TSXV Trading Symbol: MVN
CALGARY, April 29, 2014 /CNW/ - Madalena Energy Inc.
(TSXV: MVN) (the "Company" or "Madalena") is pleased to provide
selected financial and operational information for the three months
and year ended December 31, 2013 and
the Company's 2013 year end reserves.
Copies of the Company's consolidated financial
statements for the year ended December 31,
2013, the related management's discussion and analysis and
the Annual Information Form (the "AIF") of the Company for the year
ended December 31, 2013 have been
filed with Canadian securities regulatory authorities and will be
made available under the Company's profile at www.sedar.com and on
the Company's website at www.madalenaenergy.com.
2013 HIGHLIGHTS and OUTLOOK
- Established and integrated an experienced, full-cycle operating
team capable of executing both internationally and
domestically.
- Repositioned Madalena for flexibility with respect to its
Neuquén basin assets with the signing of three revised block
contracts (new contractual amendments and/or extensions) at each of
the Company's Coiron Amargo, Curamhuele and Cortadera blocks in
Argentina.
- Conducted an extensive technical review of the Company's
unconventional shale resources on its three land blocks within the
Neuquén basin. Ryder Scott Company evaluated the Vaca Muerta
shale, Lower Agrio shale and Basal Quintuco formation
throughout the Coiron Amargo, Curamhuele and Cortadera blocks and
prepared a comprehensive resource report which was released on
April 30, 2013 and effective
December 31, 2012.
Highlights of the independent resource evaluation are as
follows:
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- Best Estimate P50 total petroleum initially in place
("PIIP") of 34.8 billion boe (51 % crude oil and natural gas
liquids ("NGLs")) net to Madalena, comprised of:
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- Best Case P50 discovered PIIP ("DPIIP") of 257.4 million boe
(95 % crude oil and NGLs) and
- Best Case P50 undiscovered PIIP ("UPIIP") of 34.6 billion boe
(50 % crude oil and NGLs).
- Best Estimate P50 contingent and prospective resources
net to Madalena as follows:
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- Best case P50 prospective resources of 2.8 billion boe
(45 % crude oil and NGLs) and
- Best case P50 contingent resources of 19.4 million boe
(95 % crude oil and NGLs).
- A further breakdown (by block) of the petroleum initially in
place and the resource categories aggregating such total are shown
in a series of tables in the advisory section of this
document.
- Increased proved plus probable reserves ("P+P") by 19% to 4.648
MMboe, which is primarily supported by the Company's conventional
assets. Net present value of these P+P reserves before tax,
discounted at 10%, increased 49% to $50.2
million (see Summary of 2013 Year-end Reserves
below).
- A large inventory of horizontal locations on Madalena's western
Canadian and Argentinean lands remains unbooked.
- Q4 - 2013 production averaged 1,271 boe/d (56% oil and
liquids), an increase of 101% from Q4 - 2012.
- Madalena has been successfully recapitalized through raising a
total of $19.5 million in 2013 and an
additional $23 million in February,
2014.
- Maintained a strong balance sheet with zero debt and
approximately $8.0 million in
positive working capital at the end of 2013. With the
subsequent $23 million raised in
February 2014, unutilized credit
facilities of $13 million and funds
from operations throughout 2014, Madalena is well positioned to
meet its commitments and execute its 2014 business plan.
- In late 2013, Madalena successfully implemented its first use
of North American based horizontal drilling technology on its
international assets focused initially at its Coiron Amargo block
in the Neuquen basin. Horizontal technology was applied to
the Sierras Blancas formation which is a conventional light oil
reservoir sourced from the Vaca Muerta shale across the Coiron
Amargo block. The CAN.xr-2(h) well was re-entered and drilled
horizontally and has produced approximately 63,000 barrels of oil
in the first three months of 2014. The results to date on the
CAN.xr-2(h) horizontal have exceeded management's expectations and
as a result, Madalena has commenced a multi-well horizontal
drilling program in Sierras Blancas for 2014. To kick-off 2014, the
CAN-15(h) well was recently drilled horizontally and during testing
operations the highest rates were achieved on a 12 mm choke
setting, when the well flowed at a rate of 1,393 bbls/d of oil with
3,301 mcf/d of associated natural gas for a total of 1,943 Boe/d
(72% oil) over a 5 hour period. (see International
Operations below). The next Sierras Blancas horizontal in the
multi-well program for 2014 is expected to commence drilling in
Q2-2014. Madalena has a 35% working interest in the Coiron Amargo
block.
