Madalena Announces Financial and Operating Results for the three
and nine months ended September 30, 2012
/NOT FOR DISTRIBUTION TO UNITED
STATES NEWS WIRE SERVICES OR DISSEMINATION IN
THE UNITED STATES/
TSXV Trading Symbol: MVN
CALGARY, Nov. 26, 2012 /CNW/ - Madalena Ventures Inc.
("Madalena" or the "Company") (TSX Venture: MVN) today announced
that it has filed its unaudited financial statements and related
management's discussion and analysis ("MD&A") for the three and
nine month period ended September 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 nine months ended September 30, 2012 include:
- Strategic acquisition (closed November
1, 2012) of Canadian oil and gas assets securing access to a
large inventory of horizontal drilling locations and diversifying
country risk;
- 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;
- With its partner Apache, drilled a Vaca Muerta shale test at
the CorS X-1 deep gas exploration well on the Cortadera Block
penetrating the Vaca Muerta formation and additional zones of
interest in the Quintuco, Mulichinco, and Agrio formations;
and
- Generated in Argentina in Q3
positive funds from operations(2) on higher production
volumes and maintained strong working capital position exiting the
period with working capital of $58.7
million.
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.
Corporate
On November 1,
2012 the Company acquired all of the common shares of Online
Energy Inc. ("Online") for a total purchase price of approximately
$20.6 million which includes the
assumption of Online's debt in the amount of approximately
$4.5 million excluding transaction
and severance costs.
Online's assets include 153 net sections of land
(197 gross sections at 77.9% average working interest) in the
greater Paddle River area of central Alberta across multiple light oil and
liquids-rich gas resource plays.
The acquisition of Online is expected to have
the following benefits for Madalena:
- Provides entry into the domestic E&P space with the
opportunity to ramp production and cash flow while continuing to
develop and grow its international assets & business plan
- High working interest ownership and operatorship of a sizeable
domestic land base with a large inventory of potential oil and
liquids-rich natural gas locations
- Increases critical mass for continuing operations and the
opportunity to transfer North
America technology and engineering techniques to other
international resource plays
- Increases total proved reserves of Madalena by 124% from 874
MBOE to 1,955 MBOE(1)
- Increases total proved plus probable reserves of Madalena by
92% from 1,565 MBOE to 3,001 MBOE(1)
Online's average daily production in the third
quarter of 2012 was 389 boepd (40% oil and liquids), with Online's
current production approximately 650 boepd (51% oil & liquids)
with the recent start-up of the Ostracod 1-5 horizontal well.
Average Q3 production from the Company's combined Argentina and Canadian assets would have been
700 boepd (59% oil & liquids).
Argentina -
Coiron Amargo Block (35% working interest)
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.
In March 2012 an
application by the Coiron Amargo joint venture to convert the
northern 108 km2 of the 404 km2 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. Madalena's
remaining share of future development commitments associated with
Coiron Amargo Norte to December 31,
2013 is approximately $5.5
million plus VAT.
On Coiron Amargo Norte, in May 2012 the Company completed drilling the CAN 5
development well located within the CAN X-1 Sierras Blancas
structure and in June 2012 the
Company completed drilling the CAN 7 development well located
within the CAN X-3 Sierras Blancas structure. With the addition of
these wells, the Company's share of production in the third quarter
of 2012 from Coiron Amargo Norte and Sur was 331 boepd (268
bopd).
In November 2012,
the Company commenced drilling the CAN 8 development well located
approximately 800 metres south east of the CAN 7 well. The
vertical well is scheduled to be drilled to approximately 10,430
feet depth with the primary objective horizon in the Sierras
Blancas formation and the Vaca Muerta horizon above.
The extension of Coiron Amargo Sur to
November 8, 2013 required additional
work commitments of US$ 33.5 million
(Madalena share - US$ 13.0 million of
which approximately US$ 9.3 million
plus VAT remains outstanding). The exploration block qualifies for
an additional one year extension period at the end of the
exploration period in the fourth quarter of 2013.
Notes:
- Based on the addition of Online's proved and proved plus
probable reserves effective as of December
31, 2011 as set forth in the McDaniel Report to Madalena's
proved and proved plus probable reserves evaluated by InSite
Petroleum Consultants effective as of December 31, 2011. Reserves are "gross
reserves", being each company's working interest share of reserves
before the deduction of royalties owned by others and without
including royalty interests of each company.
- Funds from (used in) operations and funds from (used in)
operations per common share are Non-GAAP measurements - see the
discussion under Non-GAAP Measurements contained in the Company's
MD&A.
Argentina -
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 well.
