Magellan Petroleum Corporation (MPET) (“Magellan” or the “Company”) today provided an update on the Horse Hill-1 well (“HH-1”) and PEDL 137, in which it owns a 35% direct working interest.
On May 11, 2015, UK Oil & Gas Investments PLC (“UKOG”), an interest owner in HH-1 and PEDL 137, announced that Xodus Group, an international energy consultancy, conducted an independent study of the conventional reservoir in the Upper Portland sandstone in PE0DL 137 and concluded that the “best estimate” (P50, with a 50% chance that the actual volume will be greater than the stated estimate, and a 50% chance that the actual volume will be less than the stated estimate) gross oil in place (“OIP”) amounted to 21.0 MMbbls. The announcement also clarified that the OIP should not be construed as recoverable resources and that meaningful estimates of recoverable oil from the Upper Portland can only be made following the proposed HH-1 flow test, which is planned for later in 2015.
The estimated OIP in the Upper Portland is incremental to estimated OIP in other formations present at HH-1, including the Kimmeridge, Oxford, and Liassic formations. Pursuant to a farmout agreement executed in 2013, Magellan will be carried for its share of the costs of the HH-1 flow test.
J. Thomas Wilson, President and CEO of Magellan, commented: “We are encouraged by Xodus’s technical analysis resulting in an increase to the estimated OIP in the Upper Portland interval. 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.”
UK General Elections
In the UK general elections held on May 7, 2015, the Conservative Party secured a majority of seats in the House of Commons, allowing for the continuation of a government under Prime Minister David Cameron.
Mr. Wilson commented: “We welcome the results of the UK general elections, as they represent a continuation of a government that has been generally favorable to the development of onshore hydrocarbon resources in the UK.”