MRQ Presentation May 2012. | MAGNOLIA PETROLEUM PLC | MAY 2012 2 Disclaimer This presentation is being made by or on behalf of Magnolia Petroleum Plc

MRQ Presentation

May 2012

| MAGNOLIA PETROLEUM PLC | MAY 20122

Disclaimer

This presentation is being made by or on behalf of Magnolia Petroleum Plc (“Company”). This presentation has not been approved for issue as a financial promotion for the purposes of section 21 of the Financial Services and Markets Act 2000 (“FSMA”) and is being supplied in the United Kingdom only to (i) persons who have professional experience in matters relating to investments (being "investment professionals" within the meaning of Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "FPO")) or (ii) persons falling within Article 49(2) ("high net worth companies, unincorporated associations etc") of the FPO or (iii) persons who are otherwise permitted by law to receive it. The information contained in the presentation is not intended to be viewed by, passed on or distributed (directly or indirectly) to, any other category of persons . Daniel Stewart & Company plc (“DS”) is authorised and regulated by the Financial Services Authority and will be acting as nominated adviser and broker to the Company in connection with the proposed placing of ordinary shares in the capital of the Company and admission of those ordinary shares to trading on the AIM market of London Stock Exchange plc.

Neither the presentation, nor any part of it, nor anything contained or referred to in it, nor the fact of its distribution, should form the basis of or be relied on in any connection with or act as an inducement in relation to a decision to purchase or subscribe for or enter into any contract or make any other commitment whatsoever in relation to any such securities. Recipients of this presentation who decide to subscribe for the new ordinary shares in the Company are reminded that any application to so subscribe may only be made on the basis set out in the formal placing letters and not on the information contained in this presentation. In the particular, details included in this presentation are subject to updating, revision, verification and amendment and refer to events as having occurred which have not occurred at the date of this presentation but which are expected to happen in the future. This presentation does not constitute a recommendation regarding the securities of the Company.

No reliance may be placed for any purpose whatsoever on the information contained in this presentation or on its completeness. No representation or warranty, express or implied, is given by the Company or DS or their respective directors, officers, employees, agents or advisers as to the accuracy, fairness, sufficiency or completeness of the information, opinions or beliefs contained in this presentation and, save in the case of fraud, no responsibility or liability is accepted by any of them for any loss, cost or damage suffered or incurred as a result of the reliance on such information, opinions or beliefs. In particular, no representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on, any projections, targets, estimates or forecasts and nothing in this presentation is or should be relied on as a promise or representation as to the future. Offers may only be made , and applications accepted, for new ordinary shares in the Company on the basis of formal placing letters.

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Magnolia Petroleum Plc is an AIM listed oil and gas exploration and production company that acquires and develops oil and gas properties located onshore in the United States in proven fields including the Bakken / Three Forks Sanish Formations located in North Dakota and the Mississippi Lime and Hunton / Woodford Formations located in Oklahoma


Overview

• AIM quoted cash generative oil and gas exploration and production company focussed on oil

• Strategy to acquire leases in US onshore hydrocarbon formations such as the Bakken (North Dakota) Mississippi Lime and Woodford/Hunton (Oklahoma) where technology has transformed recovery/flow rates

• Holds 5,180 net acres on which there are currently 74 producing wells

• Further significant growth in 2012 – to participate in and operate wells with larger working interests in the re-opening Mississippi Lime Formation (Oklahoma)

• Commercial relationships with leading oil and gas companies such as ExxonMobil, Marathon Oil and Chesapeake Energy

• Highly experienced management team skilled in the acquisition and development of oil and gas properties – leases secured at discounts to market value


Board of Directors

Rita WhittingtonCOO

A Petroleum Landman with 32 years’ experience in the oil and gas industry. She was a senior member of the asset management team at Primary Natural Resources I and II, where she was jointly responsible for company growth and the 3:1 return on equity upon divesting. Mrs Whittington is highly skilled in acquisitions, negotiations, operations and management of oil and gas properties.

Steven SneadCEO

Mr. Snead is a Certified Professional Landman with 35 years’ experience in the US onshore oil and gas industry during which he has owned and operated successful oil and gas operating and services companies. He founded and still owns Enerlex Inc. for the purpose of acquiring and managing royalty interests. He has extensive experience in oil and gas lease acquisition, drilling, development and operations.

