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UNITED STATES
Madalena Ventures Inc. ("Madalena" or the "Company") (TSX VENTURE:MVN) today
announced its financial and operating results for the year ended December 31,
2007.
2007 Highlights
- Seismic acquisition and evaluation programs on the Remada Sud concession in
southern Tunisia were completed, leading to the Company's announcement to
participate in the TT-2 exploration well. Drilling on the TT-2 well began March
28, 2008.
- Seismic acquisition programs on the Hammamet concession offshore Tunisia were
substantially completed and evaluation of the programs continues.
- During the year the Company received approval to establish a branch office in
Argentina, and federal registry approval as an oil and gas operator.
- Three new oil and gas concessions were secured in the Neuquen Province of
Argentina, increasing the Companies exploration acreage by 280,000 gross and
196,000 net acres in the Province.
- Canadian non-operated oil and gas properties experienced declines in reserves
and productivity.
- The Company was listed for trading on the TSX Venture exchange on February 16,
2007 under the trading symbol "MVN".
The following table summarizes the Company's financial and operating results for
the year ended December 31, 2007, and comparative results for the years ended
December 31, 2006 and 2005:
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As at and for the year ended 2007 2006 2005
Financial
Gross petroleum and natural gas
revenues $ 932,964 $ 290,348 $ -
Interest income 661,293 286,533 26,396
Funds from operations(1) (169,839) (541,884) (185,514)
Funds from operations per common
share - basic and diluted(1) (0.00) (0.01) (0.01)
Net income (loss) for the period (6,033,587) (4,661,496) 467,374
Net income (loss) per common share -
basic and diluted (0.06) (0.07) 0.01
Capital expenditures $ 5,360,596 $ 9,769,262 $ 194,789
Operations
Daily production
Oil (bbls/d) 13.6 - -
Natural gas (Mcf/d) 157.6 124.8 -
Natural gas liquids (bbls/d) 6.9 3.6 -
Oil equivalent (boe/d)(2) 46.8 24.4 -
Average sales price
Oil ($/bbl) 74.38 - -
Natural gas ($/mcf) 7.16 6.84 -
Natural gas liquids ($/bbl) 60.19 55.74 -
Netback per boe (6:1)
Petroleum and natural gas $ 54.65 $ 43.24 -
Royalties 8.54 10.17 -
Operating expenses 13.68 8.89 -
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Operating netback $ 32.43 $ 24.18 -
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(1) The terms "funds from operations" and "funds from operations per share",
"netback", and "operating netback", are not defined under Generally
Accepted Accounting Principles ("GAAP"), and may not be comparable to
similar measures reported by other companies. Management considers these
measures to be useful supplementary information for investors. Funds
from operations, is defined as cash flow from operating activities
before changes in non-cash working capital items and is reconciled with
net earnings in the Company's statement of cash flows and in the MD&A.
Operating netback is calculated as total petroleum and natural gas
revenue less royalties, operating expenses, and transportation expenses.
(2) All references to barrels of oil equivalent ("boe") have been calculated
using a conversion ratio of six thousand cubic feet (six "mcf") of
natural gas to one barrel of oil. The use of boe may be misleading,
particularly if used in isolation, as the conversion ratio of six mcf
of natural gas to one barrel of oil, is based on an energy equivalency
conversion method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead.