- Madalena has established a 2014 capital budget of $48 million, $37
million of which is allocated to Argentina. The 2014 budget is focused on a
combination of high impact horizontal wells targeting the Sierras
Blancas light oil play in addition to unconventional shale and
tight sand delineation wells, re-entries and 3D seismic shooting on
the Company's international assets in Argentina. Operations in Canada will focus on horizontal wells
targeting the Ostracod and other emerging resource plays in the
greater Paddle River area.
- Ongoing drilling and completions operations will continue
across Madalena's international assets in Q2 through to year end
2014 and drilling operations are expected to recommence in
Canada post spring break-up.
SUMMARY FINANCIAL AND OPERATIONAL RESULTS
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Three months ended
December 31 |
Year ended
December 31 |
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2013 |
2012 |
2013 |
2012 |
Financial - Canadian $000s, except per
share amounts |
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Oil and gas revenue |
5,633 |
3,012 |
17,960 |
5,545 |
Net loss |
(20,527) |
(4,934) |
(23,285) |
(8,865) |
Per share - basic and diluted |
(0.06) |
(0.02) |
(0.07) |
(0.03) |
Business combinations |
- |
16,090 |
- |
16,090 |
Capital expenditures |
13,121 |
6,310 |
43,296 |
22,851 |
Working capital |
8,016 |
30,025 |
8,016 |
30,025 |
Equity outstanding - 000s |
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Common shares |
364,029 |
314,307 |
364,029 |
314,307 |
Stock options |
19,530 |
22,334 |
19,530 |
22,334 |
Operating |
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Average Daily Production |
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Crude oil and condensate - Bbls/d |
551 |
327 |
392 |
173 |
Natural gas - Mcf/d |
3,366 |
1,377 |
3,346 |
369 |
NGLs - Bbls/d |
160 |
78 |
137 |
20 |
Total - boe /d(1) |
1,271 |
634 |
1,086 |
254 |
Average Sales Prices |
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Crude oil and condensate - $/Bbl |
73.71 |
74.75 |
79.69 |
75.23 |
Natural gas - $/Mcf |
3.52 |
3.35 |
3.18 |
3.41 |
NGLs - $/Bbl |
54.99 |
48.04 |
53.61 |
48.04 |
Total - $/boe(1) |
48.16 |
51.66 |
45.28 |
59.86 |
Operating Netbacks(2) -
$/boe(1) |
16.82 |
13.49 |
15.25 |
18.18 |
(1) |
Refer to - "Oil, Natural Gas Liquids and Natural Gas
Conversions to boe" in Advisory. |
(2) |
Operating netback is a non-GAAP measure calculated as the
average per boe of the Company's oil and gas sales, less royalties,
operating and transportation expenses. |
SUMMARY OF ARGENTINEAN UNCONVENTIONAL RESOURCES
(as prepared by Ryder Scott Petroleum Consultants Ltd. ("Ryder
Scott") in accordance with National Instrument 51- 101 - Standards
for Disclosure for Oil and Gas Activities of the Canadian
Securities Administrators ("NI 51-101") (see separate press release
dated April 30, 2013))
Highlights of the independent resource
evaluation are as follows:
- Best Estimate P50 total PIIP of 34.8 billion boe (51 %
crude oil and NGLs) net to Madalena, comprised of:
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- Best Case P50 DPIIP of 257.4 million boe (95 % crude oil and
NGLs); and
- Best Case P50 UPIIP of 34.6 billion boe (50 % crude oil and
NGLs);
- Best Estimate P50 contingent and prospective resources
net to Madalena as follows:
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- Best case P50 prospective resources of 2.8 billion boe
(45 % crude oil and NGLs), and
- Best case P50 contingent resources of 19.4 million boe
(95 % crude oil and NGLs);
- A further breakdown (by block) of the petroleum initially in
place and resources aggregating such totals are shown below in a
series of tables in the advisory section of this document.
SUMMARY OF 2013 YEAR-END RESERVES
(as of December 31, 2013 - all
amounts are in Canadian dollars and net to Madalena's
interest unless otherwise stated.)