Further work to assess the Vaca Muerta and/or uphole formations
(i.e. Quintuco, Mulichinco, and Agrio zones) is required to fully
evaluate this deep exploration 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.
Argentina -
Curamhuele Block (90% working interest)
At the Cur X-1 well the Company mobilized a
service rig in the second quarter of 2012 for its planned three
stage fracture stimulation of the Lower Agrio shale formation. At
this time operations on the CurX-1 well remain suspended after
attempts to remove certain down-hole equipment in order to install
casing for the fracture stimulation were unsuccessful.
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 of which approximately US
$15.1 million plus VAT remains
outstanding). The exploration block qualifies for an
additional one year extension period at the end of the exploration
period in the fourth quarter of 2013.
FINANCIAL AND OPERATING INFORMATION
|
Three Months
Ended |
|
Nine Months
Ended |
|
September 30, |
|
September 30, |
|
2012 |
2011 |
|
2012 |
2011 |
|
|
|
|
$ |
$ |
Financial Information(1) |
|
|
|
|
|
Oil and gas revenue |
1,761,983 |
619,178 |
|
2,533,490 |
1,989,163 |
Funds used in operations(2) |
(79,767) |
(624,174) |
|
(1,932,751) |
(2,230,358) |
Funds used in operations per
share(2) |
- |
- |
|
(0.01) |
(0.01) |
Cash flow from (used in) operating activities |
(1,021,582) |
(478,183) |
|
(3,158,931) |
(2,107,111) |
Cash flow from (used in) operating activities per
share |
- |
- |
|
(0.01) |
(0.01) |
Net loss |
(916,185) |
(315,915) |
|
(3,931,534) |
(14,551,023) |
Net loss per share |
- |
- |
|
(0.01) |
(0.06) |
Total assets |
102,103,537 |
45,426,540 |
|
102,103,537 |
45,426,540 |
Working capital |
58,752,469 |
19,730,619 |
|
58,752,469 |
19,730,619 |
Capital expenditures |
3,632,703 |
3,011,513 |
|
16,541,896 |
15,951,447 |
Debt |
- |
- |
|
- |
- |
|
|
|
|
|
|
Production |
|
|
|
|
|
Total production (boe per day) |
314 |
103 |
|
148 |
116 |
|
|
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 in the third quarter of 2012 was
$1,761,983 compared to $619,178 in the third quarter of 2011. Oil and
gas revenue increased to $2,533,490
for the nine months ended September 30,
2012 compared to $1,989,163
for the corresponding period in 2011. The Company's share of
oil production from Coiron Amargo Norte in the three and nine month
periods ended September 30, 2012 was
23,127 barrels (251 barrels per day) and 34,745 barrels (127
barrels per day), respectively. The Company's share of oil
production from Coiron Amargo Norte in the three and nine month
periods ended September 30, 2011 was
9,462 barrels (103 barrels per day) and 31,741 barrels (116 barrels
per day), respectively. Net production increased from the
corresponding period in 2011 due to production from the CAN 5 and
CAN 7 wells drilled in May and June
2012 partially offset by a reduction in the Company's
working interest in the block from 52.5% to 35%. 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 $916,185 in the third quarter of 2012 compared to
$315,915 in the third quarter of
2011. Net loss increased as the third quarter of 2011
included a gain of $1,040,664
associated with the 2011 farm-out of the Coiron Amargo Block which
reduced the Company's interest in the block from 52.5% to
35%. Net loss decreased to $3,931,534 for the nine months ended September 30, 2012 compared to $14,551,023 for the corresponding period in
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 $3,705,154 in the third
quarter of 2012 compared to comprehensive income of $375,579 in the third quarter of 2011.
Total comprehensive loss for the nine months ended September 30, 2012 totaled $5,856,774 compared to a loss of $15,763,243 for the corresponding period in 2011.
Total comprehensive loss decreased due to the decrease in net loss
above partially offset by a higher loss on translation of foreign
operations. Exchange differences on translation of foreign
operations resulted in a loss of $2,788,969 in the third quarter of 2012 compared
to a gain of $691,494 in the third
quarter of 2011 as a result of a decrease in the third quarter of
2012 in the value of the Argentina
peso relative to the Canadian dollar.
At September 30,
2012 Madalena had working capital of $58,752,469 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 nine month periods ended September 30, 2012 totaling $79,767 (2011 - $624,174) and $1,932,751 (2011 - $2,230,258), respectively. Funds used in
operations decreased as a result of higher oil revenue.
ABOUT MADALENA
Madalena is an independent, Canadian-based,
domestic and international upstream oil and gas company whose main
business activities include exploration, development and production
of crude oil, natural gas liquids and natural gas. 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.
SOURCE Madalena Ventures Inc.