Reserves Summary
The following tables summarize Madalena's reserves at December 31, 2007:
Madalena's interest in reserves at December 31, 2007 based on forecast price
and cost assumptions is:
Reserves
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Light/Medium
Natural Gas NGL Crude Oil Oil Equivalent
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Reserves Gross Net Gross Net Gross Net Gross Net
Category (MMcf) (MMcf) (Mbbl) (Mbbl) (Mbbl) (Mbbl) (Mbbl) (Mbbl)
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Proved
Developed
Producing 196 167 10 7 23 19 65 54
Developed
Non-Producing 126 118 6 5 0 0 27 25
Undeveloped 87 80 4 3 0 0 19 17
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Total Proved 409 364 20 16 23 19 111 95
Probable 180 157 9 6 7 6 46 39
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Total Proved
Plus Probable 589 521 29 22 30 25 157 134
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Madalena's net present value of future net revenue before and after income
taxes at December 31, 2007 is as follows:
Net Present Values of Future Net Revenue
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Unit Value
Before
Income Tax
Before and after Income Taxes Discounted
Discounted at (%/year) at 10%/year
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0% 5% 10% 15% 20%
Reserves Category $000's $000's $000's $000's $000's $/boe
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Proved
Producing 2,321 1,930 1,656 1,455 1,303 30.87
Developed Non-
Producing 733 575 464 383 323 18.66
Undeveloped 262 173 113 71 40 6.77
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Total Proved 3,316 2,678 2,232 1,909 1,666 23.46
Probable 1,309 791 520 366 273 13.48
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Total Proved Plus
Probable
4,625 3,469 2,752 2,275 1,939 20.58
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The above reserve estimates for 2007 were prepared by an independent
professional petroleum engineering firm in accordance with National Instrument
51-101 (NI 51-101). Under NI 51-101, Proved reserves are those reserves that can
be estimated with a high degree of certainty to be recoverable. Probable
reserves are those additional reserves that are less certain to be recovered
than proved reserves. It is likely that the actual remaining quantities
recovered will be greater or less than the sum of the estimated proved plus
probable reserves. Additional reserve information relating to Madalena is
contained in Madalena's Annual Information Form filed on SEDAR at www.sedar.com.
2007 Review
In 2007 significant progress was made by the Company in acquiring, developing
and evaluating exploration opportunities in South America and Tunisia. Following
extensive negotiations and evaluation of prospective opportunities during 2007,
Madalena announced the acquisition of three exploration blocks in the Neuquen
Province of Argentina. The Neuquen Basin is the most prolific oil and gas
producing basin in Argentina and contains a number of fields with oil and
natural gas reserves ranging as high as 25 trillion cubic feet of gas and 800
million barrels of oil.
The acquisition of the first block, known as the Cortadera Block, was announced
in a press release on September 17th 2007. Madalena has a 70% working interest
in this block which carries an initial three year exploration term with a work
commitment of $US 2.5 million in exploration expenditures including seismic and
the drilling of at least one exploration well. The Cortadera Block is situated
along the western thrust belt area of the Neuquen Basin and is approximately 500
km2 (123,500 acres) in size. Madalena has access to 400 km's (250 miles) of
existing seismic data located on the Block which has identified several exciting
features with multi-zone potential. Two wells drilled on the block during the
1970s had gas shows indicating the presence of hydrocarbon potential on the
block. The work program will commence immediately with a baseline environmental
study, and the design and implementation of the seismic programs, required to
further delineate the leads identified on the existing seismic data base.
Negotiations on the second and third exploration blocks were ongoing throughout
the third quarter, resulting in an announcement on October 3rd 2007 that
negotiations and work commitments had been finalized on the blocks. These
blocks, known as the Curamhuele and Coiron Amargo Blocks, also carry initial
three year exploration terms with work commitments of $US 3.0 million and $US
5.0 million respectively in exploration expenditures, including seismic and the
drilling of at least one exploration well on each block. Madalena will have a
minimum 70% working interest, and a maximum 90% working interest in these blocks
dependent upon an option election to be made by a third party on or before March
1st, 2008.
The Curamhuele Block is situated along the eastern edge of the north south
running thrust belt on the western side of the Neuquen Basin and is
approximately 227 km2 (56,000 acres) in size. This is an increase of
approximately 33% in acreage size since the acquisition of the block was first
announced on October 3rd, 2007. The block has the potential for 4 different play
types targeting both oil and natural gas and ranging in depths from 1700 meters
(5,500 feet) to 3600 meters (11,800 feet). The block is in close proximity to a
number of prolific fields along this trend, as described by the National
Secretary of Energy of Argentina, including the Filo Morado field which is
located only 5 km (3 miles) from the block and has produced 62 million barrels
of oil equivalent, comprised of approximately 50% natural gas and 50% light oil
and condensates. The El Porton field is also located on the same trend 20
kilometers (12 miles) to the north, and has estimated recoverable reserves of 45
million barrels of oil and 282 billion cubic feet of natural gas producing from
a depth of approximately 1700 meters (5,500 feet). Only three wells have been
drilled on this expansive block of acreage, all during the 1990's. Two of the
three wells tested oil and gas. Two lower zones in one of the prospective wells
tested a combined 63 million cubic feet of gas and 2,600 bbls of 51o API
condensate over a 12 day period under various choke sizes. The other prospective
well flowed 147 barrels oil per day of 37o API oil over a one day test through a
2" choke. Madalena's initial development plans for this block will include an
investigation of the integrity of these wells for suitability to perform further
pressure and testing analysis in order to estimate the productivity potential of
these wells over the longer term. Madalena has access to approximately 2000 km's
(1,200 miles) of existing seismic data located on the block and will conduct
additional seismic on the block to further delineate existing leads for drilling
locations.
