US-focused Magnolia Petroleum has raised $411,000 from the sale of 19 new wells in North Dakota and Oklahoma.
Magnolia said the move would help realign its investments into core counties in which Western Energy Development (WED) can participate.
Earlier this month, Magnolia entered into an exclusive agreement with WED to invest up to $18.5million in the Oklahoma oil and gas market.
The London-listed company has agreed to farm-out its interest in six Marathon Oil-operated wells in North Dakota for $150,000.
It has also divested its interest in the 13 Sympson wells it acquired in 2015 in Oklahoma for $261,000.
Magnolia had incurred $200,000 in drilling costs in those wells, but will no longer be required to meet any of its share of the future costs.
Magnolia will put $210,000 towards reducing its reserve based lending facility to $2.35million. The remaining funds will be used for working capital and for future investment.
Magnolia chief executive Rita Whittington said: “After securing what we regard as a game-changing agreement with WED to invest and manage on their behalf up to US$18.5 million of foreign capital under the US Immigrant Investor Programme, today’s transactions are part of a re-evaluation and realignment of our portfolio to participate alongside WED.
“By providing Magnolia with an additional revenue stream based on asset management services as well as low risk expansion of our lease position and well count, WED represents an excellent platform with which to fast-track our objective to generate substantial value, and we intend to take full advantage of this opportunity.
“The WED agreement and the multiple opportunities within our existing leases and wells in Oklahoma are the building blocks we intend to use to transform Magnolia into the significant US onshore oil and gas company we believe it can become. This is an exciting period for Magnolia and I look forward to providing further updates on our progress.”
The firm’s shares were up 13.51% to 0.1p on the London Stock Exchange in early trading.
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