CALGARY, April 21, 2016 /CNW/ - Madalena Energy Inc.
("Madalena" or the "Company") (TSXV: MVN and OTCQX: MDLNF) is
pleased to provide selected financial and operational
information for the three months and year ended December 31, 2015.
Copies of the Company's consolidated financial statements for
the year ended December 31, 2015, the
related management's discussion and analysis and the Annual
Information Form (the "AIF") of the Company 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. All dollar figures
are expressed in United States
dollars unless otherwise stated. Prior year figures were
previously reported in Canadian dollars and have been translated
for comparative purposes as disclosed in the notes to the
consolidated financial statements.
An updated corporate presentation is available on the Company's
website.
2015 HIGHLIGHTS
Highlights for 2015 included:
- Oil and gas production averaged 3,274 boe/d (Q4-2014 – 4,075
boe/d) and 3,577 boe/d (2014 - 2,882 boe/d) for the fourth quarter
and year, respectively;
- Proved plus probable reserves ("P+P") of 11.4 MMboe (2014 -
11.5 MMboe), primarily from the Company's conventional assets. Net
present value of these P+P reserves before tax, discounted at 10%
("NPV10") was $127.2 million (2014 - $171.9 million);
- Argentina operating netbacks
averaged $21.07/boe in the fourth
quarter (Q4-2014 - $23.54/boe) and
$26.07/boe for the year (2014 -
$28.33/boe);
- Benchmark Medanito oil prices in 2015 averaged $75.00/bbl for the quarter (Q4-2014 -$83.60/bbl) and $75.92/bbl for the year
(2014 - $80.35/bbl);
- Funds flow from operations were $3.7
million (Q4-2014 – $3.9
million) and $27.8 million
(2014 -$16.5 million) for the quarter
and year, respectively. Funds flow from operations were positively
impacted by one-time oil price incentives of $16.8 million;
- Exited the year with a positive working capital position of
$0.5 million which includes
$3.9 million of current Argentine
bank debt. The Company has an additional $2.0 million in long-term Argentine bank
debt;
- Drilled, completed and placed on production three (35% WI)
Sierras Blancas conventional light oil horizontal wells at Coiron
Amargo and one (100% WI) Loma
Montosa light oil multi-frac horizontal well at
Riconada-Puesto Morales;
- Drilled one (100% WI) vertical exploration well in the quarter
at Curamhuele and successfully completed the well in Q1-2016 with
four hydraulic fractures, the upper three intervals being within
the Lower Agrio shale and the lowest interval containing both the
Lower Agrio shale and Mulichinco tight sand formations; and
- Drilled a fourth (35% WI) Sierras Blancas conventional light
oil horizontal well at Coiron Amargo in the quarter and
successfully completed and placed on production in the first
quarter of 2016.
SUMMARY FINANCIAL AND OPERATIONAL RESULTS
|
|
|
|
Three months
ended
December
31
|
Year
ended
December
31
|
|
2015
|
2014
|
2015
|
2014
|
Financial – US
Dollars ($000s, except per share amounts)
|
|
|
|
|
Gross
revenue(1)
|
18,304
|
23,446
|
97,505
|
65,873
|
Funds flow from
operations(2)
|
3,693
|
3,918
|
27,801
|
16,475
|
Per share - basic
& diluted(2)
|
0.01
|
0.01
|
0.05
|
0.04
|
Net
loss(3)
|
(13,761)
|
(28,273)
|
(13,705)
|
(31,832)
|
Per share – basic and
diluted(3)
|
(0.03)
|
(0.05)
|
(0.03)
|
(0.07)
|
Capital
expenditures
|
12,707
|
11,542
|
41,417
|
36,105
|
Working
capital
|
462
|
10,151
|
462
|
10,151
|
|
|
|
|
|
Equity
outstanding – 000s
|
|
|
|
|
Common
shares
|
542,083
|
539,782
|
542,083
|
539,782
|
Stock
options
|
34,819
|
25,880
|
34,819
|
25,880
|
|
|
|
|
|
Operating
|
|
|
|
|
Average Daily
Sales
|
|
|
|
|
Crude oil and Ngls –
Bbls/d
|
2,671
|
2,991
|
2,880
|
2,035
|
Natural gas –
Mcf/d
|
3,614
|
6,505
|
4,187
|
5,083
|
Total - boe
/d
|
3,274
|
4,075
|
3,577
|
2,883
|
|
|
|
|
|
Average Sales
Prices
|
|
|
|
|
Crude oil and Ngls -
$/Bbl
|
68.88
|
77.01
|
72.83
|
77.38
|
Natural gas -
$/Mcf
|
4.14
|
3.97
|
4.64
|
4.58
|
Total -
$/boe
|
60.77
|
62.85
|
64.06
|
62.72
|
|
|
|
|
|
Corporate
Operating Netbacks(4)
|
|
|
|
|
$/boe
|
21.07
|
23.54
|
26.07
|
28.33
|
|
|
(1)
|
The year-end
balance includes other income of $13.9 million pursuant to the
one-time settlement of the past Petroleo Plus incentive credits and
$2.9 million in oil incentive credit, $0.7 million of which was
recorded in Q4- 2015.