The Coiron Amargo Block is situated along the eastern side of the Neuquen Basin
and is approximately 400 km2 (100,000 acres) in size. This block also has the
potential for 4 different play types targeting oil and natural gas ranging in
depths from 2200 meters (7,200 feet) to 3600 meters (11,800 feet). The Coiron
Amargo Block is in close proximity to a number of prolific fields including
Borde Montuos with reserves of 12 million barrels of oil equivalent, Charco
Bayo/ Piedras Blancas with reserves of 250 million barrels of oil equivalent,
and Loma de la Lata with reserves of 1.7 billion barrels of oil equivalent, all
located within 20 km's (12 miles) of the Block. Two recently drilled wells
offsetting the Block are currently producing oil at rates of approximately 400
barrels of oil per day. Since the initial announcement of the acquisition of the
block, Madalena has acquired access to a 375 km2 (92,500 acres) 3D seismic
program conducted over the Block, which the Company is currently reprocessing.
This seismic is in addition to approximately 900 km's (550 miles) of 2D seismic
data located on the Block which indicates the continuation of the fault trends
from the offsetting producing block extending across Coiron Amargo. The Company
has several prospects mapped on the block and will commence the immediate
evaluation of the top drilling candidates.
Exploration progress continued to be made on our operations in Tunisia during
2007. Seismic evaluation resulted in the announcement by the Company to
participate in an exploration well to be drilled on the Remada Sud onshore
exploration block. Drilling began on the well on March 28, 2008. The Remada Sud
Block contains over 4,800 km2 (1.2 million acres) in the highly prospective
Ghadames basin of southern Tunisia and has exploratory potential in the
Ordovician, Silurian Acacus and Triassic Ras Hamia formations. All three zones
are proven commercially productive from adjoining blocks in Libya or Tunisia
with significant reserves potential. The 2D seismic program conducted over the
Block during Q2 2007 has also delineated additional prospective structures which
are under review by the Company for future drilling consideration. Madalena will
pay 30% of the well costs to earn a 15% working interest in approximately 2,400
km2 (600,000 acres) in the block. The first exploration well to be drilled by
Madalena on the block will primarily target the Ordovician formation. Madalena
will retain the option to drill a second test well on the block to earn an
additional 2,400 km2 (600,000 acres) and the right to participate in all further
development of the block.
Progress was also made on the Hammamet offshore block in Tunisia during 2007.
The extensive 3D offshore seismic programs were completed with highly
encouraging results, outlining several prospective drilling opportunities. The
Hammamet offshore block is directly offset by the Oudna field which was placed
on production in December 2006 at rates in excess of 20,000 barrels of oil per
day. The 3D and 2D seismic programs were designed to evaluate the potential
reactivation of the Tazerka field located on the block, evaluate three large
untested structures previously recognized on the block, and high-grade the most
prospective test well location on the block. Interpretation of the data is
currently underway and nearing completion.
In Canada the Company realized increases in revenues from petroleum and natural
gas ($932,964 in 2007 compared to $290,348 in 2006) as the Canadian wells were
tied in and started producing, and in interest revenues ($661,293 in 2007
compared to $286,533 in 2006) as the Company invested its working capital. The
increased revenues were offset by modest increases in operating costs ($233,488
in 2007 compared to $59,712 in 2006) as wells were tied in and started
producing, and general and administrative costs ($1,382,596 in 2007 compared to
$1,013,873 in 2006) as more time was spent evaluating prospective opportunities,
a full management team and the associated salary costs was in place for all of
2007 compared to only a portion of 2006. and the costs of the company being
listed on the TSX venture for its first full year were experienced. Funds from
operations increased in 2007 to a negative $169,839 from a negative $541,884 in
2006.
