LONDON, September 10, 2015 /PRNewswire/ --
Canadian small-cap explorer Madalena Energy forges ahead with a
strong Q2 showing and plans underway for its first horizontal
multi-stage frack in Argentina,
where $77 oil prices make this the
most attractive venue on Earth.
It's not only high Argentine oil prices and an $11-million-plus incentivized oil program that
has spurred Madalena's growth this year. The company's success is
highlighted by an impressive balance sheet, a new three-well,
back-to-back horizontal program, the upcoming launch of a new
high-impact well to test two major resource plays and preparations
for the first multi-stage horizontal frac well in the prized Vaca
Muetra.
And the good news keeps flooding in, with supermajors ramping up
activity right on Madalena's border. Most recently, Shell signed up
to drill and exploit for 35 years on two Vaca Muerta blocks
offsetting Madalena's assets. After meeting with significant
success in its initial horizontal program on
Madalena's border, Shell is now moving to the next
phase with a horizontal pad development and ambitious plant
infrastructure.
This news alone increases Madalena's value proposition
exponentially as Shell's massive drilling commitment here is on
land directly adjacent to and surrounding Madalena's core Coiron
Amargo acreage in the Vaca Muerta.
Madalena is focused on drilling four strategic resource plays in
2015, and has been described as a 'sleeper' that awakened earlier
this year with successful horizontal test results on the Loma
Montosa oil resource play at Puesto Morales. The company is now
gearing up to drill a big well on its Curamhuele block to evaluate
two additional strategic plays in the Agrio Shale (oil) and
Mulichinco (liquids-rich gas).
Madalena is also underway with a three-well back-to-back
horizontal drilling program on its Coiron Amargo block, which is a
prime Vaca Muerta shale play that also has attractive conventional
development across multiple light oil pools.
Beyond this, we're looking at the recent Q2-2015 financial and
operational results, showing steady progression with a strategy
balanced nicely between horizontal development drilling to enhance
future cashflows and high-impact strategic drilling to unlock
large, scaleable resources.
And from a financial flexibility perspective, here's where the
Argentina oil price story gets
even more interesting: Madalena realized a Q2 2015 oil price here
of CDN $96.33/bbl and
$6.28/mcf for natural gas. The
company has also increased its oil and gas production by 155% from
2014, to 3,996 boe/d. Topping things off, Madalena saw a 30%
increase in revenues to $83.50/boe,
up from $64.08/boe from the same time
last year. All this while corporate operating netbacks were
over $37/boe in Argentina, with funds flowing from operations
an impressive ~$6.2 million (not
including a one-time charge).
Up next is a high-impact Curamhuele well, which will be
spudded in September to test two large unconventional oil resources
in the Agrio Shale and the liquids-rich gas play in the Mulichinco.
Both of these targeted zones have significant upside for the
company.
And as Argentina's oil prices
are coming in at $75-$77 despite low
global prices, the effect is reverberating widely, incentivizing
oil companies to put more money into the country's oil and gas
sector. This is a great story against the backdrop of a country
that is home to the second-largest reserves of shale gas and the
fourth-largest reserves of shale oil in the world.
Not only is Argentina shaping
up to be the next big-time shale venue, but Madalena's acreage is
right in the middle of massive unconventional exploration by major
players, including ExxonMobil (NYSE: XOM), Royal Dutch Shell
(NYSE: RDS.A), Total (NYSE: TOT), Petronas, and Chevron
(NYSE: CVX). And Shell's strategic move here confirms the savvy
investor's theory that not only is Argentina THE place to be right
now, but this venue is about to get even bigger. Shell's commitment
will drive more shale development and production investment in the
Neuquen Basin via joint ventures and buyouts of smaller players
such as Madalena.
At this point, one of the only ways to gain quality exposure to
Argentina's unconventional shales
is through the last-remaining small-cap company which has the
staying power to unlock significant value for investors. This is
shaping up to be Madalena, which controls a significant portion of
Argentina's recoverable shale
resources and is potentially sitting on what could be three 3X than
all of Texas' reserves put
together.
For more information on the energy opportunities in Argentina please click here.
SOURCE Oilprice.com