|
(2)
|
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 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 (loss) per share.
|
(3)
|
Includes a pre-tax
impairment charge on the Canadian assets in the amount of $1.3
million for the three months ended December 31, 2015 (Q4 -2014 -
$24.1 million) and $5.4 million for the year ended December 31,
2015 (2014 - $26.9 million). Includes a pre-tax impairment charge
on the Argentine assets in the amount of $8.4 million for the three
months and year ended December 31, 2015. There was no
impairment on the Argentine assets in 2014.
|
(4)
|
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.
|
ADVISOR RETAINED FOR CURAMHUELE
The Company has
recently retained Evercore Group LLC as its exclusive financial
advisor in connection with identifying and securing a joint venture
partner for the Curamhuele block in Argentina to accelerate exploration and
development activities on the block.
In addition, the Company is actively marketing certain of its
other properties in Argentina with
a view to enhance liquidity and meet commitments.
CANADA OPERATIONS
UPDATE
On February 8, 2016,
First Mountain Exploration Inc. ("First Mountain"), Point Loma
Energy Ltd. ("Point Loma") and Madalena entered into a non-binding
letter of intent pursuant to which, among other things, it is
proposed that Point Loma will acquire Madalena's non-core Canadian
oil and gas assets for a deemed aggregate purchase price of
approximately $4.0 million (CAD
$5.5 million).
It is anticipated that the Company will sign the asset purchase
and sale agreement ("PSA") within the next two weeks. Proceeds
will consist of 14,522,823 common shares of Point Loma, with a
deemed value of $1.8 million (CAD
$2.5 million), as well as a five-year
$2.2 million (CAD $3 million) secured convertible debenture,
bearing interest at 3% per annum, payable at the end of the
debenture term. The effective date of this PSA is expected to be
May 1, 2016, with closing expected on
or about May 31, 2016, subject to
certain terms and conditions, including the completion of a
financing by the purchaser, as well as the successful acquisition
(the "Acquisition") of Point Loma by First Mountain. The
Acquisition will involve an exchange of publicly traded First
Mountain common shares (TSXV: FMX) for all of the outstanding
common shares of Point Loma including those received by Madalena as
proceeds of the PSA.
ARGENTINA OPERATIONS
UPDATE
Subsequent to the year-end, the Company fulfilled its
remaining work obligation at Curamhuele by completing the
Yapai.x-1001 well. Over a 55 day period, the well has produced
5,338 bbls oil (97 bopd), 7,311 bbls water (133 bbls/d)
representing approximately 53% of the frac load fluid and 6.1 MMcf
gas (110 mcf/d). The well has been flowing up five inch
casing and the Company is currently evaluating equipping the well
with tubing and artificial lift (pumping unit) to optimize
production and further test the potential of the well.
Madalena expects Q1 - 2016 sales volumes to average
approximately 3,000 boe/d.
2016 OUTLOOK
The current macro-economic outlook in
Argentina is increasingly
positive. The recently elected government has implemented changes
that are expected to revitalize Argentina's economy, attract foreign
investment and enable the country to gain access to international
credit markets.
The Company exited 2015 with a largely unleveraged balance sheet
- positive working capital of $0.5
million and a before tax, NPV10 proved plus probable
reserves value of $127.2 million,
with $2.0 of long-term bank debt and
$1.6 million of other long-term
liabilities. However, during 2015 and to date in 2016, the Company
has been unable to access additional capital on terms acceptable to
the Company, which is required for liquidity purposes and to fund
commitments on the Company's blocks in Argentina. The current world-wide economic
environment relating to the oil and gas industry has made access to
capital challenging for many companies, Madalena included. This has
resulted in liquidity challenges and unless the Company is able to
raise additional capital or renegotiate its commitments, it does
not expect that forecasted cash flows from operating activities
will be sufficient to meet its anticipated 2016 and 2017 capital
commitments. The Company is examining alternative sources of
capital, including potential debt and equity financing and ways to
monetize its assets, including, without limitation, asset sales or
swaps, joint ventures or other transactions with industry partners,
all with a view to enhancing liquidity and meeting commitments. The
need to raise capital or defer expenditures to fund its anticipated
2016 and 2017 capital commitments creates uncertainty that may cast
doubt over the Company's ability to continue as a going
concern.
