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Current MPET Stock Info

Magellan Petroleum Corporation (ticker: MPET) is an independent oil and gas exploration and production company with assets in the United States, Australia, and the United Kingdom. The development of a CO2-enhanced oil recovery program at its Poplar Dome assets in eastern Montana is its primary focus. Magellan’s U.K. properties are onshore and include the Weald and Wessex Basins prospective for unconventional shale oil and gas production.

The Poplar assets were covered in-depth by OAG 360 in a feature article.

Overview of MPET’s U.K. Operations

Magellan has interests in 11 production, exploration and development licenses (PEDL) across the Weald and Wessex Basins totaling approximately 200,000 net acres. Two blocks are wholly owned and operated by MPET, which are highlighted in yellow in the map below. Four other licenses are operated by Celtique Energy  in the Weald, which MPET defines as its core properties.  The remaining five blocks are operated by Northern Petroleum (ticker: NOP.L), and two wells have been completed through January 2014 as part of the partnership.

Pages from Presentation_at_Sidoti's_Semi-Annual_Microcap_ConferenceMagellan plans on receiving drilling approval across its acreage to prove the potential of hydrocarbons in both conventional and unconventional methods. The company plans on drilling up to three exploratory wells in its partnership with Celtique, with two intended for the PEDL 234 block (50% working interest). The first well is expected to be spud in Q3’14. A private company drilled a horizontal well located immediately to the east of MPET’s acreage in September 2013 and is currently waiting on regulatory approval to commence production testing. Magellan is watching the developments with interest and believes a successful process will add to the value of its acreage.

MPET is pursuing a farm-in partner for its Horse Hill prospect in PEDL 137. The prospect will be drilled vertically and target conventional plays while possibly logging information from unconventional formations. Results from the information will contribute to the MPET’s assessment of its Weald Basin properties.   The Horse Hill has already been granted planning approval from the local council, which authorizes the commencement of drilling operations pending a final approval from the national government.

United Kingdom Overview

The United Kingdom Onshore Operators Group (UKOOG) estimates the nation currently holds 1,300 trillion cubic feet (Tcf) onshore, according to a June 2013 estimate conducted by the British Geological Survey and the Department of Energy and Climate Change. The country consumes 3 Tcf of gas annually, 43% of which is imported.

The U.K.’s growing need for gas, coupled with high spot prices (roughly 233% higher than U.S. prices in November 2013) and existing infrastructure are all positives for producers in the region. However, a difficult terrain and high environmental standards can make the cost of hydrocarbon extraction up to three times more expensive than production in the United States.

Drilling Regulations

The UKOOG is responsible for handling all onshore drilling permits in the U.K. Due to the country’s strict regulations on shale producers, the process of receiving a permit to drill can be a lengthy ordeal. Companies must complete environmental assessments from the national agency, contract an examiner to approve the well design and receive planning permission from either the local or national council. Once the process is completed, the driller can finally apply for a permit from the national government. Fracing requires the submission of an entirely new plan, and is less likely to be accepted. The method has been approved in only 10% of onshore wells.

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.