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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