CALGARY, May 28, 2015 /PRNewswire/ - Madalena Energy Inc.
("Madalena" or the "Company") (TSXV: MVN and OTC:
MDLNF) is pleased to announce its financial and operating
results for the three months ended March 31,
2015. Selected financial and operational information is
outlined below and should be read in conjunction with Madalena's
unaudited interim financial statements for the three months ended
March 31, 2015 and the associated
management's discussion and analysis, which are available for
review under the Company's profile at www.sedar.com and on the
Company's website at www.madalenaenergy.com.
HIGHLIGHTS
($CDN unless otherwise
specified)
Highlights for the three months ended March 31, 2015 included:
- In Q1–2015, Madalena's average realized prices in Argentina for crude oil and NGLs was
$90.43/bbl and for natural gas was
$5.30/mcf;
- Oil and gas production increased 215% to 3,586 boe/d compared
to 1,141 boe/d in Q1-2014;
- Current production is approximately 4,000 boe/d (79% oil and
NGLs);
- Realized a 22% increase in oil and gas revenue per boe to
$74.78/boe compared to $61.38/boe in Q1-2014;
- Corporate operating netbacks increased 12% to $33.18/boe compared to $29.62/boe in Q1-2014;
- Argentina operating netbacks
averaged $37.16/boe in Q1-2015;
- Funds flow from operations increased 68% and 27% to
$6.0 million compared to $3.6 million and $4.4
million in Q1-2014 and Q4 – 2014, respectively;
- Drilled, completed and placed on production Madalena's fourth
Sierras Blancas horizontal well at Coiron Amargo (35% WI);
- Successfully drilled a Loma Montosa light oil horizontal well
(100% WI) and completed with a 12 stage frac setting up a scaleable
resource play for development; and
- Entered into a three year evaluation phase contract at Coiron
Amargo Sur (southern portion of the Coiron Amargo block), securing
key unconventional Vaca Muerta shale acreage.
SUMMARY FINANCIAL AND OPERATIONAL RESULTS
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Three months ended March
31
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2015
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2014
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Financial -
Canadian $000s, except per share amounts
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Oil and gas
revenue
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24,135
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6,306
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Funds flow from
operations(1)
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6,006
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3,569
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Per share - basic
& diluted(1)
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0.01
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0.01
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Net income
(loss)
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(1,771)
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297
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Per share – basic and
diluted
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(0.00)
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0.00
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Capital
expenditures
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14,568
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12,548
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Working
capital
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3,187
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19,463
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Equity
outstanding – 000s
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Common
shares
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540,316
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396,886
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Stock
options
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24,165
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19,530
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Operating
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Average Daily
Sales
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Crude oil and Ngls –
Bbls/d
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2,801
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644
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Natural gas –
Mcf/d
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4,711
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2,979
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Total - boe
/d
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3,586
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1,141
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Average Sales
Prices
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Argentina
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Crude oil and NGLs –
$/bbl
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90.43
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85.31
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Natural gas –
$/mcf
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5.30
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4.60
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Total -
$/boe
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78.91
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82.82
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Canada
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Crude oil and NGLs –
$/bbl
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35.87
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78.59
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Natural gas –
$/mcf
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2.81
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5.87
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Total -
$/boe
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26.78
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53.44
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Corporate
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Crude oil and NGLs –
$/bbl
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87.54
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81.66
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Natural gas –
$/mcf
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4.87
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5.84
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Total -
$/boe
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74.78
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61.38
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Corporate
Operating Netbacks(2)
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33.18
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29.62
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(1)
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This table
contains the term "funds flow from operations", which is a non-GAAP
measure
and should not be considered an alternative to, or more meaningful
than "cash flows from
operating activities" as determined in accordance with
International Financial Reporting
Standards ("IFRS") as an indicator of the Company's performance.
Funds flow from
operations and funds flow from operations per share (basic and
diluted) do not have any
standardized meanings prescribed by IFRS and may not be comparable
with the
calculation of similar measures for other entities. Management uses
funds flow from
operations to analyze operating performance and considers funds
flow from operations
to be a key measure as it demonstrates the Company's ability to
generate the cash
necessary to fund future capital investment. The reconciliation
between funds flow from
operations and cash flows from operating activities can be found in
"Management's
Discussion and Analysis". Funds flow from operations per share is
calculated using the
basic and diluted weighted average number of shares for the period,
consistent with the
calculations of earnings per share.
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(2)
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Operating netback
is a non-GAAP measure calculated as the average per boe of the
Company's oil and gas sales, less royalties and operating
costs.
