TSXV Trading Symbol: MVN
OTC Trading Symbol: MDLNF
CALGARY, July 30, 2014 /CNW/ - Madalena Energy Inc.
("Madalena" or the "Company") (TSXV: MVN
and OTC: MDLNF), is pleased to announce that it has approved
a CDN$ 36 million budget for the
remainder of 2014 and to provide an overview of the Company's
operational priorities through the 2015 calendar year.
Key Focus Areas and Company
Priorities:
Madalena is positioned within the Argentine
energy sector with a solid platform for future growth across 14
concessions and is focused on delivering a balanced approach
towards both conventional oil and gas development and the
delineation of the Company's unconventional shale and tight sand
resources. The Company also has a land base with over 150 net
sections (>100,000 net acres) in Western Canada with a large inventory of
horizontal development locations.
Madalena has a strong portfolio of assets in
Argentina including approximately
1 million net acres of land, a stable production base, an extensive
inventory of low-risk development drilling opportunities, a
portfolio of conventional exploration and appraisal assets and a
large-petroleum-in-place set of unconventional shale (Vaca Muerta
and Lower Agrio shales) and tight sand resources.
Over the next 17 months, Madalena plans to
invest the Company's cash flow and financial resources on its
conventional opportunities and to execute a delineation strategy on
the Company's unconventional shale and tight sand resources within
the Neuquén basin.
Madalena is focused on creating shareholder
value through a balanced business strategy focused primarily on a
combination of lower risk development activities and unconventional
shale and tight sand delineation strategy. Key focus areas
and priorities are as follows:
Priority #1: Conventional Development -
Horizontal Drilling & Workover Programs
To build the Company's production platform,
conventional development will be a key priority and will include
implementing horizontal drilling and multi-stage frac technology
both internationally and domestically. In Argentina, on the Coiron Amargo, Puesto
Morales and Rinconada South blocks, the Company plans to execute
horizontal drilling programs in both the Sierras Blancas light oil
reservoir and the Loma Montosa oil resource play. In
Western Canada, the Company plans
to drill additional horizontal Ostracod oil wells to increase oil
production and to further advance this project across the Company's
prospective land base.
Horizontal drilling operations in the Sierras
Blancas and Ostracod oil developments will proceed through the
remainder of 2014 with the drilling of four to five wells. A
multi-well drilling program in the Loma Montosa oil resource play
is being planned for 2015 at the Puesto Morales field.
Additionally, Madalena is planning to execute a
multi-well workover program in 2014 and 2015 to optimize production
across its producing fields in Argentina. Specifically, the Company
plans to conduct four workovers in its Puesto Morales field before
the end of 2014.
Priority #2: Unconventional Shale &
Tight Sand Resources - Advancing a Delineation
Strategy
Industry activity near Madalena's unconventional
blocks within the Neuquén basin continues to increase and Madalena
is well positioned with exposure to the evolving shale and tight
sand plays at Corion Amargo, Curamhuele and Cortadera. As part of a
balanced business strategy to unlock value, Madalena is planning to
conduct vertical and/or horizontal activities in the Vaca Muerta
shale, Lower Agrio shale and Mulichinco tight sand plays.
For the remainder of 2014, on the Coiron Amargo
block, Madalena plans to continue its delineation activities in the
Vaca Muerta shale with a fracture treatment at the CAS.x-15
vertical well (previously drilled) and a new vertical well to be
drilled and multi-stage fracced at the CAS.x-16 location.
Rigs have been secured for these activities. Also in 2014, on
the Cortadera block, Madalena expects to conduct a re-entry
targeting the Mulichinco tight sand in the previously drilled
CorS.x-1 deep vertical test.
The Company also plans to move forward at
Curamhuele on its unconventional resources in the Lower Agrio shale
and Mulichinco tight sands by re-entering two existing wells
(Yp.x-1001 and Ch.x-1) to conduct drilling, multi-stage frac and
testing operations in these zones of interest. Timing of this
work is currently planned for late 2014 or Q1-2015. Madalena is
currently working to source a drilling rig and other services for
this program. In response to offsetting industry activity,
Madalena is also further evaluating the Vaca Muerta shale across
the Curamhuele block.
Priority #3: Exploration and
Appraisal Potential Across Multiple Blocks
Madalena's realigned Canadian and Argentine
staff is now able to put additional focus on select business
development initiatives related to potential block farm-outs.
