Magnolia’s Bakken/Three Forks Sanish Interests target the Bakken formation, which comprises three separate reservoirs, and the Three Forks Sanish Formation which sits above. The interests comprise of leases covering approximately 11,520 gross mineral acres (412 net mineral acres) distributed across a total of 28 sections all of which are located in Dunn, Williams and McKenzie Counties, North Dakota. The Bakken is being infill drilled to four wells per 1,280 acres spacing unit by other operators. The leases grant Magnolia the right to participate in 92 identified well locations (78 increased density locations) targeting the Bakken as well as 107 identified well locations (82 increased density locations) targeting the Three Forks Sanish.
Magnolia has the opportunity to produce oil on the same lease from both separate formations. The operator is entitled to drill 4 wells on each of the Bakken and Three Forks Sanish formations in each section. At the time of acquisition of the Company’s interests in the Bakken it was unknown that the Three Forks Sanish formation was a separate and distinct reservoir. It is now thought that the Three Forks Sanish formation could be equally or more productive than the Bakken formation.
Based on the current pace of development, the Directors expect it to take several years to develop fully Magnolia’s Bakken/Three Forks Sanish Interest; operators in this area expect to drill 4 wells per unit in each of the Middle Bakken and Three Forks Sanish formations. Magnolia has experienced average stabilised production rates of 400 barrels of oil per day on its multi-stage frac wells.