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ARGENTINA OPERATIONS
UPDATE
Puesto Morales (100% WI) Field – Horizontal Drilling of Loma
Montosa Oil Resource Play
- As disclosed in a news release dated April 8, 2015, Madalena successfully drilled and
completed a Loma Montosa horizontal well (PMS-1135(h)) with a 12
stage frac. The well tested 860 boe/d and was tied into existing
facilities on April 10, 2015. The
well is still flowing up 5.5" casing with the first 30 days of
production averaging 302 bopd of oil and an estimated 1,600 mcf/d
of gas for a total of 570 boe/d.
- Production results continue to exceed the Company's type curve
for the Loma Montosa resource play.
- The Company is in the process of installing a production string
(tubing) to optimize the flow and to allow for future pumping
operations on the well.
- Madalena has a large inventory of horizontal development
locations on the Puesto Morales block and the Company is currently
taking steps to survey and prepare environmental permit
applications for follow-up locations to the recent PMS-1135(h)
horizontal success.
Coiron Amargo (35% WI) Block – Block Contract Update &
Sierras Blancas Horizontal Exploitation
- The Coiron Amargo block (34,951 net acres) is divided into two
regions called Coiron Amargo Norte (northern portion of the block)
and Coiron Amargo Sur (southern portion of the block). Coiron
Amargo Norte is currently held under a 25 year exploitation
(development) concession until 2038 with no further firm
commitments remaining on this portion of the block.
- Following a successful block renegotiation process the Company
received approval on April 16, 2015,
by way of an official decree signed by the Province of Neuquén, for
a three year evaluation phase contract on Coiron Amargo Sur (south
portion of the block). Coiron Amargo Sur is a key unconventional
shale block located in the heart of the oil window for the Vaca
Muerta shale and is a core asset within the Company's portfolio.
Madalena and its partners have until November 8, 2017 to further evaluate the southern
portion of the block. The Company's share of the work commitment is
US$17.5 million which is to be
incurred by November 8, 2017.
Following this three year evaluation phase, Madalena is eligible to
enter into a further exploitation (development) concession and/or
enter into additional evaluation phase periods to further evaluate
Coiron Amargo Sur.
- As disclosed in a news release dated April 8, 2015, the Company's fourth Sierras
Blancas horizontal well at Coiron Amargo Norte CAN-16h is now on
production. The average production over the first 60 days was 450
bopd of oil (158 bopd WI) and 675 mcf/d (236 mcf/d WI) for a total
of 489 boe/d (171 boe/d WI). In early May the choke was opened to 7
mm and production increased to 480 bopd (168 bopd WI) and 1,000
mcf/d (350 mcf/d WI) for a total of 650 boe/d (227 boe/d WI) at a
flowing pressure of 1,225 psi.
Regulated Argentina Oil AND GAS Price Market
- In Argentina, oil prices are
regulated and set by the Government for product sold into the
domestic oil market, which is where Madalena sells the oil from its
Argentine operations. When world prices fell sharply in the latter
half of 2014 and into 2015, Argentina prices continued to remain
relatively stable. The Medanito oil price posting for April and
May 2015 has been set at US$76.00/bbl compared to a Q1 2015 average of
US$76.30/bbl. Madalena's average
discount to this posting for quality and transportation is
approximately US$4.00/bbl.
- On February 2, 2015 the
Government of Argentina announced
a new oil incentive program. The program runs from January 1, 2015 to December 31, 2015 and could be extended for one
year. To stimulate production and to provide an additional
incentive to producers to invest further, the Government of
Argentina has set a US$3.00/bbl royalty free bonus payment on all
production for companies of Madalena's size which are able to keep
their quarterly production above 95% of its Q4-2014 production
levels. For the first quarter of 2015 Madalena believes it has
qualified for this incentive and is making the appropriate
application to receive this bonus payment on its Argentina production.
- Natural gas prices in Argentina are fixed by the regulator in
US$/mmbtu. For Madalena's current producing fields, the Company has
recently entered into a contract in Argentina for the winter period between May to
September 2015 setting gas prices at
US$5.30/mmbtu compared to last winter
(2014) at US$5.20/mmbtu during the
same period.
CANADA OPERATIONS
UPDATE
- As disclosed in a news release dated January 30, 2015, Madalena was advised by Keyera
Corp. ("Keyera") that Keyera's Paddle River gas plant would
be shut down for a minimum period of two months commencing
February 1, 2015 due to current
economic conditions and recent commodity price declines in
North America. As a result of the
gas plant shut-down, Madalena temporarily suspended production of
approximately 660 boe/d in Western
Canada (40% oil) on February 1,
2015.
- As of March 10, 2015, the Company
was successful in restoring 140 boe/d (100% oil) of the suspended
production.
- The Company along with Keyera has been evaluating various
alternatives to bring the remaining shut-in volumes (estimated 400
boe/d) in the Paddle River area back on-stream. Madalena expects to
restore the remainder of the Company's Western Canadian production
in the coming months.
