TSXV Trading Symbol: MVN
OTC Trading Symbol:
MDLNF
CALGARY, Nov. 26, 2014 /CNW/ - Madalena Energy Inc.
("Madalena" or the "Company") (TSXV: MVN and US: OTC: MDLNF) is
pleased to announce its third quarter 2014 financial and operating
results. The third quarter was highlighted by the results of the
accretive acquisition made by Madalena in late June 2014. The information below 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. Third quarter 2014
highlights as compared to the third quarter of 2013 include:
THIRD QUARTER 2014 HIGHLIGHTS
($CDN unless
otherwise specified)
- 300% increase in production to 4,707 boe/d (75% oil &
NGLs);
- 538% increase in oil and gas revenues to $30.9 million;
- 379% increase in funds flow from operations to $8.8 million;
- During the quarter the Company was awarded USD$4 million for Argentine Oil Plus Credits
(related to production and reserve increases in prior years).
The Company anticipates collecting these credits (revenue) in 2015
and will recognize the revenue at the time of collection;
- Exited the quarter with a positive working capital position of
$18.0 million, no debt and unutilized
credit facilities of $13.0
million;
- Appointed two new independent directors Messrs. Douglas E. Brooks and Steven Sharpe to the Board directors. Messrs.
Brooks and Sharpe add significant operational, strategic and
governance expertise to Madalena;
- Realized oil prices in Argentina remained strong with the Company
receiving an average of $87.11 per
barrel of oil during the third quarter;
- Drilled, completed and placed on production its third Sierras
Blancas light oil horizontal (CAN-18(h)) after successfully
targeting a third separate oil pool on its Coiron Amargo Norte
block (35% WI). The CAN-18(h) horizontal was initially placed on
production through permanent facilities at a rate of 910 boe/d (83%
oil);
- Successfully drilled and completed a new horizontal oil and gas
exploration discovery (100% WI) in the Nordegg formation on Madalena's western
Canadian assets. This new discovery well flowed continuously
up 7 inch casing and ended its initial clean-up period flowing at a
rate of 718 boe/d (51% Oil); and
- Commenced the international operational planning related to the
drilling of multiple high impact plays in 2015 focused on the Loma
Montosa oil resource play, Sierras Blancas light oil pools, Vaca
Muerta shale, Agrio shale, and liquids rich Mulichinco.
SUMMARY FINANCIAL AND OPERATIONAL RESULTS
|
|
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Three months
ended
September
30
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Nine months
ended
September
30
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2014
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2013
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|
2014
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|
2013
|
Financial Canadian
- $000s
(except per share
amounts)
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|
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|
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Oil and gas
revenue
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30,860
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4,840
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46,310
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12,327
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Funds flow from
operations(1)
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8,750
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1,828
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13,368
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2,239
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Per share - basic
& diluted(1)
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0.02
|
|
0.01
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|
0.03
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|
0.01
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Net income
(loss)
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(2,267)
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(118)
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(5,480)
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(2,758)
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Per share – basic and
diluted
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(0.00)
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|
(0.00)
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|
(0.01)
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|
(0.01)
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Business
combination
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-
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-
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74,406
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-
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Capital
expenditures
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12,543
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7,171
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27,256
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30,175
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Working
capital
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17,958
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8,925
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17,958
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8,925
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Equity outstanding
– 000s
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Common
shares
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539,783
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338,698
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539,783
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338,698
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Stock
options
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25,433
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20,430
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25,433
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20,430
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Operating(2)
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Average Daily
Sales
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Crude oil and
condensate – Bbls/d
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3,377
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|
401
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1,592
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338
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Natural gas –
Mcf/d
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7,135
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3,838
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4,604
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3,340
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NGLs –
Bbls/d
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140
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137
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125
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129
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Total - boe
/d(3)
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4,707
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1,177
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|
2,485
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1,024
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Average Sales
Prices
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Crude oil and
condensate - $/Bbl
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87.16
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89.51
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87.48
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83.01
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Natural gas -
$/Mcf
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4.81
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2.43
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5.10
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3.05
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NGLs -
$/Bbl
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48.56
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54.54
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54.58
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53.33
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Total -
$/boe(3)
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71.28
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44.72
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68.27
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44.11
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Operating Netbacks
(4)
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$/boe(3)
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34.29
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14.82
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33.76
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14.61
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(1)
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This table contains
the term "funds flow from operations", which is a non-GAAP measure
and should not be considered an alternative to, or more meaningful
than "cash flows from operating activities" as determined in
accordance with International Financial Reporting Standards
("IFRS") as an indicator of the Company's performance. Funds flow
from operations and funds flow from operations per share (basic and
diluted) do not have any standardized meanings prescribed by IFRS
and may not be comparable with the calculation of similar measures
for other entities. Management uses funds flow from operations to
analyze operating performance and leverage and considers funds flow
from operations to be a key measure as it demonstrates the
Company's ability to generate the cash necessary to fund future
capital investment. The reconciliation between funds flow from
operations and cash flows from operating activities can be found in
"Management's Discussion and Analysis". Funds flow from operations
per share is calculated using the basic and diluted weighted
average number of shares for the period, consistent with the
calculations of earnings per share.
