/NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR
DISSEMINATION IN THE UNITED STATES/ TSXV Trading Symbol: MVN
CALGARY, Aug. 23, 2012 /CNW/ - Madalena Ventures Inc. ("Madalena"
or the "Company") today announced that it has filed its unaudited
financial statements and related management's discussion and
analysis ("MD&A") for the three and six month period ended June
30, 2012 on www.sedar.com and on its website
www.madalena-ventures.com. All amounts are in Canadian dollars ($)
unless otherwise stated. HIGHLIGHTS Highlights in the six months
ended June 30, 2012 include: -- Extension of the Company's large
acreage position in the Neuquen Basin and conversion of the
northern 108 km2 of the 404 km2 Coiron Amargo Block to a 25 year
exploitation concession; -- Successful drilling and completion of 2
development wells and 2 exploration wells on the Coiron Amargo
Block; -- Positive well test results at the end of Q2 / early Q3
from CAN 5 and CAN 7 development wells, respectively; -- Commenced
testing the Vaca Muerta formation at the CorS X-1 deep gas
exploration well on the Cortadera Block; -- Continued preparations
for regions first fracture stimulation of the Lower Agrio shale;
and -- Strengthened working capital position with completion of
$67.5 million equity offering. OVERVIEW Madalena is an independent,
Canadian-based, international upstream oil and gas company whose
main business activities include exploration, development and
production of crude oil, natural gas liquids and natural gas. The
Company currently has production and exploration operations in
Argentina. Coiron Amargo Block (35% working interest) In March 2012
an application by the Coiron Amargo joint venture to convert the
northern 108 km(2) of the 404 km(2) block to a 25 year exploitation
concession (Coiron Amargo Norte) was approved by the Province of
Neuquén. In addition, the exploration period for the remainder of
the block (Coiron Amargo Sur) was extended to November 8, 2013. On
Coiron Amargo Norte, in May 2012 the Company completed drilling the
CAN 5 development well located within the CAN X-1 Sierras Blancas
structure discovered in the second half of 2010. In June
2012, initial flow testing results of the Sierras Blancas formation
averaged 370 boepd (including 320 bopd), predominantly on a
5/16(th) inch choke over a 3.2 day period. In June 2012 the Company
completed drilling the CAN 7 development well located within the
CAN X-3 Sierras Blancas structure. The well was drilled to a total
depth ("TD") of 10,390 feet and cased to TD. The well
encountered the hydrocarbon bearing Vaca Muerta unconventional
shale formation as well as the conventional Sierras Blancas
formation. Open hole logs could not be obtained during
drilling due to continuous high pressure inflows into the well bore
whilst drilling through the Vaca Muerta formation. Initial
production testing of the CAN-7 development well following a
fracture stimulation treatment of the Sierra Blancas formation
resulted in an average flow rate of 1,340 boepd (including 940
bopd) over 2.2 days with a 20% water cut. The well was tested
on a 1/2 and 5/16 inch choke with a final wellhead flowing pressure
of 1,100 psi and 1,230 psi, respectively. Prior to the
fracture treatment the well tested an average of 370 boepd
(including 207 bopd) over a 2.2 day period on a 5/16 inch
choke. Following the success of these wells and related
fracture treatments, several additional development drilling
locations have been identified in the northern Sierras Blancas
structures. The Company's share of production in July 2012 from
Coiron Amargo Norte and Sur was 291 boepd (238 bopd). Since the
completion of the CAN 5 and CAN 7 development wells, wells in
Coiron Amargo Norte have been subject to periodic shut-ins due to
storage limitations at the wellhead and Centenario oil storage
terminal. When on production, a portion of associated gas is
now flowing to the Loma Jarillosa Este gas processing facility
located on an adjacent block and a portion of related water
production is being injected into a water disposal well completed
earlier in the period. If the storage and gas processing
restrictions were eliminated and all wells in Coiron Amargo Norte
and Sur placed on production, the Company's estimated share of
total production would be 460 boepd (including 398 bopd).
Effective August 1, 2012, Coiron Amargo Norte gas production is
being sold at a price of US $4.35/mmbtu. On Coiron Amargo Sur, in
February 2012 the Company drilled and cased the CAS X-4 well
approximately nine kilometers south east of the CAS X-1 discovery
well drilled in 2011 and in March 2012 drilled and cased to TD the
CAS X-2 vertical exploration well in the center of the block.