Madalena's strategy is to focus the Company's cash flow and
financial resources on its development assets and the delineation
of its unconventional resources (as described above). The Company
will concurrently pursue a farm-out strategy to create value on
select exploration and appraisal blocks.
Operations Update: Drilling
Recommences
Madalena plans to recommence drilling operations
in both Argentina and Western Canada in August 2014. At Madalena's Coiron Amargo
block in the Neuquén basin, drilling operations are commencing on a
three well program with the initial well a horizontal well on the
Sierras Blanca light oil play. Upcoming drilling operations
in Western Canada will include two
horizontal development wells on the Ostracod oil play.
Corporate Update: Focused Team, 2014
Budget and Guidance
Subsequent to closing the recent acquisition of
Gran Tierra's Argentine business unit, Madalena has integrated the
Canadian and Argentina based
corporate, operational and technical teams. With an
experienced, full cycle team in place on the ground in Argentina, Madalena is able to efficiently
operate all aspects of its oil and gas business in Argentina.
Madalena's board and management team is focused
on delivering positive results and has established a capital budget
for the remainder of 2014 of CDN$ 36
million. This budget is focused on a combination of
high impact horizontal wells in the Sierras Blancas oil play,
development horizontals in the Ostracod oil play, re-entries and
workovers for production optimization, and unconventional shale
delineation activities.
At the end of 2014, the Company expects to be in
a positive working capital position with no debt and a strong
balance sheet with financial flexibility. Madalena expects to
grow production for the remainder of 2014 and estimates to exit
2014 with corporate production of approximately 5,200 boe/d to
5,400 boe/d (72% oil and NGLs) while also advancing the Company's
unconventional shale resources. Madalena currently has an undrawn
bank facility of CDN$13 million with
a major Canadian bank.
About Madalena - International and Domestic
Assets
Madalena is an independent, Canadian-based,
international and domestic 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 14 large land
blocks within five provinces 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
conventional and resource plays.
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 other oil and 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, in particular, but not
limited to, with respect to the characteristics of the properties
held by the Company, current and future production levels, the
strategic value and opportunities available to Madalena, capital
expenditure, operational and business development plans and the
ability of Madalena to execute on such plans. Statements relating
to "reserves" are also deemed to be forward looking statements, as
they involve the implied assessment, based on certain estimates and
assumptions, that the reserves described exist in the quantities
predicted or estimated and that the reserves can be profitably
produced in the future. 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
operational activities to be conducted by the Company. 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.
Meaning of Boe
The term "boe" or barrels of oil equivalent
may be misleading, particularly if used in isolation. A boe
conversion ratio of six thousand cubic feet of natural gas to one
barrel of oil equivalent (6 Mcf: 1 bbl) is based on an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead.
Additionally, given that the value ratio based on the current price
of crude oil, as compared to natural gas, is significantly
different from the energy equivalency of 6:1; utilizing a
conversion ratio of 6:1 may be misleading as an indication of
value.
Analogous Information
Certain information in this news release may
constitute "analogous information" as defined in National
Instrument 51-101 - Standards of Disclosure for Oil and Gas
Activities ("NI 51-101"), including, but not limited to,
information relating to areas, assets, wells and/or operations that
are in geographical proximity to or believed to be on-trend with
lands held by Madalena. Such information has been obtained from
public sources, government sources, regulatory agencies or other
industry participants. Management of Madalena believes the
information may be relevant to help define the reservoir
characteristics within lands on which Madalena holds an interest
and such information has been presented to help demonstrate the
basis for Madalena's business plans and strategies. However,
management cannot confirm whether such analogous information has
been prepared in accordance with NI 51-101 and the Canadian Oil and
Gas Evaluation Handbook and Madalena is unable to confirm that the
analogous information was prepared by a qualified reserves
evaluator or auditor. Madalena has no way of verifying the accuracy
of such information. There is no certainty that the results of the
analogous information or inferred thereby will be achieved by
Madalena and such information should not be construed as an
estimate of future production levels or the actual characteristics
and quality Madalena's assets. Such information is also not an
estimate of the reserves or resources attributable to lands held or
to be held by Madalena and there is no certainty that such
information will prove to be analogous in the future. The reader is
cautioned that the data relied upon by Madalena may be in error
and/or may not be analogous to such lands to be held by
Madalena.
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.