TSXV Trading Symbol: MVN
OTC Trading Symbol: MDLNF
CALGARY,
Aug. 28, 2014 /CNW/ - Madalena Energy
Inc. ("Madalena" or the "Company") (TSXV: MVN)
(OTC: MDLNF) is pleased to announce the filing on SEDAR of its
unaudited interim consolidated financial statements and related
Management's Discussion and Analysis ("MD&A") for the three and
six months ended June 30, 2014.
Selected financial and operational information is outlined below
and should be read in conjunction with Madalena's unaudited interim
consolidated financial statements and related MD&A which are
available for review under the Company's profile at www.sedar.com
and on the Company's website at www.madalenaenergy.com.
SECOND QUARTER 2014 HIGHLIGHTS
($CDN unless otherwise specified)
- June 24, 2014 - closed a bought
deal financing for aggregate gross proceeds of $50 million;
- June 25, 2014 - closed the
acquisition (the "Acquisition") of the Argentinean business unit of
Gran Tierra Energy Inc. for a total consideration of $74.4 million, including working capital
adjustments, payable in $59.2 million
cash and $15.2 million in common
shares of Madalena. The second quarter results include six days of
contribution from the Acquisition. The Acquisition included proved
plus probable reserves of 6,513 Mboe at December 31, 2013, production on closing of
approximately 3,300 boe/d (~78% oil), 11 exploration and production
blocks comprising approximately 890,000 net acres and a fully
functional independent business unit in Argentina, with an experienced technical and
operational team;
- July 7, 2014 - closed the
over-allotment option of the bought deal financing for aggregate
gross proceeds of $7.5 million;
- Q2 - 2014 production was 1,569 boe/d - including the six
day contribution from the Acquisition;
- Current production is approximately 4,700 - 4,800 boe/d (75%
oil & NGLs) net to Madalena;
- Operating netbacks continue to improve and averaged
$35.14 per boe compared to
$13.71 per boe in Q2-2013, an
increase of 156%;
- Operating costs in Argentina
have significantly improved averaging $21.60 per boe in Q2-2014 as compared to
$40.43 per boe in Q2-2013, as the
benefits from increasing production volumes from the Company's
horizontal drilling programs and the optimization of surface fluid
handling and gas conservation facilities were realized;
- Well positioned with a strong balance sheet, exiting the
quarter with $11.2 million in working
capital ($18.2 million
following the closing of the over-allotment option for the bought
deal financing on July 7, 2014) and
unutilized credit facilities of $13
million; and
- Established a capital budget for the second half of 2014 of
$36 million, which will be funded by
existing working capital and cash flow from operations. This budget
is focused on a combination of high impact horizontal development
wells in the Sierras Blancas light oil play, development horizontal
wells in the Ostracod oil play, re-entries and workovers for
production optimization, and unconventional shale delineation
activities. Comprehensive details are provided under the Outlook
for Second Half of 2014 section shown below.
SUMMARY FINANCIAL AND OPERATIONAL RESULTS
|
|
|
|
|
|
Three months
ended
June 30 |
Six months
ended
June 30 |
|
2014 |
2013 |
2014 |
2013 |
Financial Canadian - $000s
(except per share amounts) |
|
|
|
|
Oil and gas revenue |
9,144 |
3,877 |
15,450 |
7,487 |
Net income (loss) |
(3,511) |
(320) |
(3,213) |
(2,640) |
Per share - basic and diluted |
(0.01) |
(0.00) |
(0.01) |
(0.01) |
Business combination |
74,406 |
- |
74,406 |
- |
Capital expenditures |
2,165 |
6,053 |
14,712 |
23,028 |
Working capital |
11,234 |
7,780 |
11,234 |
7,780 |
|
|
|
|
|
Equity outstanding - 000s |
|
|
|
|
Common shares |
525,043 |
316,841 |
525,043 |
316,841 |
Stock options |
19,305 |
15,372 |
19,305 |
15,372 |
|
|
|
|
|
Operating(1) |
|
|
|
|
Average Daily Sales |
|
|
|
|
Crude oil and condensate - Bbls/d |
841 |
297 |
686 |
307 |
Natural gas - Mcf/d |
3,654 |
3,491 |
3,318 |
3,086 |
NGLs - Bbls/d |
119 |
140 |
117 |
125 |
Total - boe /d(2) |
1,569 |
1,020 |
1,356 |
946 |
|
|
|
|
|
Average Sales Prices |
|
|
|
|
Crude oil and condensate - $/Bbl |
90.31 |
78.77 |
88.54 |
78.70 |
Natural gas - $/Mcf |
5.09 |
3.57 |
5.37 |
3.45 |
NGLs - $/Bbl |
50.24 |
47.91 |
58.22 |
52.66 |
Total - $/boe(2) |
64.08 |
41.80 |
62.95 |
43.72 |
|
|
|
|
|
Operating Netbacks (3) |
|
|
|
|
$/boe(2) |
35.14 |
13.71 |
32.82 |
14.47 |
(1) |
Sales represent production volumes adjusted for inventory
changes and losses in Argentina. |
(2) |
Refer to - "Reserves and Other Oil and gas Disclosure" in
Advisory. |
(3) |
Operating netback is a non-GAAP measure calculated as the
average per boe of the Company's oil and gas sales, less royalties
and operating costs. |
|
|
OUTLOOK FOR SECOND HALF OF 2014
Madalena has commenced drilling operations and
currently has a well drilling in both Argentina and Canada. The Company is evaluating options for
an additional drilling rig in Argentina prior to year end or into early
2015. The Company also expects to commence a multi-well
workover program early September in Argentina.