John CubittNon-Executive Chairman

Over 31 years’ commercial experience in the oil exploration and production industry, following a period in academic research and graduate/post-graduate education in the UK and USA. A registered Chartered Geologist (CGeol) experienced in asset evaluation and project management, as well as board-level strategic and operational direction. Managing Director of Woburn Energy Plc (formerly Black Rock Oil & Gas Plc), an AIM-listed oil and gas exploration company, and also a director of various private oil industry consultancy and software companies.

Gavin BurnellNon-Executive

Mr. Burnell has 11 years’ experience of corporate finance, specialising in small-cap companies, and is a director of corporate finance at Northland Capital Partners Limited. He is also the founder and/or director of several companies in varying sectors including Globo Plc (AIM:GBO), Hot Rocks Investments Plc (PLUS:HRIP), Hellenic Capital Plc (PLUS:HECP) and Woodland Capital Limited.

Ronald HarwoodNon-Executive

Mr. Harwood has had active involvement in originating and developing projects in oil and gas exploration and production since 1981. He founded Bellwood Petroleum Corporation in 1985, Bellwood Petroleum, LLC in 2007 and Colony Petroleum, LLC in 1990. Colony secured US and international investors to participate in oil and gas exploration and production ventures originated and operated by American and Canadian independent oil and gas companies.


Key Data

Share Price 1.5p

Market AIM

Ticker MAGP

Market Capitalisation £10.33 million

Ordinary Shares in Issue 668,880,985

Nomad & Joint Broker Daniel Stewart & Company Plc

Joint Broker Northland Capital Partners Limited


Two Phase Growth Strategy

Phase 1 Phase 2

Identify reopening oil and gas plays early – acreage acquired at a discount to current market rates

Operate wells – control timing of well proposals and drilling

Focus on proven oil fields – lowering exploration risk

Acquire larger working interests in proven oil fields – offers scope for greater revenues

Drill wells with leading industry players – minimising capital commitments

Apply advanced technology to drilling – transforms recovery and flow rates

Apply advanced technology to drilling – transforms recovery and flow rates of wells

Target oil plays over gas – secure higher prices

Favour oil over gas plays – securing higher margins / returns

Generate greater revenues – recycle into wells and purchase additional acreage

Recycle revenues – generated by wells to acquire more leases and participate in further drilling


Existing Interests

Bakken / Three Forks Sanish Formations, North Dakota

Mississippi Lime / Woodford / Hunton Formations, Oklahoma Gas wells

Oil wells


The Bakken / Three Forks Sanish Formations (North Dakota)

• The Bakken:

• 3.0 - 4.3 billion boe estimated recoverable oil reserves (U.S. Geological Survey - USGS) • Covers 200,000 square miles of the subsurface • Horizontal drilling and fracture stimulation technology has reopened the play• Daily production estimated to exceed 700,000 bopd by 2013 and 1.2 MMbopd by 2019• 4,000 active wells – the majority drilled in last five years• Largest Bakken field produces circa 30,000 bopd from 60 wells

• Three Forks Sanish (TFS):

• Two billion boe estimated recoverable oil reserves (USGS) • A separate reservoir beneath the Bakken• At early stage of development• Three possible shelves• Initial production rate of first TFS well 2,303 bopd, a record for the Company


3-D visual of TFS & Bakken


Activity in the Bakken / Three Forks Sanish

4 wells preparing to be drilled on Magnolia’s acreage – yet to elect to participate


Magnolia’s Bakken / Three Forks Sanish Land Package

• 33,920 gross acres across 28 sections – 557 net acres

• Average working interest 1.46% – average net revenue interest 1.10%

• Acreage acquired at $1,500 per net mineral acre – current price $7,000• Benefits of early mover advantage

• 197 Proven development locations on current Bakken (92) and TFS acreage (105)• Low exploration risk

• Scope to drill four wells per unit in each formation due to TFS lying beneath the Bakken


Magnolia’s Current Production in Bakken / TFS

• 21 oil and / or gas producing properties located in Bakken and TFS• Over 800 bopd – average initial production on wells drilled on this acreage in various drilling and completion stages

• Seven new wells drilled• On course for significant step change in annualised daily production attributable to Magnolia by end of 2012

• Working interests up to 3.12% – net revenue interests 2.35%

• Majority of acreage in fairway of Marathon Oil’s Bakken Shale development• Marathon operator of majority of wells

“delivering on phase one”

In March 2012 North Dakota became the number 2 oil producing state after Texas


Woodford / Hunton Formations (Oklahoma)

Oklahoma

Magnolia Project Area – Canadian, Pottawatomie, Grady, Cleveland, Seminole and Stephens Counties