- Total Company proved plus probable ("P+P") reserves of
4.648 MMboe (51% crude oil and natural gas liquids vs 46% at
year-end 2012) representing a 19% increase from Madalena's 2012
year end P+P reserves;
- 58% of P+P reserves are categorized as proved reserves;
- A P+P reserve life index of 10.0 years and a
proven reserve life index of 5.8 years, based on Q4 - 2013 actual
production of 1,271 boe/d;
- Reserve net present value of P+P reserves before tax
(discounted at 10%) of $50.2 million
representing a 49% increase from Madalena's 2012 year end P+P
reserves; and
Disclosure of Reserves Data
All of Madalena's international reserves were
evaluated by Ryder Scott Company and
all of Madalena's domestic reserves were evaluated by McDaniel
& Associates Consultants Ltd. in separate reports dated
effective December 31, 2013
(collectively, the "Reserve Reports"). The Reserve Reports
were prepared in accordance with NI 51-101 and the standards
contained in the Canadian Oil and Gas Evaluation Handbook (the
"COGE Handbook"). The reserves data provided in this news release
("Reserves Data") summarizes the oil, liquids and natural gas
reserves associated with Madalena's assets and properties and the
net present values of future net revenue for these reserves using
forecast prices and costs as at December 31,
2013. The Reserves Data represents only a
portion of the disclosure required under NI 51-101. All of the
required information is in the AIF, which has been filed with
Canadian securities regulatory authorities and will be made
available under the Company's profile at www.sedar.com and on the
Company's website at www.madalenaenergy.com.
INTERNATIONAL OPERATIONS - Neuquén Basin, Argentina
Coiron Amargo Block
- Industry activity in and around Madalena's Coiron Amargo block
(approximately 35,000 net acres) including developments in the
greater Loma La Lata and Loma
Campana areas has seen a significant step change from
initial exploration and appraisal drilling in 2012 to an
accelerated exploitation / development phase in the unconventional
Vaca Muerta shale through 2013 and into 2014. Over 150
Vaca Muerta shale wells have been drilled in and around this area
and a number of significant joint ventures (or other transactions)
over the last 14 months have been announced. These largely involve
large integrated exploration and production companies such as YPF,
Chevron, Shell, Total SA, Wintershall, Petrobras and others. YPF
and Chevron have announced a 140 well drilling program in 2014
targeting the Vaca Muerta shale to the west of Madalena's acreage
and they expect to increase production from the Vaca Muerta shale
to approximately 80,000 bbls/d by 2017 in this area. Madalena's
Coiron Amargo block is strategically positioned within this area of
intense Vaca Muerta shale resource development and Madalena
continues to execute its business plan in this area.
- The Coiron Amargo block is divided into a North and South
region with active drill programs being executed in both areas.
Coiron Amargo Notre (the northern portion of the block) is
currently under a 25 year exploitation (development)
concession. The southern portion of the block, Coiron Amargo
Sur, is currently under an exploration contract which was extended
until November 8, 2014 by way of an
official decree signed by the Province of Neuquén in Argentina on November
12, 2013. Subsequent to November 8,
2014, Madalena has the ability to extend Coiron Amargo Sur
through further exploration, evaluation and/or exploitation
(development) phases.
- The focus of Madalena's business plan for the Coiron Amargo
block includes:
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i) |
Continue to advance the Company's Vaca Muerta shale activities
with a combination of new delineation wells and completion
techniques (stimulations and/or multi-stage fracs); |
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ii) |
Drill, complete, test and tie-in a number of high impact
horizontal wells targeting Vaca Muerta sourced light oil from the
Sierras Blancas reservoir; and |
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iii) |
Technically assess deep gas potential on the block in response
to offsetting industry activity. |
- Recently, the Company has intensified its focus on the Vaca
Muerta shale given the unconventional prize across the Coiron
Amargo block. The block is strategically positioned within the
Neuquén basin in the shallower portion of the Vaca Muerta oil
window and in an area where over 150 Vaca Muerta shale wells have
been drilled over the last 12 to 14 months. Industry activity
continues to increase offsetting the Coiron Amargo block where
Madalena drilled the CAS.x-14 and the CAS.x-15 vertical wells in
Coiron Amargo Sur for the Vaca Muerta shale in 2013. The
CAS.x-14 and CAS.x-15 wells were drilled and cased encountering
approximately 105 and 114 meters respectively of Vaca Muerta shale
on logs. Completion (stimulation work and/or multi-stage frac)
activities on these wells are expected to commence in Q2 -
2014.
