Magnolia Petroleum acquires acreage in Mississippi formation

Magnolia Petroleum has acquired 800 acres in the oil-producing Mississippi Lime formation in Oklahoma.

The AIM-listed US oil and gas exploration firm said the deal was in line with its growth strategy to operate wells in the Mississippi Formation.

It follows successful participation in the Sundance well with Chesapeake last year.

As part of the Mississippi deal, Magnolia has also acquired minority interests in leases over a further 284 net acres.

The Mississippi Formation is a commercial oil and gas system that has been producing from thousands of vertical wells for more than 50 years.

Magnolia expects to drill at least three vertical wells to test the formation on this acreage in the near future.

The company's chief operating officer, Rita Whittington, said the deal was a milestone for the company.

"The new acreage lies on the Mississippi formation in Oklahoma, recognised as having the potential to be the next big play in onshore US and where many of the leading players operating in the Bakken have recently been busy acquiring large tracts of land," she said.

Posted by Claire Manning