CREDIT FACILITIES UPDATE
Argentine Debt Facility
As at March 31, 2015, there were no credit facilities
in place in Argentina. With 90% of
the Company's conventional oil and gas assets in Argentina and a solid cash flow platform from
its operations, Madalena has sufficient assets to leverage its
balance sheet. On May 28, 2015, as an
initial step in its anticipated broader debt financing strategy,
Madalena closed an AR$90 million (ninety million Argentine Pesos or
$12.5 million Canadian dollars) loan
with Industrial and Commercial Bank of China (Argentina) S.A.
Canadian Debt Facility
Subsequent to the year end, in
conjunction with the annual review, Madalena's Canadian credit
facility was reduced from $10 million
to $7 million, of which the maximum
draw is currently limited to $3.5
million. In addition to this credit facility, the Company's
acquisition/development demand loan credit facility remains
available to a maximum of $3 million.
As of March 31, 2015, the Company had
utilized $2.5 million of the
operating demand loan credit facility and had cash on hand in
Canada in the amount of
US$2.1 million. The
acquisition/development demand loan credit facility was unutilized
at March 31, 2015. Both the credit
and acquisition/development facilities are subject to a periodic
review by the bank and the next review is scheduled on or before
June 30, 2015.
2015 OUTLOOK
Madalena's current production is approximately 4,000 boe/d (79%
oil and NGLs) with 3,800 boe/d (80 % oil and NGLs) in Argentina and 200 boe/d (55% oil & NGLs)
in Canada.
Over the last several months, Madalena has commenced operational
planning related to the drilling of four strategic resource plays
in Argentina and continued
horizontal development of its light oil assets. The four
strategic resource plays include the Loma Montosa oil resource
play, Vaca Muerta shale, Lower Agrio shale and Mulichinco
liquids-rich gas resource play.
At Coiron Amargo Madalena and its partners plan to
drill additional horizontal wells into the Sierras Blancas light
oil formation later in 2015 and in 2016. To date the Company
has drilled, completed and placed on production four successful
horizontals in the Sierras Blancas and has an inventory of
horizontal development wells identified on four main pools on the
northern portion of the block. Madalena and its partners are
also planning to execute the first horizontal multi stage frac on
the block in the Vaca Muerta shale (oil) and expect this to
commence in Q1 2016.
At Curamhuele, Madalena is planning its re-entry and testing
program of the Lower Agrio oil resource play. The Lower Agrio
is approximately 450 meters thick at Curamhuele the Yapia re-entry
location. Concurrently with the Lower Agrio re-entry
operation, the Company intends to complete and further evaluate the
Mulichinco at Curamhuele. The Mulichinco is a liquids-rich
gas resource play (approximately 200 meters thick) comprising the
fourth strategic resource the Company intends to evaluate in
2015.
The Company is well positioned to achieve it stated goals and
objectives to advance four scalable resource plays in Argentina in 2015. With early success on
the Loma Montosa, activity commencing on the Lower Agrio shale and
Mulchinco over the next two quarters, and a continued focus on the
Company's horizontal development plays, 2015 will be the Company's
most active year in Argentina.
About Madalena Energy
Madalena is an independent, Canadian-based Argentina focused, upstream oil and gas
company.
Madalena holds over 950,000 net acres in five provinces of
Argentina where it is focused on
the delineation of large shale and unconventional resources in the
Vaca Muerta shale, Lower Agrio shale, Loma Montosa oil play and the
Mulichinco liquids-rich gas play. The Company is implementing
horizontal drilling and completions technology to develop both its
conventional and resource plays.
Madalena trades on the TSX Venture Exchange under the symbol MVN
and on the OTC under the symbol MDLNF.
Reader Advisories
Forward Looking Information
The information in this news release contains certain
forward-looking statements. These statements relate to future
events or our future performance, in particular, with respect to
the characteristics of the properties held by the Company,
current and production levels, the strategic value and
opportunities available to Madalena and operational, business
development and financial plans, and opportunities and the ability
of Madalena to execute on such plans and opportunities. All
statements other than statements of historical fact may be
forward-looking statements. Forward-looking statements are often,
but not always, identified by the use of words such as "seek",
"anticipate", "plan", "continue", "estimate", "approximate",
"expect", "may", "will", "project", "predict", "potential",
"targeting", "intend", "could", "might", "should", "believe",
"would" and similar expressions. These statements involve
substantial known and unknown risks and uncertainties, certain of
which are beyond the Company's control, including: the impact of
general economic conditions; industry conditions; changes in laws
and regulations including the adoption of new environmental laws
and regulations and changes in how they are interpreted and
enforced; fluctuations in commodity prices and foreign exchange and
interest rates; stock market volatility and market valuations;
volatility in market prices for oil and natural gas; liabilities
inherent in oil and natural gas operations; uncertainties
associated with estimating oil and natural gas reserves;
competition for, among other things, capital, acquisitions, of
reserves, undeveloped lands and skilled personnel; incorrect
assessments of the value of acquisitions; changes in income tax
laws or changes in tax laws and incentive programs relating to the
oil and gas industry; geological, technical, drilling and
processing problems and other difficulties in producing petroleum
reserves; and obtaining required approvals of regulatory
authorities. The Company's actual results, performance or
achievement could differ materially from those expressed in, or
implied by, such forward-looking statements and, accordingly, no
assurances can be given that any of the events anticipated by the
forward-looking statements will transpire or occur or, if any of
them do, what benefits the Company will derive from them. These
statements are subject to certain risks and uncertainties and may
be based on assumptions that could cause actual results to differ
materially from those anticipated or implied in the forward-looking
statements. The forward-looking statements in this news release are
expressly qualified in their entirety by this cautionary statement.