- Madalena has implemented a balanced business strategy between
unconventional shale delineation and high impact
horizontal drilling. Accordingly, Madalena successfully
implemented North American based horizontal technology and
experience on the Coiron Amargo block. As the first implementation
of horizontal technology internationally, the CAN.xr-2(h) well was
re-entered, drilled and completed horizontally in the Sierras
Blancas light oil reservoir which is a high deliverability
conventional reservoir which is sourced from the Vaca Muerta shale.
The CAN.xr-2(h) well has now been producing since late 2013 and has
exceeded management's expectations. The well has been producing oil
at restricted rates for most of Q1 - 2014. Cumulative oil
production for Q1-2014, based on field estimates, was approximately
63,000 barrels of oil plus associated solution gas. Average daily
production was approximately 700 bbls/d and 1,560 mcf/d of
associated solution gas for a total of 978 boe/d (72% oil) over
a three month period in Q1-2014. The well has been
recently tied into a permanent pipeline system to the central plant
and gas dehydration and compressor facility and, accordingly,
associated solution gas volumes will be realized as sales in future
quarters. Madalena has a 35% working interest in the
CAN.xr-2(h) well.
- Encouraged by the results of the CAN.xr-2(h) horizontal,
Madalena has commenced a multi-well horizontal drilling program for
2014. The CAN-15(h) well, in which the Company has a 35% working
interest, was recently drilled horizontally in the Sierras Blancas
light oil reservoir in the Coiron Amargo block to a total measured
depth of 3,750 metres with a horizontal lateral section of
approximately 692 metres in length. This well is the second
horizontal well drilled into the Sierras Blancas which is a
conventional light oil reservoir sourced from the Vaca Muerta shale
across the Coiron Amargo block. The well was subsequently
cased and completed with a 3.5" slotted liner and a multi-rate
production test was carried out through temporary production
facilities. Throughout the multi-rate production test, the
CAN-15(h) well flowed without artificial lift equipment and was
tested for approximately 75 hours at various choke settings ranging
from 6 mm to 12 mm in size with the following flow rates observed
during the test:
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i) |
With the production test only being carried out on a portion of
the horizontal lateral section as planned, the highest rates were
achieved on a 12 mm choke setting, when the CAN-15(h) well was
flowed at a rate of 1,393 bbls/d of oil with 3,301 mcf/d of
associated natural gas for a total of 1,943 Boe/d (72% oil)
over a 5 hour period and at an average flowing pressure of
approximately 1,263 psi. |
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ii) |
On an 8mm choke setting, the CAN-15(h) well was flowed at a
rate of 745 bbls/d of oil with 1,990 mcf/d of associated natural
gas for a total of 1,077 Boe/d (69% oil) over a 29 hour
period and at an average flowing pressure of approximately 1,629
psi. |
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iii) |
During the test period of 75 hours, the total gross produced
cumulative volumes were approximately 2,553 barrels of oil and
approximately 7,210 mcf of natural gas, for a total of
approximately 3,754 barrels of oil equivalent (68% oil)
gross. No significant flowing pressure declines were
observed throughout the testing period and water cuts ranged from
0% to 3% throughout the test period. |
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- Operationally, Madalena and its partners currently have a
completion rig running on the Coiron Amargo block with another
drilling rig scheduled to mobilize to the block in Q2 to continue
drilling a combination of high impact horizontals and Vaca Muerta
shale delineation wells.
- Two 3D seismic programs were shot at Coiron Amargo Sur during
the second quarter of 2013 and were subsequently processed in the
third quarter. The Coiron Amargo block (both north and south
regions) is now almost entirely covered with 3D seismic.
Curamhuele Block
- The greater El Trapial / Curamhuele region is an evolving area
within the Neuquén basin which is seeing increased exploration and
appraisal activity for unconventional shale plays and tight sand
reservoirs. Chevron has recently announced that a second focus area
for Chevron in the Vaca Muerta shales is the El Trapial block which
is adjacent and to the east of Madalena's 90% working interest
Curamhuele block. At El Trapial, Chevron is drilling and
testing four exploration wells in 2014 to further assess the
unconventional shale potential. Others, such as YPF are also
drilling on lands offsetting Madalena's Curamhuele block for
unconventional shale and tight sand plays.
- The primary zones of interest across the Curamhuele block are
the unconventional Vaca Muerta shale, Lower Agrio
shale and liquids rich Mulichinco sands. The block is
also prospective for other conventional reservoirs.
