While site preparation had been completed, projected drilling costs were higher than anticipated. Active discussions and focused work by the operator, Northern Petroleum, has yielded a cost that all parties find acceptable and the wells will proceed.

The operator continues to work on the sale of all of its UK properties, but has represented that there will be no further delay in the Markwells Wood spud.

In Montana, at East Poplar Unit and in the Northwest Poplar oil fields, the company will conduct residual oil saturation testing later in the summer to gain further data usable for CO2 miscible flood planning. A successful CO2 flood could produce up to 80mmbls at Poplar, based on a 10% industry average recovery rate of the field’s 800mmbls original oil in place.

Drilling two further infill oil wells is being considered as part of the company’s program to redevelop the field. The wells would test the Tyler and Nisku formations and could also provide data on Bakken shale quality. All formations have yielded hydrocarbons in the past. Magellan holds a direct and indirect 83.7% interest in the fields.

In Australia, Santos has placed its 65% operating interest in Mereenie oil and gas field and other interests in Palm Valley and Dingo gas fields up for sale.

The sale process is nearing completion and Magellan will participate in discussions as to how to best operate the respective fields going forward – including, but not limited to, the appointment of new Basin-wide operator, optimizing ownership interests with new partners, lowering unit operating expense, and developing the remaining two-thirds of west Mereenie for incremental oil production.

Remaining gas reserves, not yet committed to market, are seen as a viable fuel gas option in the construction of a large, new Methanol complex in Darwin using Evans Shoal feed gas.