While the Company continues to actively investigate alternative
sources of capital and opportunities to extend its drilling
commitments to address these liquidity challenges and fulfill its
commitments, until these issues are resolved, the Company will not
be in a position to provide guidance on its 2016 capital
program.
About Madalena Energy
Madalena is an independent, Canadian-based Argentina focused, upstream oil and gas
company.
Madalena holds approximately 950,000 net acres in four provinces
of Argentina where it is focused
on the delineation of large shale and unconventional resources in
the Vaca Muerta shale, Lower Agrio shale and Loma Montosa oil plays. The Company is
implementing horizontal drilling and completions technology to
develop both its conventional and resource plays.
Madalena trades on the TSX Venture Exchange under the symbol MVN
and on the OTCQX 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, in particular, but not limited
to, with respect to the characteristics of the properties held by
the Company, production levels, the strategic value and
opportunities available to Madalena, operational, business
development and financial plans, and opportunities and the ability
of Madalena to execute on such plans and opportunities and the
Company's ability to meet its commitments and continue as a going
concern. All statements other than statements of historical fact
may be forward-looking statements. Forward-looking statements are
often, but not always, identified by the use of words such as
"seek", "anticipate", "plan", "continue", "estimate",
"approximate", "expect", "may", "will", "project", "predict",
"potential", "targeting", "intend", "could", "might", "should",
"believe", "would" and similar expressions. These statements
involve substantial known and unknown risks and uncertainties,
certain of which are beyond the Company's control, including: the
impact of general economic conditions; industry conditions; changes
in laws and regulations including the adoption of new environmental
laws and regulations and changes in how they are interpreted and
enforced; fluctuations in commodity prices and foreign exchange and
interest rates; stock market volatility and market valuations;
volatility in market prices for oil and natural gas; liabilities
inherent in oil and natural gas operations; uncertainties
associated with estimating oil and natural gas reserves;
competition for, among other things, capital, acquisitions, of
reserves, undeveloped lands and skilled personnel; incorrect
assessments of the value of acquisitions; changes in income tax
laws or changes in tax laws and incentive programs relating to the
oil and gas industry; geological, technical, drilling and
processing problems and other difficulties in producing petroleum
reserves; and obtaining required approvals of regulatory
authorities. The Company's actual results, performance or
achievement could differ materially from those expressed in, or
implied by, such forward-looking statements and, accordingly, no
assurances can be given that any of the events anticipated by the
forward-looking statements will transpire or occur or, if any of
them do, what benefits 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.
Initial Production Rates
Any references in this document to test rates, flow rates,
initial and/or final raw test or production rates, early
production, and/or "flush" production rates are useful in
confirming the presence of hydrocarbons, however, such rates are
not necessarily indicative of long-term performance or of ultimate
recovery. Such rates may also include recovered "load" or "frac"
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, certain Madalena properties
are unconventional resource plays which may be subject to high
initial decline rates. Such rates may be estimated based on other
third party estimates or limited data available at this time and
are not determinative of the rates at which such wells will
continue production and decline thereafter.
Drilling Locations
This press release refers to unbooked drilling locations.
Unbooked locations are internal estimates based on Madalena's
prospective acreage and an assumption as to the number of wells
that can be drilled per section based on industry practice and
internal review. Unbooked locations do not have attributed
reserves. Unbooked locations have been identified by management as
an estimation of our future drilling activities based on evaluation
of applicable geologic, seismic, engineering, production and
reserves information. There is no certainty that Madalena will
drill all unbooked drilling locations and if drilled there is no
certainty that such locations will result in additional oil and gas
reserves or production. The drilling locations on which we actually
drill wells will ultimately depend upon the availability of
capital, regulatory approvals, access restrictions, oil and natural
gas prices, costs, actual drilling results, additional reservoir
information that is obtained and other factors. While certain of
the unbooked drilling locations have been derisked by drilling
existing wells in relative close proximity to such unbooked
drilling locations, some of other unbooked drilling locations are
farther away from existing wells where management has less
information about the characteristics of the reservoir and
therefore there is more uncertainty whether wells will be drilled
in such locations and if drilled there is more uncertainty that
such wells will result in additional oil and gas reserves or
production.
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.