- To satisfy a portion of the 2014 block commitments, Madalena
has recently shot an approximately 75 square kilometer 3D seismic
survey at Curamhuele. Processing of this data is currently
underway. The Company plans to merge this newly acquired data with
the existing 125 square kilometer 3D survey on the block.
This will provide 3D seismic coverage on the entire northern
portion of the Curamhuele block.
- To satisfy the remaining 2014 block commitments, Madalena plans
to execute two high impact re-entries of the Yp.x-1001 and Ch.x-1
wellbores. Through these re-entries, Madalena plans to test an
estimated 200 meter thick tight Mulichinco sand liquids-rich gas
play and an estimated 225 meter thick oil zone in the Lower Agrio
shale (which is a second emerging unconventional shale play in
Argentina). In response to
offsetting industry activity, Madalena is also evaluating the Vaca
Muerta shale across the block.
- To accelerate exploration and development activities on the
block, the Company continues to assess different opportunities
with RBC Capital Markets ("RBC"), Madalena's exclusive advisor
related to its Neuquén basin assets, in respect of a possible
joint venture partnership or other transaction.
Cortadera Block
- On January 15, 2014, the
Corporation announced that, on the Cortadera Block, the joint
venture partnership consisting of Apache Corporation, Gas y
Petroleo del Neuquén SA and Madalena had signed an amended contract
agreement to formalize a multi-year extension of the initial
exploration period and inclusion of subsequent exploration periods.
Subsequent to that agreement and following an application and
approval process, the first exploration period for Cortadera was
extended by way of an official decree which was signed by the
Province of Neuquén in Argentina.
This extension provides the partnership until October 26, 2014 to satisfy the remaining work
commitments on the block, which involves an upcoming re-entry of
the CorS.x-1 well. Under the amended agreement, and subsequent to
conducting the upcoming re-entry work, the partnership at Cortadera
has the option to enter into a second exploration period extending
to October 25, 2018 and a third
exploration period extending to October 25,
2021, or extend the Cortadera Block through potential
further evaluation and/or exploitation phases.
- Madalena and its new block partner YPF S.A. (acquired through
YPF's recent purchase of the Apache subsidiary in Argentina) plan to re-enter the previously
drilled CorS.x-1 Vaca Muerta test well to evaluate the uphole
Mulichinco tight sand play (or other zone of interest). Madalena
expects that its share of any costs for the work performed will not
be significant due to YPF's continued earning obligations which
include carrying Madalena for the majority of the anticipated
costs.
DOMESTIC OPERATIONS - Greater Paddle River Area,
Alberta,
Canada
- Domestically, Madalena's core area of operations is located in
the greater Paddle River area, where the Company holds
approximately 196 gross (154 net) sections of land (approximately
78% average working interest) in west-central Alberta that support light oil and
liquids-rich gas resource plays. Madalena entered the
domestic E&P space in November, 2012 and executed horizontal
drilling activity in 2013 with a focus of bringing increased
production and cash flow into the company.
- Drilled 6 (5.92 net) wells in 2013 including 4 development
horizontals and 2 exploration wells which qualify for Canadian
Exploration Expense ("CEE") , resulting in 4 (4 net) oil wells;
- Continued to make progress on the Ostracod horizontal oil
project with 5 (4.92 net) wells drilled in 2013. Four (4.0 net) of
these wells are currently on production while the fifth (0.92 net),
a significant step-out well drilled in late 2013, continues to be
evaluated. Q4 - 2014 production from the producing Ostracod wells
represented 70% of the Company's domestic production of 1,098
boe/d. Operating costs for the Ostracod horizontal wells in Q4,
2013 were $14.54 per boe.
Overall, the Company has gained valuable insights during 2013 on
its emerging Ostracod project and has an inventory of horizontal
development locations on its 58 net section land position.
- Madalena's domestic focus is to exploit its inventory of
horizontal development locations on its Ostracod oil,
Notikewin/Wilrich liquids-rich gas and other emerging oil &
liquids-rich gas resource plays in the area. Madalena also
holds more than 100 net sections (100% W.I.) which are prospective
for the Duvernay shale.
About Madalena - International and Domestic Assets
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.
Internationally, Madalena holds three large
blocks within the Neuquén basin in Argentina where it is focused on the
delineation of large petroleum in-place shale and unconventional
resources in the Vaca Muerta and Lower Agrio shales, in addition to
multiple tight sand plays. The Company is also implementing
horizontal drilling and completions technology to high impact
international plays and is currently focused on a conventional oil
play in the Sierras Blancas formation. Madalena holds approximately
132,200 net acres on the Coiron Amargo (34,951 net acres),
Curamhuele (50,595 net acres) and Cortadera (46,656 net acres)
blocks.
