Marathon Oil is preparing to spud six low risk, high impact wells in North Dakota.
AIM-listed Magnolia Petroleum will work alongside the American opeartor in the drilling of the wells in the Bakken and Three Forks Sanish formations.
The wells are close to Marathon’s best performing well in the region, the Lazy DE 24-7H – which as at March 2017 had recovered over 300,000 barrels of oil and 196,944 MCF of gas, is currently producing over 150 BOPD and 120 MCFD
Drilling costs have come down from over $10 million per well prior to the downturn to approximately $6.5 million per well.
The proposed Keystone XL Pipeline which will run through North Dakota when completed is also expected to significantly reduce transportation costs
Magnolia CEO, Rita Whittington said, “These six wells tick all the boxes: low risk due to being increased density wells; high impact as they are being drilled on leases which have already produced significant volumes of oil and gas; excellent address thanks to being located in the prolific Bakken and Three Forks Sanish formations; and highly attractive commercial returns as a result of having a low breakeven oil price of approximately US$40.
“Furthermore, the read across from an approximate halving in drilling costs in recent years is effectively a doubling of the potential return on investment.
“These wells therefore represent an excellent de-risked opportunity to rapidly scale up production and reserves, and we are looking to capitalise on this by either taking up our full participation rights or farming out a portion of our entitlement to interested parties.”
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