Oil and gas production firm Magnolia Petroleum on Thursday signed a non-binding agreement for the sale of its 31 wells in North Dakota for a total consideration of $1.5m.
Furthermore, the AIM-traded company announced the sale of its Roger Swartz 1 well in Oklahoma for approximately $30,000.

The disposals are part of the company's debt reduction programme, and subject to shareholder consent at the company's annual general meeting on 22 June, which is intended to clear a large proportion of an outstanding balance of $2m of the reserve-based lending facility of its wholly owned operating subsidiary.

The programme arises from the fact that the bank declined to extend the lending facility, instead requiring the full outstanding amount to be repaid or refinanced by 9 July.

If repayment or refinancing is not achieved in this deadline the bank is likely to repossess and sell company assets.

Magnolia Petroleum said this would 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.

The company currently holds interests in 108 wells in North Dakota, Mississippi and Oklahoma.

As of 0928 BST, Magnolia Petroleum's shares were up 17.65% at 0.50p.

Related share prices
Magnolia Petroleum (MAGP) share price