The Company experienced improved operating results from its Canadian
non-operated properties. However, as a result of revisions to year end reserves,
the Company recorded a write down of the cost of the property and equipment
recorded in the amount of $3,630,000 which is include in depletion, depreciation
and accretion. In 2007 the Company recorded a charge of $4,422,984 for
depletion, depreciation and accretion compared to $2,793,717, which was the
biggest contributor to the Companies increase in net loss to $6,033,587 in 2007
from $4,661,496 in 2006.
2008 Outlook
In 2008 Madalena plans to focus its activities on developing its Argentina and
Tunisia properties.
In Argentina the Company will focus its efforts on drilling at least two
exploration wells on the exploration blocks secured during 2007. On the Coiron
Amargo block, the Company will complete the evaluation of a 350 square kilometre
seismic program, complete base line environmental studies, select an appropriate
drilling location, and look to secure the proper drilling rig for drilling the
Company's first exploration well in Argentina. Evaluation of existing seismic
data has provided numerous potential drilling locations. On the Cortadera and
Curamhuele blocks, the Company will focus on securing seismic services, shooting
and evaluating 120 square kilometers of 3D seismic for Cortadera and 140 square
kilometers of 3D seismic for Curamhuele. Once seismic evaluations are completed,
additional drilling locations will be determined.
In Tunisia, the TT-2 well in Remada Sud which spud March 28, 2008 will finish
drilling in the second quarter. The Company will evaluate drilling results and
will assess alternatives for completion, production and tie-ins, or abandonment.
Madalena's existing seismic option agreement provides the Company with the
option to participate in a second test well on the Remada Sud property. The
Company will evaluate participation in the second test well based on results
from the first well. The Company will also complete its evaluation of seismic
data on the offshore Hammamet block to determine if it will exercise the second
seismic option agreement on this property and participate in drilling an
offshore well on the Hammamet concession.
Madalena remains committed to the exploration and development of its concessions
in Argentina and Tunisia in order to maximize shareholder value. The Company
continues to evaluate other opportunities in South America and Northern Africa.
Madalena's 2007 financial statements, MD&A and Annual Information Form are
available on the Company's website at www.madalena-ventures.com as well as on
the SEDAR website at www.sedar.com.
About Madalena
Madalena Ventures Inc. is an international oil and gas exploration and
development company headquartered in Calgary, Alberta, Canada. Madalena's
objective is to create value for its shareholders through the exploration and
development of international oil and gas opportunities. Madalena is focused on
opportunities in South America and North Africa and has production operations in
Alberta. Madalena is listed on the TSX Venture exchange under the symbol "MVN".
Visit www.madalena-ventures.com for more information.
Forward Looking Statements
Certain information set forth in this press release, including a discussion of
future plans and operations, contains forward looking statements that involve
substantial known and unknown risks and uncertainties. These forward-looking
statements are subject to numerous risks and uncertainties, some of which are
beyond management's control, including but not limited to, the impact of general
economic conditions, industry conditions, fluctuation of commodity prices,
fluctuation of foreign exchange rates, environmental risks industry competition,
availability of qualified personnel and management, stock market volatility,
timely and cost effective access to sufficient capital from internal and
external sources, as well as risks inherent in operating in foreign
jurisdictions, including varying judicial or administrative guidance on
interpreting rules and regulations and a higher degree of discretion on the part
of governmental authorities. Actual results, performance or achievement could
differ materially from those expressed in or implied by these forward-looking
statements.
The reserves and future net revenue in this press release represent estimates
only. The reserves and future net revenue from the company's properties have
been independently evaluated by GLJ with effective date of December 31, 2007.
This evaluation includes a number of assumptions relating to factors such as
initial production rates, production decline rates, ultimate recovery of
reserves, timing and amount of capital expenditures, marketability of
production, future prices of crude oil and natural gas, operating costs, well
abandonment and salvage values, royalties and other government levies that may
be imposed during the producing life of the reserves. These assumptions were
based on price forecasts in use at December 31, 2007 and many of these
assumptions are subject to change and are beyond the control of the Company.
Actual production, sales and cash flows derived therefrom will vary from the
evaluation and such variations could be material. The present value of estimated
future net cash flows referred to herein should not be construed as the current
market value of estimated crude oil and natural gas reserves attributable to the
company's properties.
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