CALGARY, Alberta, May 29, 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 http://www.sedar.com and on the Company's website at
http://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
Three months ended
March 31
2015 2014
Financial - Canadian $000s, except per share
amounts
Oil and gas revenue 24,135 6,306
Funds flow from operations(1) 6,006 3,569
Per share - basic & diluted(1) 0.01 0.01
Net income (loss) (1,771) 297
Per share - basic and diluted (0.00) 0.00
Capital expenditures 14,568 12,548
Working capital 3,187 19,463
Equity outstanding - 000s
Common shares 540,316 396,886
Stock options 24,165 19,530
Operating
Average Daily Sales
Crude oil and Ngls - Bbls/d 2,801 644
Natural gas - Mcf/d 4,711 2,979
Total - boe /d 3,586 1,141
Average Sales Prices
Argentina
Crude oil and NGLs - $/bbl 90.43 85.31
Natural gas - $/mcf 5.30 4.60
Total - $/boe 78.91 82.82
Canada
Crude oil and NGLs - $/bbl 35.87 78.59
Natural gas - $/mcf 2.81 5.87
Total - $/boe 26.78 53.44
Corporate
Crude oil and NGLs - $/bbl 87.54 81.66
Natural gas - $/mcf 4.87 5.84
Total - $/boe 74.78 61.38
Corporate Operating Netbacks(2) 33.18 29.62
(1) 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.
(2) 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.
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 http://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.
please contact Kevin Shaw, P.Eng,
MBA, President and Chief Executive Officer, Madalena Energy Inc.,
Phone: +1-403-262-1901 (Ext. 230), kdshaw@madalenaenergy.com;
Thomas Love, CA, VP, Finance and Chief Financial Officer, Madalena
Energy Inc., Phone: +1-403-262-1901 (Ext. 227),
tlove@madalenaenergy.com