At CAS X-4 a full diameter core was taken through most of the
Vaca Muerta shale formation interval which will be used to optimize
future wells in the Vaca Muerta formation. Flow testing of the CAS
X-1 well from the non-conventional Vaca Muerta formation continues
and it is anticipated that pumping equipment will be installed
during the third quarter. A drilling rig is expected to return to
the block in September 2012 to drill one additional development
well on Coiron Amargo Norte and one exploration well on Coiron
Amargo Sur. The exploration well is located approximately
10km west of the CAS X-2 well near a previous well drilled on the
block that during drilling indicated extensive natural fracturing
in the Vaca Muerta formation. The extension of Coiron Amargo Sur to
November 8, 2013 required additional work commitments of US$ 33.5
million (Madalena share - US$ 11.7 million). The exploration block
qualifies for an additional one year extension period at the end of
the exploration period in the fourth quarter of 2013. Cortadera
Block (40% working interest) In March 2012 Apache completed a two
stage hydraulic fracture stimulation of the Vaca Muerta formation
in the CorS X-1 vertical exploration and testing of the Vaca Muerta
formation continues. Apache continues to await specialized
equipment required in this high pressure environment in order to
add the initial frac stage to the testing. Further work to
assess additional uphole formations (Quintuco, Mulichinco, and
Agrio zones) is expected to be carried out following the Vaca
Muerta test. Also in March 2012, a resolution was passed
approving Apache's application to qualify the Cortadera exploration
block for Gas Plus pricing. The Gas Plus program was launched
at the end of 2008 to stimulate investments in and production of
natural gas and oil through providing incentives for new production
of natural gas or oil. The Company has agreed a work program with
provincial authorities to extend the initial exploration period of
the Cortadera Block beyond the initial expiry date of October 26,
2011 and despite delays in formalizing this extension, the Company
believes that formal approval of the extension remains forthcoming.
Curamhuele Block (90% working interest) At the Cur X-1 well the
Company mobilized a service rig in the period for its planned three
stage fracture stimulation of the Lower Agrio shale formation. Over
340 barrels of light gravity crude was flowed from the Lower Agrio
formation in order to de-pressurize the well in order to perform
the pre-fracture treatment well intervention. At this time
operations on the CurX-1 well have been temporarily suspended in
order to reduce stand-by costs after attempts to remove certain
down-hole equipment in order to install casing for the fracture
stimulation were unsuccessful. Various options have been
reviewed to remove the down-hole equipment and plans are to
re-enter the well once all necessary tools are available.
Once completed, the frac would be the first hydraulic fracture
stimulation of the Lower Agrio shale in the Neuquén Basin. In March
2012 the exploration period for the block was extended to November
8, 2013. The extension of the block required additional work
commitments of US$ 17.6 million (Madalena share - US$ 17.6
million). The exploration block qualifies for an additional
one year extension period at the end of the exploration period in
the fourth quarter of 2013. Corporate In March 2012, the Company
issued 54,000,000 common shares at an issue price of $1.25 per
share for gross proceeds to Madalena of $67,500,000. In June 2012,
the Company's rolling stock option plan and shareholder rights plan
("Rights Plan") was approved by shareholders at the Company's
Annual and Special Meeting. The Rights Plan is similar to other
rights plans adopted by many Canadian corporations. The
Rights Plan is not triggered if an offer to acquire Company shares
is made as a "permitted bid" and thereby allows sufficient time for
the Board and shareholders to consider and react to the
offer. The plan is available for viewing at www.SEDAR.com.