Domestically, Madalena's core area of operations
is located in the Greater Paddle River area of west-central
Alberta where the Company holds
approximately 200 gross (>150 net) sections of land
(approximately 78% average W.I.) encompassing light oil and
liquids-rich gas resource plays. Madalena's primary domestic focus
is to exploit its large inventory of horizontal drilling locations
on its Ostracod oil and emerging oil & liquids-rich gas
resource plays.
Madalena trades on the TSX Venture Exchange
under the symbol MVN. Basic corporate information, recent news
releases and regularly updated corporate presentations are
available on the Company's website at www.madalenaenergy.com
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, including, without
limitation, with respect to expected operational activities,
including drilling, completion, re-entry, evaluation and seismic
activities, and the timing thereof, timing matters related to
Madalena's properties, including potential block extensions and
matters pertaining to Madalena's efforts to seek a joint venture
partner for certain assets. 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. In
particular, this news release contains forward-looking statements
pertaining to planned operational activities to be conducted by the
Company. In addition, statements relating to "reserves" or
"resources" are deemed to be forward-looking statements as they
involve the implied assessment, based on certain estimates and
assumptions, that the reserves and resources described exist in the
quantities predicted or estimated and can be profitably produced in
the future. 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
Reserves and Other Oil and Gas
Disclosure
Any references in this news release to test
rates, flow rates, initial and/or final raw test or production
rates, early production, test volumes behind pipe 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, the Vaca Muerta shale is an unconventional resource play
which may be subject to high initial decline rates. While Madalena
is very encouraged by the initial results from the CAN-15(h)
horizontal well, the flowback information disclosed above should be
considered preliminary and is not indicative of the well's
long-term performance. Ongoing technical work and operational
enhancements are expected to continue to improve the Company's
understanding of the ultimate potential of its Sierras Blancas
horizontal oil play.
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.
Certain information in this document 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 in which Madalena may hold an interest and such
information has been presented to help demonstrate the basis for
Madalena's business plans and strategies.
However, such analogous information has not 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 of 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.
Notes to Disclosure of Resources
(1) |
"Total Petroleum Initially In Place" means DPIIP + UPIIP.
When calculating DPIIP, there is no material production or reserves
associated with these properties. Contingent resources is the only
category of DPIIP that has been categorized as recoverable.
Prospective resources is the only category of UPIIP that has been
categorized as recoverable. There is no certainty that it
will be commercially viable to produce any portion of the
contingent resources referred to in the tables above. There
is no certainty that any portion of the prospective resources
referred to in the tables above will be discovered. If discovered,
there is no certainty that it will be commercially viable to
produce any portion of these resources. |
(2) |
Certain volumes are arithmetic sums of multiple estimates of
contingent & prospective resources, which statistical
principles indicate may be misleading as to volumes that may
actually be recovered. Readers should give attention to the
estimates of individual classes of resources and appreciate the
differing probabilities of recovery associated with each class as
explained herein. Details on the categories that comprise
these calculations are in the tables that follow. |
Coiron Amargo Discovered
Petroleum Initially In Place (1) (net to
Madalena)
Oil, NGLs and Natural Gas at December 31, 2012 |
|
Oil &
NGLs
(MMbbl) |
Natural
Gas
(Tcf) |
Oil &
NGLs + Natural
Gas (MMboe) |
|
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Vaca
Muerta
Shale |
242.6 |
244.4 |
246.2 |
0.077 |
0.077 |
0.078 |
255.4 |
257.4 |
259.2 |
|
Note: |
(1) |