The Woodford / Hunton Formations (Oklahoma)

• The Woodford contains 1,281 producing wells after only four years of active drilling – majority in the dry gas window

• Horizontal drilling and fracture stimulation technology have reopened these reservoirs

• Activity in the Woodford Oil window play increasing – Continental Resources and Newfield, two leading independent oil and gas companies, among the most active

• Magnolia elected to participate in two wells with Cimarex, a leading independent oil and gas exploration and production company focussed on the US

• Ability to drill multiple wells in each formation per unit

“These plays fit our criteria of good investment returns and solid long-term growth potential.” Thomas Jorden, CEO of Cimarex Energy Co. (Source: Tulsa World)


Magnolia’s Woodford / Hunton Land Package & Production

• 57,600 gross acres across 87 sections – average working interests up to 2.65% – average net revenue interest 2.36%

• 19 oil and / or gas producing properties located in Woodford / Hunton covering Oklahoma, Texas

• 7 new wells now producing in the play

• Formations not exploited to the same extent as the Bakken

• 87 well proposals received on current acreage • Likely to be drilled over the next two to three years• Magnolia to focus on participating in wells targeting the oil play

• Estimated Ultimate Recoverable Reserves (EUR) per well reported in excess of 400,000 boe

• Initial production on well drilled on this acreage was over 300 bopd “delivering on phase one”


Magnolia’s Woodford/Hunton Acreage

● Magnolia’s Acreage

Zenyatta 2-6 Well, operated by Avalon, targets the Hunton Formation. Magnolia has a 1.057% working interest


Magnolia’s Current Producing Assets

• 74 oil and / or gas producing properties

• Excellent success rate: • Prior to AIM admission - positive return on capital on 22 out of

first 23 wells as per the CPR – US$503k invested in 23 wells – currently valued at US$1,512,000 (the last five wells not included as just completed)

• $105,000 revenues per quarter generated which excludes new wells – revenues cover corporate overheads

• 24 months average payout on wells drilled• 1st well in Mississippi Lime Formation – 3 months

• Producing assets volumetrics (as per CPR, prior to AIM admission):

• 46.6MBO and 198.2MMCF proved reserves• 68.7MBO and 249.8MMCF proved and probable reserves (2P)• 975.6MBO and 1,175 MMCF proved, probable and possible

reserves (3P)

“delivering on phase one”


Phase Two: “The next play” – The Mississippi Lime Formation

• An oil and gas bearing, liquids rich formation in central Oklahoma

• Identified by management as the next big play in onshore US

• Field has been producing from several thousand vertical wells for more than 50 years

• Horizontal drilling and fracture stimulation technologies have reopened these fields

• Short-term payouts with long-term reserve potential

• Participated in a horizontal well with Chesapeake Energy – 3 month payout

• Initial production on wells drilled on this acreage reported up to 750 bopd


3-D map of Mississippi Lime Formation


The Mississippi Lime Formation

• Exhibits good reservoir characteristics ideally suited to horizontal drilling

• Horizontal wells and modern fracture stimulation treatments unlocks the commercial viability of identified prospects

• Relatively low drill costs between $2.4-$3.5 million: • Horizontal wells have relatively short lateral lengths of between 2,500ft and 5,000ft• Fracture stimulated in 6-12 stages – less than those in the Bakken play • Relatively shallow depths – 4,500ft to 7,000ft below surface• Current drilling times approximately 17-28 days from spud to total depth

• Magnolia’s operatorship allows control of timing the proposing, drilling, and producing of its wells in Oklahoma


Magnolia’s Mississippi Formation Interests

• Acquired 3,540 net acres with larger average working interest through ongoing leasing activity

• Plans to drill a minimum three vertical wells on this acreage in the near term

• 2 wells currently producing• 1 new well• 3 wells in various stages of drilling and/or completion• 5 wells elected to participate and waiting to be spud• At least an additional 5 wells expected in 2012

Non-operating

[Alfalfa, Garfield, Major & Woods Counties]

28,840 gross acres

~ 830 net acres

2.88% average working interest

Operating

[Noble & Osage Counties]

21,760 gross acres

~ 2,710 net acres

10.86% average working interest


Magnolia’s Mississippi Acreage

● Magnolia’s Acreage


Participating in Four Mississippi Formation Wells

Initial production rates awaited from operator Chesapeake for Thomason well in which Magnolia has 9.375% Net Revenue Interest