FINANCIAL AND OPERATING INFORMATION Three Months Ended Six Months
Ended June 30, June 30, 2012 2011 2012 2011 $ $ Financial
Information(1) Oil and gas 374,734 807,497 771,507 1,369,985
revenue Funds used in operations(2) (1,102,882) (685,467)
(1,852,984) (1,606,184) Funds used in operations per share(2) - -
(0.01) (0.01) Cash flow from (2,610,258) (1,029,889) (2,137,349)
(1,628,928) (used in) operating activities Cash flow from (0.01) -
(0.01) (0.01) (used in) operating activities per share Net loss
(1,847,984) (12,490,603) (3,015,349) (14,235,108) Net loss per
(0.01) (0.05) (0.01) (0.05) share Total assets 105,047,273
45,272,876 105,047,273 45,272,876 Working capital 63,260,017
23,385,285 63,260,017 23,385,285 Capital 6,217,529 8,380,325
12,909,193 12,939,934 expenditures Debt - - - - Production Oil
production 66 105 64 123 (barrels per day) 1) All amounts per
common share are basic and diluted amounts per share 2) Funds used
in operations and funds used in operations per common share are
Non-GAAP measurements - see the discussion under Non-GAAP
Measurements contained in the Company's MD&A. Results of
operations Oil and gas revenue for the three months ended June 30,
2012 was $374,734 compared to $807,497 for the corresponding period
in 2011. Oil and gas revenue decreased to $771,507 in the first
half of 2012 compared to $1,369,985 in the first half of
2011. The Company's share of oil production from Coiron
Amargo Norte in the three and six month periods ended June 30, 2012
was 6,030 barrels (66 barrels per day) and 11,617 barrels (64
barrels per day), respectively. The Company's share of oil
production from Coiron Amargo Norte in the three and six month
periods ended June 30, 2011 was 9,568 barrels (105 barrels per day)
and 22,278 barrels (123 barrels per day), respectively. Net
production declined from the corresponding period in 2011 due to a
reduction in the Company's working interest in the block from 52.5%
to 35% and wells waiting on pumping equipment. The Company's
share of oil revenue, operating costs and royalty expenses related
to production from Coiron Amargo Sur is capitalized for accounting
purposes and therefore excluded from production and revenue
information. The Company realized a net loss of $1,847,984 for the
three months ended June 30, 2012 compared to $12,490,603 for the
corresponding period in 2011. Net loss decreased to
$3,015,349 in the first half of 2012 compared to $14,235,108 in the
first half of 2011. Net loss decreased primarily due to an
impairment loss recorded in the second quarter of 2011 with respect
to drilling the Curamhuele X-1001 exploration well. Total
comprehensive loss decreased to $2,353,821 for the three months
ended June 30, 2012 compared to a loss of $13,541,655 for the
corresponding period in 2011. Total comprehensive loss in the
first half of 2012 totaled $2,151,620 compared to a loss of
$16,138,822 in the first half of 2011. Total comprehensive
income loss decreased due to the decrease in net loss above as well
as income on translation of foreign operations. Exchange
differences on translation of foreign operations resulted in a loss
of $505,837 for the three months ended June 30, 2012 compared to a
loss of $1,051,052 for the corresponding period in 2011 as a result
of a slight decrease in the second quarter of 2012 in the value of
the Argentina peso relative to the Canadian dollar. At June 30,
2012 Madalena had working capital of $63,260,017 compared to
$14,442,910 at December 31, 2011. Working capital increased
as the Company issued 54,000,000 common shares at an issue price of
$1.25 per share for gross proceeds to Madalena of $67,500,000. The
Company had negative funds from operations in the three and six
month periods ended June 30, 2012 totaling $1,102,882 (2011 -
$685,467) and $1,852,984 (2011 - $1,606,184), respectively.
Funds used in operations increased as a result of lower oil revenue
and higher operating costs per boe. ABOUT MADALENA Madalena is an
independent, Canadian-based, international upstream oil and gas
company whose main business activities include exploration,
development and production of crude oil, natural gas liquids and
natural gas. The Company currently has production and exploration
operations in Argentina. Madalena is publicly traded on the
TSXV under the symbol "MVN". Forward Looking Statements and BOE
equivalents The information in this news release contains certain
forward-looking statements. These statements relate to future
events or our future performance. 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 that 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 Company's forward-looking
statements 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. Any references in this news release 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 the Company. In addition, the Vaca Muerta shale is
an unconventional resource play which may be subject to high
initial decline rates. All calculations converting natural gas to
barrels of oil equivalent ("boe") have been made using a conversion
ratio of six thousand cubic feet (six "Mcf") of natural gas to one
barrel of oil, unless otherwise stated. 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. 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 on a 6:1 basis may be misleading as an indication of
value. 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. Madalena Ventures Inc. CONTACT:
Dwayne H. Warkentin President and Chief Executive Officer Madalena
Ventures Inc. Phone: (403) 233-8010 ext 229Anthony J. PotterVice
President, Finance and Chief Financial OfficerMadalena Ventures
Inc.Phone: (403) 233-8010 ext 233
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