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(2)
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Sales represent
production volumes adjusted for inventory changes in
Argentina.
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(3)
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Refer to - "Reserves
and Other Oil and gas Disclosure" in Advisory.
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(4)
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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.
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OUTLOOK FOR FOURTH QUARTER OF 2014 AND
2015
The Company had previously established a $36 million capital budget for the second half of
2014. Madalena expects to spend an estimated $26 million of such amount by the end of 2014
with certain drilling and operational activities related to the
Company's International programs being carried over into
2015. The Company continues to be well positioned
heading into an active 2015 year and expects to be in a positive
working capital position with no debt at the end of 2014.
The Company's current base production is approximately 4,400
boe/d plus an additional estimated 200 bopd which is currently
shut-in on its El Vinalar block pending maintenance work. This
production is expected to be restored prior to the end of
2014. In addition, Madalena also has an estimated 500 boe/d
of production additions to be brought on stream in Q1-2015 from
recent drilling and completion operations conducted in
Q4-2014.
Madalena has recently commenced drilling a Vaca Muerta shale
delineation well on its Coiron Amargo block and plans to start
drilling a fourth horizontal well into its Sierras Blancas light
oil play in Q4-2014. The Company is also currently in the
field conducting various production optimization activities on its
Argentina properties.
With Madalena positioned with a solid production base for
reinvestment, the Company expects to be very active in 2015, with
plans to drill a number of wells focused on properties with
scaleability and large exploitation upside both unconventionally
and conventionally.
The Company is focused on maintaining a balanced approach
comprised of implementing horizontal drilling and completions
technology across its oil assets both in Argentina and Canada and the delineation of the Company's
unconventional shales and tight sand resources in
Argentina.
Among the Company's portfolio of assets, six high impact plays
are proposed to be drilled and completed throughout 2015 and will
focus on:
Coiron Amargo
- Continued horizontal drilling of the Company's Sierras Blancas
light oil assets at Coiron Amargo across six different pools on the
block;
- Vertical and horizontal multi-frac wells to further delineate
and evaluate the Vaca Muerta shale oil potential at Coiron
Amargo;
Puesto Morales
- Applying horizontal multi-frac technology to advance the
Company's Loma Montosa oil resource play at Puesto Morales which is
scaleable with regional scope;
Curamhuele
- Re-entry activities at Curamhuele to drill, complete and test
the potential of the unconventional Agrio shale for light oil,
offsetting a recent industry discovery on an adjacent block;
- Re-entry activities at Curamhuele to drill, complete and test
the unconventional liquids-rich Mulichinco play which is over 200
meters thick on the block; and
Canada
- Horizontal development drilling and advancement of the
Company's proprietary completion technology on its emerging
Nordegg oil and gas resource play
in west-central Alberta,
Canada.
Madalena's 2015 business plan involves advancing business
development initiatives related to its non-core properties.
As such, the Company will continue to pursue potential non-core
asset sales, select strategic joint ventures or farm-outs to create
additional shareholder value.
In addition to drilling a number of plays in 2015 and working on
business development initiatives, the Company also plans to conduct
work-over programs and overall facility enhancement activities to
continue to optimize its existing producing fields.
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.
Madalena holds over 950,000 net acres across five provinces and
2 major blocks 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 across its oil and liquids-rich
gas resource plays.
Madalena trades on the TSX Venture Exchange under the symbol MVN
and on the US: 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 (including
working capital position, debt and balance sheet levels) 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.