Milestones to date

Completed Milestones

Listed on AIM market, raised £2.5 million to date

Daily production and revenues significantly increased – latest quarterly revenues US$105,000compared to US$60,000 at time of listing

Acquired licence to operate wells in Oklahoma

Acquired 3,540 acres with larger working interests in the Mississippi Lime Formation

Strengthened commercial relationships with leading oil and gas companiese.g. ExxonMobil, Marathon Oil, Chesapeake Energy

Commissioned CPR – £11m NPV10 of 2P Reserves

Number of interests in producing properties increased to 74


Future Milestones

Future Targeted Milestones

Significant increase in net bopd and revenues expected this year

Increase number of participating wells to 100

To drill first well as operator in Oklahoma

Acquire further acreage in proven formations onshore US with larger working interests

Updated CPR expected to lead to reserve upgrade


Value Drivers

Low exploration risk Focus on proven hydrocarbon formations

Low execution risk Participates with leading oil and gas cos.

Low entry costs to (re)opening plays Early mover advantage

Exceptional drilling success rate Already generating cash flow that covers corporate overheads

Broad spread of interests Diversifies risk

Focus on oil Higher margins than gas

2012 step up in growth To drill and operate first well with larger working interest

Current valuation underpinned by reserves

Updated CPR due in Q1 2013 expected to lead to reserve upgrade

High calibre management team Proven track record in creating shareholder value


Summary

• Low risk / high return business model focused on proven onshore US oil plays with low overheads

• US predicted to become “the world’s largest producer of hydrocarbon liquids by 2020” (Citi Global Perspective & Solutions, April 2012)

• Already producing and generating revenues

• Established commercial relationships with leading oil and gas companies including ExxonMobil, Marathon Oil and Chesapeake Energy

• 74 producing wells – 3 further wells in drilling / completion – 7 waiting to spud

• To operate first well in 2012 with larger working interest – expected to lead to step change in net production and revenues generated

• Plenty of newsflow expected – drilling results; ongoing leasing activity

• Highly experienced management team with proven track record


Contact

For further information please contact:

Rita WhittingtonChief Operating OfficerMagnolia Petroleum PLC18452 E 111th StBroken Arrow, OK 74011

T: +01 918 449 8750F: +01 918 449 0180www.magnoliapetroleum.com

Frank Buhagiar/Lottie BrocklehurstSt Brides Media & Finance LtdTelephone +44 20 7236 1177


Appendix: Summary of Magnolia Reserves

As of October 1, 2011

Net Reserves Net Cash Flow

Oil &

Condensate

Natural

Gas

Future

Net

Revenue

Future Net

OPEX

Future Net

Capital

Future Net Cash

Flow

NPV Disc @

10%

Reserve Class/Category (Mbbl) (MMcf) ($000) ($000) ($000) ($000) ($000)

Proved Developed Producing 24.2 146.5 2,963 959 - 2,004 919

Proved Developed Non-

Producing

14.4 31.0 1,446 427 103 917 408

Proved Undeveloped 8.0 20.7 818 200 187 431 205

Total Proved 46.6 198.2 5,226 1,585 289 3,352 1,531

Probable Reserves 22.1 51.6 2,229 465 441 1,323 651

Total 2P 68.7 249.8 7,455 2,050 731 4,674 2,182

Possible Reserves 15.9 34.2 1,592 356 314 922 431

Bakken Increased Density 404 404 41,300 7,900 4,900 28,500 7,500

Three Forks Sanish 487 487 51,200 10,000 6,900 34,300 7,900

Total 3P 975.6 1,175.0 101,547 20,305 12,845 68,396 18,013


Appendix: Extracts from Competent Person’s Report

“A well diversified portfolio of producing properties that provide a stable long life cash flow to underpin the company. It has a small, but well positioned presence in two of the most active unconventional resource plays in North America.”

“A state study evaluating oil reserves in the Three Forks Formation in western North Dakota concluded that there could be as much as 2 billion barrels of recoverable oil… based on more than 200 well measurement logs and 85 sets of testimony from technical experts.”

“The development of the horizontal drilling technology and the multistage fracture stimulation… have transformed once known, but marginal plays into highly profitable plays.”

“The North Dakota leasehold position has the potential… to double the expected recovery of hydrocarbons from the existing asset base providing significant upside to Magnolia.”


Documents

MRQ Presentation May 2012. | MAGNOLIA PETROLEUM PLC | MAY 2012 2 Disclaimer This presentation is being made by or on behalf of Magnolia Petroleum Plc