Magnolia Petroleum has secured a US$5 million three year Credit Facility ('the Credit Facility'). Combined with the Company's fast growing revenues from production, which as at 1 August 2013 stood at 214 boepd, the Credit Facility will provide funding for future drilling activity alongside established operators, as well as the acquisition of additional leases in proven US onshore formations.
The Credit Facility is a three year revolving line of credit with a nominal value of US$5 million. Interest is charged on credit draw down at Wall Street Journal Prime (currently 3.25%) +1.00%. No warrants or equity are to be issued as part of the facility. Under the terms of the credit line, an initial borrowing base limit of US$1.6 million has been set which will be reassessed on a six monthly basis and adjusted in line with the level of Magnolia's Proven Developed Producing reserves ('PDP'). The Directors expect the strong growth seen to date in the Company's PDP reserves will be maintained as a result of a pipeline of 50 new wells at various stages of development and the multiple well proposals being received.