Mangnolia Petroleum will begin drilling 10 new wells in Oklahoma with onshore operator Continental Resources.
The companies will be targeting gas in the Woodford formation where Continental has seen previous success.
The wells are located in the South Central Oklahoma Province (SCOOP) which has already delivered more than three million barrels of conventional oil from 60 reservoirs.
Magnolia’s total cost for all 10 wells is estimated at US$590,000 – with the full cost of each well ranging from $8.8 million to $13.1 million.
The company said the new wells are lower-risk increased density wells located in two sections and form part of Magnolia’s strategy to more evenly balance its oil and gas product mix.
The first well is expected to spud in October 2015 with subsequent wells drilled back to back through to March 2016.
Rita Whittington, chief operating officer, said: “From the outset our business model has been based on providing shareholders with exposure to the US onshore energy revolution while minimising risk, as highlighted by our mantra ‘no one well will make or break us.
“This has seen us build a portfolio of 203 producing wells, split 56% oil / 44% gas, in which our average interest is approximately 3%. Increasing our gas production ought to be viewed with risk management in mind. Due to gas markets being more local than oil, this move will further diversify our revenues.”
Recommended for you
