The company says in a trading update that since admission to PLUS in October, it has participated in seven wells in the prolific Bakken formation with an average working interest of 0.79%.

All wells have been successfully tested by the operators, Marathon Oil and Hunt Oil, and have been completed and are producing. The wells are averaging approximately 490 barrels of oil per day.

Magnolia is also participating with Chesapeake Exploration in a horizontal drilling play in Woods County, Oklahoma. It says the formation being drilled has the potential of being a reservoir comparable to the Bakken in oil production.

To enable Magnolia to participate in a wide range of Marathon's currently drilling opportunities, an agreement has been signed with Hangtown Oil to farm out Magnolia's interest in five proposed middle Bakken wells to be drilled by Marathon.

Magnolia will not be required to make any contribution towards the cost of drilling and completing the wells but will receive 25% of the working interest revenue once the cost of drilling and completing has been recovered, expected within nine to 12 months.

The company's monthly oil and gas production revenues have increased from approximately $4,500 in September, prior to admission, to over $40,000 in December.

COO Rita Whittington said, 'The ability to farm out Magnolia's interest in these five wells has greatly reinforced our view about the Bakken area.

'Magnolia anticipates another eight to ten wells to be proposed by Marathon this year. We are very excited to be able to participate in an area with such great potential and are very pleased so far with the production we have achieved.'