When calculating DPIIP, there is no material production or
reserves associated with these properties. All DPIIP, other
than contingent resources, has been categorized as
unrecoverable. There is no certainty that it will be
commercially viable to produce any portion of the resources
referred to in the table above. |
(2) |
These volumes are arithmetic sums of multiple estimates, which
statistical principles indicate may be misleading as to volumes
that may actually be recovered. Readers should give attention
to the estimates of individual classes of resources and appreciate
the differing probabilities of recovery associated with each
class as explained herein. |
Coiron Amargo Contingent
Resources(1) (net to Madalena)
Oil, NGLs and Natural Gas at December 31, 2012 |
|
Oil &
NGLs
(MMbbl) |
Natural
Gas
(Tcf) |
Oil &
NGLs + Natural Gas
(MMboe) |
|
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Vaca
Muerta
Shale |
5.8 |
18.3 |
30.6 |
0.002 |
0.006 |
0.01 |
6.1 |
19.3 |
32.2 |
Notes: |
(1) |
There is no certainty that it will be commercially viable to
produce any portion of the resources referred to in the table
above. |
Coiron Amargo Undiscovered
Petroleum Initially In Place (1) (net to
Madalena)
Oil, NGLs and Natural Gas at December 31, 2012 |
|
|
Oil & NGLs
(MMbbl) |
Natural Gas
(Tcf) |
Oil & NGLs + Natural Gas
(MMboe) |
|
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Vaca
Muerta
Shale |
2,687.8 |
2,717.5 |
2,747.5 |
0.851 |
0.861 |
0.870 |
2,829.7 |
2,860.9 |
2,892.5 |
Notes: |
(1) |
Prospective resources is the only category of UPIIP that has
been categorized as recoverable. There is no certainty that
any portion of the resources referred to in the table above
will be discovered. If discovered, there is no certainty that it
will be commercially viable to produce any portion of these
resources. |
(2) |
These volumes are arithmetic sums of multiple estimates, which
statistical principles indicate may be misleading as to volumes
that may actually be recovered. Readers should give attention
to the estimates of individual classes of resources and appreciate
the differing probabilities of recovery associated with each
class as explained herein. |
Coiron Amargo Prospective
Resources(1) (net to Madalena)
Oil, NGLs and Natural Gas at December 31, 2012 |
|
Oil & NGLs
(MMbbl) |
Natural Gas
(Tcf) |
Oil &
NGLs + Natural Gas
(MMboe) |
|
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Vaca
Muerta
Shale |
122.7 |
249.7 |
377.2 |
0.039 |
0.079 |
0.119 |
129.2 |
262.9 |
397.1 |
Notes: |
(1) |
Prospective resources is the only category of UPIIP that has
been categorized as recoverable. There is no certainty that any
portion of the resources referred to in the table above will be
discovered. If discovered, there is no certainty that it will be
commercially viable to produce any portion of these resources. |
Curamhuele Undiscovered
Petroleum Initially In Place (1) (net to
Madalena)
Oil, NGLs and Natural Gas at December 31, 2012 |
|
|
Oil & NGLs
(MMbbl) |
Natural
Gas
(Tcf) |
Oil &
NGLs + Natural Gas
(MMboe) |
|
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Lower
Agrio
Shale |
3,835.7 |
4,763.4 |
5,834.0 |
2.777 |
3.955 |
5.443 |
4,298.4 |
5,422.5 |
6,741.2 |
Vaca
Muerta
Shale |
7,884.8 |
9,642.9 |
11,762.2 |
17.405 |
52.017 |
90.208 |
10,785.7 |
18,312.3 |
26,796.9 |
Total |
11,720.5 |
14,406.2 |
17,596.2 |
20.182 |
55.971 |
95.651 |
15,084.2 |
23,734.8 |
33,538.1 |
Notes: |
(1) |
Prospective resources is the only category of UPIIP that has
been categorized as recoverable. There is no certainty that any
portion of the resources referred to in the table above will be
discovered. If discovered, there is no certainty that it will be
commercially viable to produce any portion of these resources. |
(2) |
These volumes are arithmetic sums of multiple estimates, which
statistical principles indicate may be misleading as to volumes
that may actually be recovered. Readers should give attention to
the estimates of individual classes of resources and appreciate the
differing probabilities of recovery associated with each class as
explained herein. |
Curamhuele Prospective Resources(1) (net to
Madalena)
Oil, NGLs and Natural Gas at December 31, 2012 |
|
Oil & NGLs
(MMbbl) |
Natural Gas
(Tcf) |
Oil & NGLs + Natural Gas
(MMboe) |
|
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Lower
Agrio
Shale |
86.1 |
328.6 |
596.2 |
0.070 |
0.266 |
0.524 |
97.8 |
373.0 |
683.5 |
Vaca
Muerta
Shale |
174.7 |
667.4 |
1,207.4 |
0.663 |
2.942 |
8.096 |
285.2 |
1,157.6 |