Except as required by law, the Company undertakes no obligation to
publicly update or revise any forward-looking statements. Investors
are encouraged to review and consider the additional risk factors
set forth in the Company's Annual Information Form, which is
available on SEDAR at www.sedar.com.
Meaning of Boe
The term "boe" or barrels of oil equivalent may be
misleading, particularly if used in isolation. A boe conversion
ratio of six thousand cubic feet of natural gas to one barrel of
oil equivalent (6 Mcf: 1 bbl) is based on an energy equivalency
conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead. Additionally,
given that the value ratio based on the current price of crude oil,
as compared to natural gas, is significantly different from the
energy equivalency of 6:1; utilizing a conversion ratio of 6:1 may
be misleading as an indication of value.
Analogous Information
Certain information in this news release may constitute
"analogous information" as defined in National Instrument 51-101 -
Standards of Disclosure for Oil and Gas Activities ("NI 51-101"),
including, but not limited to, information relating to areas,
assets, wells and/or operations that are in geographical proximity
to or believed to be on-trend with lands held by Madalena. Such
information has been obtained from public sources, government
sources, regulatory agencies or other industry participants.
Management of Madalena believes the information may be relevant to
help define the reservoir characteristics within lands on which
Madalena holds an interest and such information has been presented
to help demonstrate the basis for Madalena's business plans and
strategies. However, management cannot confirm whether such
analogous information has been prepared in accordance with NI
51-101 and the Canadian Oil and Gas Evaluation Handbook and
Madalena is unable to confirm that the analogous information was
prepared by a qualified reserves evaluator or auditor. Madalena has
no way of verifying the accuracy of such information. There is no
certainty that the results of the analogous information or inferred
thereby will be achieved by Madalena and such information should
not be construed as an estimate of future production levels or the
actual characteristics and quality Madalena's assets. Such
information is also not an estimate of the reserves or resources
attributable to lands held or to be held by Madalena and there is
no certainty that such information will prove to be analogous in
the future. The reader is cautioned that the data relied upon by
Madalena may be in error and/or may not be analogous to such lands
to be held by Madalena.
Initial Production Rates
Any references in this document to test rates, flow rates,
initial and/or final raw test or production rates, early
production, and/or "flush" production rates are useful in
confirming the presence of hydrocarbons, however, such rates are
not necessarily indicative of long-term performance or of ultimate
recovery. Such rates may also include recovered "load" fluids used
in well completion stimulation. Readers are cautioned not to place
reliance on such rates in calculating the aggregate production for
Madalena. In addition, certain Madalena properties are
unconventional resource plays which may be subject to high initial
decline rates. Such rates may be estimated based on other third
party estimates or limited data available at this time and are not
determinative of the rates at which such wells will continue
production and decline thereafter.
Drilling Locations
This press release refers to unbooked drilling locations.
Unbooked locations are internal estimates based on Madalena's
prospective acreage and an assumption as to the number of wells
that can be drilled per section based on industry practice and
internal review. Unbooked locations do not have attributed
reserves. Unbooked locations have been identified by management as
an estimation of our future drilling activities based on evaluation
of applicable geologic, seismic, engineering, production and
reserves information. There is no certainty that Madalena will
drill all unbooked drilling locations and if drilled there is no
certainty that such locations will result in additional oil and gas
reserves or production. The drilling locations on which we actually
drill wells will ultimately depend upon the availability of
capital, regulatory approvals, access restrictions, oil and natural
gas prices, costs, actual drilling results, additional reservoir
information that is obtained and other factors. While certain of
the unbooked drilling locations have been derisked by drilling
existing wells in relative close proximity to such unbooked
drilling locations, some of other unbooked drilling locations are
farther away from existing wells where management has less
information about the characteristics of the reservoir and
therefore there is more uncertainty whether wells will be drilled
in such locations and if drilled there is more uncertainty that
such wells will result in additional oil and gas reserves or
production.
Neither the TSX Venture Exchange nor its Regulation Service
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Madalena Energy Inc.