(All dollar figures are expressed in
United States dollars unless
otherwise stated)
CALGARY, May 16, 2016 /CNW/ - Madalena Energy Inc.
("Madalena" or the "Company") (TSXV: MVN and OTCQX: MDLNF) is
pleased to provide its operating and financial results for the
three months ended March 31,
2016. Selected information is outlined below and should be
read in conjunction with Madalena's unaudited condensed interim
consolidated financial statements for the three months ended
March 31, 2016 and the associated
management's discussion and analysis, which are available for
review under the Company's profile at www.sedar.com and on the
Company's website at www.madalenaenergy.com. An updated corporate
presentation is available on the Company's website.
SUMMARY FINANCIAL AND OPERATIONAL RESULTS
|
|
|
Three months
ended
March
31
|
|
2016
|
2015
|
Financial – US
Dollars ($000s, except per share amounts)
|
|
|
Oil and gas
revenue
|
15,105
|
19,445
|
Funds flow from
operations(1)
|
2,963
|
4,720
|
Per share - basic
& diluted(1)
|
0.01
|
0.01
|
Net income
(loss)
|
(6,834)
|
1,003
|
Per share – basic and
diluted
|
(0.01)
|
0.00
|
Capital
expenditures
|
4,861
|
11,737
|
Working
capital
|
(3,329)
|
462
|
Common shares
outstanding - 000s
|
542,083
|
540,300
|
|
|
|
Operating
|
|
|
Average Daily
Sales
|
|
|
Crude oil and Ngls –
Bbls/d
|
2,545
|
2,801
|
Natural gas –
Mcf/d
|
3,180
|
4,710
|
Total - Boe
/d
|
3,075
|
3,586
|
|
|
|
Average Sales
Prices
|
|
|
Crude oil and Ngls -
$/Bbl
|
60.04
|
70.53
|
Natural gas -
$/Mcf
|
4.16
|
3.93
|
Total -
$/Boe
|
53.99
|
60.25
|
|
|
|
Operating
Netbacks(2) - $/Boe
|
22.96
|
26.73
|
|
|
(1)
|
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.
|
(2)
|
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.
|
FIRST QUARTER 2016 HIGHLIGHTS
Sale of Non-Core Canadian Assets
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).
Proceeds to the Company 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 is May 1, 2016, with closing expected in early
June 2016, subject to certain terms
and conditions, including 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.
Advisor Retained for JV Partner 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 90% working interest Curamhuele block
in Argentina to accelerate
exploration and development activities on the block. In addition,
the Company is actively marketing certain of its non-core
properties in Argentina.
Operations Update
During the first quarter, the
Company completed the Yapai.x-1001 well on its exploration block at
Curamhuele targeting the Lower Agrio shale. Over an 80 day
period, the well has produced 6,160 bbls oil (77 bopd), 7,645 bbls
water (95 bbls/d) representing approximately 56% of the frac load
fluid and 7.0 MMcf gas (88 mcf/d). All solution gas is being
flared. The well has been flowing up five inch casing and was
shut-in on May 10, 2016 for a
pressure build-up test.
OUTLOOK
There have been a number of economic changes in Argentina over the last six months. These
changes include the election of a new president, the subsequent
Argentina peso devaluation, the
lifting of foreign currency controls, a 10% reduction in early 2016
for Medanito crude quality oil from $75.00
to $67.50 and the settlement of the 2001 Argentina government defaulted bonds with the
bondholders.
Although the Company has a largely unleveraged balance sheet at
March 31, 2016, it does have a
working capital deficit of $3.3
million, and continues to face liquidity challenges. The
Company is actively pursuing 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 to execute on its business
plan.
Capital commitments in 2016 and 2017 are expected to exceed
anticipated future funds flow from operations and, accordingly, the
Company has included a note on going concern uncertainty in the
condensed interim consolidated financial statements. In the event
the Company cannot access the required funding and certain work
commitments are not fulfilled prior to the commitment deadlines,
the Company will attempt to extend its commitments with the
regulators. There is no certainty that any extensions will occur in
the future and failure to obtain such extensions may result in the
loss of concessions and the rights attached to them.
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.
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.
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.