2,556.7 |
Total |
260.8 |
996.0 |
1,803.6 |
0.733 |
3.208 |
8.620 |
382.9 |
1,530.6 |
3,240.2 |
Notes: |
(1) |
There is no certainty that any portion of the resources
referred to in the table above will be discovered. If discovered,
there is no certainty that it will be commercially viable to
produce any portion of these resources. |
Cortadera Undiscovered Petroleum
Initially In Place(1) (net to Madalena)
Oil, NGLs and Natural Gas at December 31, 2012 |
|
Oil & NGLs
(MMbbl) |
Natural Gas
(Tcf) |
Oil & NGLs + Natural Gas
(MMboe) |
|
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Basal
Quintuco |
46.8 |
108.8 |
184.8 |
16.234 |
22.706 |
29.003 |
2,752.4 |
3,893.1 |
5,018.6 |
Vaca
Muerta
Shale |
52.8 |
118.0 |
184.4 |
22.277 |
23.656 |
25.082 |
3,765.6 |
4,060.6 |
4,364.7 |
Total |
99.6 |
226.8 |
369.2 |
38.510 |
46.362 |
54.085 |
6,518.0 |
7,953.7 |
9,383.3 |
Notes: |
(1) |
Prospective resources is the only category of UPIIP that has
been categorized as recoverable. There is no certainty that any
portion of the resources referred to in the table above will
be discovered. If discovered, there is no certainty that it will be
commercially viable to produce any portion of these
resources. |
(2) |
These volumes are arithmetic sums of multiple estimates, which
statistical principles indicate may be misleading as to volumes
that may actually be recovered. Readers should give attention
to the estimates of individual classes of resources and appreciate
the differing probabilities of recovery associated with each
class as explained herein. |
Cortadera Prospective
Resources(1) (net to Madalena)
Oil, NGLs and Natural Gas at December 31, 2012 |
|
Oil & NGLs
(MMbbl) |
Natural
Gas
(Tcf) |
Oil & NGLs + Natural Gas
(MMboe) |
|
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Low
Estimate
P90 |
Best
Estimate
P50 |
High
Estimate
P10 |
Basal
Quintuco |
5.6 |
14.0 |
27.2 |
1.745 |
2.932 |
4.569 |
296.5 |
502.6 |
788.7 |
Vaca
Muerta
Shale |
6.4 |
14.8 |
27.6 |
1.958 |
3.189 |
4.428 |
332.7 |
546.3 |
765.6 |
Total |
12.0 |
28.8 |
54.8 |
3.703 |
6.121 |
8.997 |
629.2 |
1,048.9 |
1,554.3 |
Notes: |
(1) |
Prospective resources is the only category of UPIIP that has
been categorized as recoverable. There is no certainty that any
portion of the resources referred to in the table above will be
discovered. If discovered, there is no certainty that it will be
commercially viable to produce any portion of these resources. |
|
|
Definitions |
|
"Contingent resources" |
Definition: Those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
known accumulations using established technology or technology
under development, but which are not currently considered to be
commercially recoverable due to one or more contingencies.
Contingencies may include factors such as economic, legal,
environmental, political, and regulatory matters or a lack of
markets. It is also appropriate to classify as contingent resources
the estimated discovered recoverable quantities associated with a
project in the early evaluation stage. |
|
|
"Discovered petroleum initially-in-place" or
"discovered resources" or "DPIIP" |
Definition: That quantity of petroleum that is
estimated, as of a given date, to be contained in known
accumulations prior to production. The recoverable portion of
discovered petroleum initially-in-place includes production,
reserves and contingent resources; the remainder is
unrecoverable. |
|
|
"Prospective resources" |
Definition: Those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
undiscovered accumulations by application of future development
projects. Prospective resources have both an associated chance of
discovery and a chance of development. |
|
|
"Total petroleum initially-in-place", "total
resources" or "TPIIP" |
Definition: That quantity of petroleum that is
estimated to exist originally in naturally occurring accumulations;
equal to DPIIP plus UPIIP. It includes that quantity of petroleum
that is estimated, as of a given date, to be contained in known
accumulations, prior to production, plus those estimated quantities
in accumulations yet to be discovered. |
|
|
"Undiscovered petroleum initially-in-place",
"undiscovered resources" or "UPIIP" |
Definition: That quantity of petroleum that is
estimated, on a given date, to be contained in accumulations yet to
be discovered. The recoverable portion of undiscovered petroleum
initially-in-place is referred to as prospective resources; the
remainder is unrecoverable. |
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.