MAGP Magnolia Pet

 
TIDMMAGP 
 
20 June 2018 
 
     Magnolia Petroleum Plc / Index: AIM / Epic: MAGP / Sector: Oil & Gas 
 
             Magnolia Petroleum plc ('Magnolia' or 'the Company') 
 
           Proposed Disposal of Oklahoma Assets and Issue of Equity 
 
Magnolia Petroleum plc, the US focused oil and gas exploration and production 
company announces it has signed a non-binding agreement with Western Energy 
Development ('WED') for the sale of 13 wells in Oklahoma for a consideration of 
$500,000. 
 
The disposal is in line with the Company's debt reduction programme. Together 
with the proposed disposal of the North Dakota assets, both of which are 
subject to shareholder consent and completion, the board estimates that the 
proceeds will be sufficient to satisfy the outstanding US$2 million balance of 
the reserve-based lending facility ('the Lending Facility') of its wholly owned 
operating subsidiary, Magnolia Petroleum, Inc. ('Magnolia Inc'). As detailed in 
the Company's announcement of 7 June 2018, the Company embarked on a debt 
reduction programme in response to the Bank's decision not to extend the 
Lending Facility and its requirement that the full outstanding amount be repaid 
or refinanced by 9 July 2018. 
 
As previously advised, the Bank has placed restrictions on the Company's bank 
account until the Lending Facility is repaid. In the meantime, the Company is 
carefully managing its working capital which is severely constrained. While the 
disposal of the North Dakota and Oklahoma assets, subject to shareholder 
consent, is expected to repay the lending facility in full and release the 
restrictions on the Company's bank account, it is likely that the Company will 
continue to need to carefully manage its working capital in the short term 
until the costs of the disposal and related legal work have been received.  It 
should be noted that the sale of the North Dakota and Oklahoma assets will 
materially reduce the Company's revenue and further disposals may be required 
to provide additional working capital. 
 
In order to assist the Company with costs to allow for the disposal and to 
provide a modest amount of additional working capital, the Company has raised GBP 
26,950 by way of subscription for 7,700,000 new ordinary shares at 0.35p per 
share ('Subscription Shares').  WED has agreed to participate in the 
subscription for 3,500,000 new ordinary shares which will increase its interest 
in the Company to approximately 26.1 per cent. Murray Street Investments LLC 
has subscribed for 4,200,000 new ordinary shares, representing 9.86 per cent. 
of the enlarged issued share capital. 
 
As WED holds more than 10 per cent. of the Company's ordinary shares, the 
subscription and the disposal, subject to shareholder consent, constitute 
related party transactions.  The Directors consider, having consulted with its 
nominated adviser, Cairn Financial Advisers LLP, that the terms of the 
transactions are fair and reasonable insofar as its shareholders are concerned. 
 
The Proposed Disposal is conditional on the granting of approval of the Board's 
asset disposal programme at the Company's general meeting which is to be held 
at 15:30 p.m. BST (09:30 a.m. local time) on 22 June 2018 at the offices of 
Pray Walker P.C., 100 West Fifth Street, Suite 900, Tulsa, OK 74103, USA ('the 
General Meeting'). 
 
The Company reminds shareholders that, in the event that the Lending Facility 
is not repaid or refinanced, it is expected that either the Bank will repossess 
and sell assets to pay off the debt, which is likely to be at a lower value for 
Shareholders than the Company could achieve, or the Directors will be required 
to commence Chapter 11 bankruptcy proceedings with respect to Magnolia Inc. 
This would also likely lead to a loss of control of the debt reduction 
programme and reduced value being achieved by the Company for its portfolio of 
wells. In this scenario, shareholders are unlikely to receive any value for the 
Company's portfolio of wells with all proceeds of sales being used to settle 
creditors and the costs of the Chapter 11 proceedings. 
 
Issue of Equity 
 
The Subscription Shares will rank pari passu in all respects with the Company's 
existing issued ordinary shares.  Application will be made for the admission of 
the Subscription Shares to trading on AIM and it is expected that admission 
will occur and that dealings will commence at 8.00 a.m. on or around 26 June 
2018. 
 
For the purposes of the Financial Conduct Authority's Disclosure and 
Transparency Rules, the Company announces that, following the issue of the 
Subscription Shares, the Company will have 42,606,992 ordinary shares in issue. 
 
The Company has no ordinary shares held in treasury. The total number of voting 
rights in the Company will therefore be 42,606,992. This figure may be used by 
shareholders in the Company as the denominator for the calculations by which 
they will determine if they are required to notify their interest in, or a 
change in their interest in, the share capital of the Company under the FCA's 
Disclosure and Transparency Rules. 
 
This announcement contains inside information for the purposes of Article 7 of 
EU Regulation 596/2014. 
 
                                 * * ENDS * * 
 
For further information on Magnolia Petroleum Plc visit http:// 
www.magnoliapetroleum.com/ or contact the following: 
 
Rita Whittington           Magnolia Petroleum Plc       +01918449 8750 
 
Jo Turner / James Caithie  Cairn Financial Advisers     +44207213 0880 
                           LLP 
 
Daniel Gee                 Cornhill Capital Limited     +44207710 9610 
 
Lottie Wadham              St Brides Partners Ltd       +44207236 1177 
 
Frank Buhagiar             St Brides Partners           +44207236 1177 
                           Ltd 
 
 
 
END 
 

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June 20, 2018 08:56 ET (12:56 GMT)

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