The Company's current production is
approximately 4,700 - 4,800 boe/d and with the execution of the
second half capital budget of $36
million, the Company is budgeting to exit 2014 with
production of 5,200 - 5,400 boe/d, which is expected to be
funded by existing working capital and cash flow from operations.
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 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.
Madalena has a strong portfolio of assets in
Argentina including 14
concessions/blocks, a solid production base for growth, 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 Agrio shales) and tight sand resources. The Company also
has a land base with over 150 net sections in Western Canada with a large inventory of
horizontal development locations.
Operational Update - Argentina
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, Agrio shale and Mulichinco tight sand plays
Coiron Amargo (35% WI)
The Company's Sierras Blancas horizontals, in which the Company has
a 35% working inrest, continue to exceed expectations.
Madalena's first horizontal well (CAN-xr-2h) is producing
approximately 500 Bbls/d and 800 Mcf/d sales gas (630 boe/d gross)
and has cumulative gross production to the end of July (seven
months on production) of approximately 144,000 Bbls of oil.
The second horizontal (CAN-15h) is producing 430 Bbls/d and 480
Mcf/d sales gas (510 boe/d gross) and has cumulative gross
production of 44,300 Bbls of oil to the end of July (three months
on production). Current water cut for these wells are
approximately 10 and 15% respectively.
The third Sierras Blancas horizontal (CAN-18h)
is currently running intermediate casing prior to drilling out and
commencing the build section of the horizontal. It is
anticipated to finish drilling in September with production
expected for October 2014. A
fourth horizontal (CAN-16h) will commence following the completion
of CAN-18h. Production from this well is expected prior to
year end.
On the Coiron Amargo South block Madalena is
expecting to commence a completion and frac of the Vaca Muerta
shale on the CAS-x-15 well before year end. In addition, the
Company plans to drill the CAS-x-16 well as a Vaca Muerta shale
test prior to year end. A rig has been secured for both
operations.
Puesto Morales (100% WI)
Madalena has secured a service rig and will commence a four well
recompletion program in the Loma Montosa formation at Puesto
Morales in September. The recompletion candidates are based
on behind pipe zones which have been successfully recompleted in
the field in other wells. The targets are predominately gas
with associated liquids. All four wells are expected to be on
production prior to year end.
A multi-well horizontal drilling program in the
Loma Montosa oil resource play is also being evaluated for 2015 at
the Puesto Morales field.
Curamhuele (90% WI)
Madalena has been working with its partner Gas Y Petroleo (GyP, the
Provincial Oil company) to secure a second rig to handle Curamhuele
and other projects in the Nuequen Basin. The Company is in
the process of receiving and evaluating drilling rig proposals for
the re-entry and recompletion (frac and test) of CH-x-1 well
focused on the Agrio shale and the deepening of the YP-x-1001 to
frac and test the Mulichinco liquids-rich gas resource play.
Most of the regulatory approvals have been received and the Company
anticipates commencing operations late 2014 or early 2015.
Madalena's Curamhuele block is within the oil window of the Agrio
shale and is directly offset or adjacent to the recently announced
Agrio shale discovery by the Argentina state company YPF.
Cortadera (37.8% WI)
Prior to the end of the year, Madalena and its partners YPF and GyP
plan to conduct a re-entry targeting an uphole zone of interest
(Mulichinco tight sand) in the CorS.x-1 vertical well (which was
originally drilled as a Vaca Muerta shale discovery on the
block).
Operational Update - Western Canada
Paddle River Ostracod Oil Development
(100% WI)
Madalena has drilled and cased an Ostracod horizontal well
offsetting its Paddle River discovery. The Company has run a
bottom hole liner assembly with 15 frac ports along the 1258 metre
lateral section of the wellbore. The drilling rig is expected
to commence drilling a second horizontal from the same surface pad
imminently. Prior to year end, both of these horizontals wells are
expected to be on production and a third horizontal in Canada is expected to be spud.
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 Agrio shales, in addition to
multiple tight sand plays. The Company is also implementing
horizontal drilling and completions technology to develop 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 and on the OTC under the symbol MDLNF.
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 the expected timing and details of
operational activities, including drilling, completion, re-entry,
evaluation and seismic activities, anticipated financial condition
and metrics and anticipated production levels. 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.
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, 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 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.
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.