been a technical success, and demonstrates that the CO2-EOR technique is a technically viable tertiary recovery method in the Charles formation at Poplar Dome. The Company reached this conclusion on the basis of the oil production response observed in, and other injection and pressure data gathered from, the Pilot.
CO2 injection into the Pilot’s single injector well began in August 2014. In October, the Pilot’s four producer wells were opened for production. Since then, oil production has increased in three of the four producer wells in response to CO2 injection, and the Company expects the fourth well will demonstrate an oil production response soon. The current run-rate of production from the three producing wells together is between 50 and 75 bopd and is expected to increase gradually through the summer.
J. Thomas Wilson, President and CEO of the Company, commented: “Demonstrating that CO2-EOR works in practice at Poplar is a major milestone that substantially de-risks the technical feasibility aspects of this project. Our next objective is to demonstrate that this technique is economic at our field, which is largely a function of (i) how much CO2 a full field development will require and (ii) what the cost of that CO2 will be. A few more months of data from the Pilot should address the former, and our ongoing discussions with CO2suppliers are addressing the latter. Although oil prices also affect the economics of the project and the current oil price environment remains depressed, we believe that the potential long-term value of CO2-EOR development at Poplar is encouraging, since a full field CO2-EOR development at Poplar would require approximately two to three years to implement, and CO2-EOR projects tend to yield stable production over multi-decade time frames. Overall, the Pilot continues to exceed our expectations, and we believe that we are on track to establish the economic viability and attractiveness of Poplar as a prime CO2-EOR candidate.”
Utah CO2 Option Update
The Company also announced today that the partners in Utah CO2 LLC have negotiated an extension by two months of their option to acquire the Farnham Dome CO2 reservoir that was originally scheduled to expire on March 31, 2015. This extension will allow more time to negotiate with potential off-takers of Farnham Dome’s CO2 before determining whether or not to exercise the option.
CAUTIONARY INFORMATION ABOUT FORWARD-LOOKING STATEMENTS
Statements in this press release, including forecasts or projections that are not historical in nature, are intended to be, and are hereby identified as, forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. The words “believe”, “estimate”, “evaluate”, “expect”, “forecast”, “initial”, “intend”, “plan”, “project”, “should”, “tend”, “will”, and similar expressions are intended to identify forward-looking statements. These statements about the Company may relate to its businesses and prospects, planned capital projects and expenditures, increases or decreases in oil and gas production and reserves, estimates regarding recoverable resource potential, revenues, expenses, and operating cash flows, progress in developing the Company’s projects, future values of those projects, and other matters that involve a number of risks and uncertainties that may cause actual results to differ materially from expectations expressed or implied in the forward-looking statements. Among these risks and uncertainties are the following: uncertainties associated with our planned CO2-EOR program at Poplar, including uncertainties about the technical and economic viability of CO2-EOR techniques at Poplar, the drilling results from the pilot project, the results of CO2 injection, including the ability to sustain CO2pressures at sufficient effective levels to sweep the oil across the formation to production wells, the Company’s ability to acquire a long term CO2supply for the program, possible adverse changes to the CO2-EOR industry, possible geologic or other obstacles to the further development of the Company’s Poplar project, possible geologic or other obstacles to obtaining the anticipated production from the Company’s CO2-EOR projects and the timing of development milestones, uncertainties inherent in projecting future rates of production from CO2-EOR activities, and whether enhanced production expected from CO2-EOR will be comparable to other CO2-EOR projects or otherwise meet the Company’s expectations; the uncertain nature of oil and gas prices, including uncertainties about the duration of the currently depressed oil commodity price environment and the related impact on the Company’s revenues, project developments, and ability to obtain financing; uncertainties regarding the Company’s ability to successfully acquire CO2 at Farnham Dome in Utah and realize the expected benefits thereof; uncertainties regarding the Company’s ability to maintain sufficient liquidity and capital resources to implement the Company’s projects; and other matters discussed in the “Risk Factors” sections of the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. Any forward-looking information provided in this release should be considered with these factors in mind. The Company assumes no obligation to update any forward-looking statements contained in this press release, whether as a result of new information, future events, or otherwise, except as required by securities laws.
Magellan Petroleum Corporation is an independent oil and gas exploration and production company focused on the development of CO2-EOR projects in the Rocky Mountain region. Historically active internationally, Magellan also owns significant exploration acreage in the Weald Basin, onshore UK, and an exploration block, NT/P82, in the Bonaparte Basin, offshore Northern Territory, Australia, which the Company currently plans to farmout. Our strategy is to enhance shareholder value by maximizing the value of our CO2-EOR business and our international projects. We are committed to efficiently investing financial, technical, and management capital in our projects in order to achieve the greatest risk-adjusted value and returns for our shareholders. Magellan routinely posts important information about the Company on its website at www.magellanpetroleum.com.