BUENOS AIRES, Argentina, Jan. 10, 2019 (GLOBE NEWSWIRE) — Madalena Energy Inc. (“Madalena” or the “Company”) (TSXV: MVN, OTCQX: MDLNF) is pleased to announce the Company’s fourth quarter operational update.
Madalena’s President and CEO Jose Penafiel commented: “We are pleased to report a significant reduction in our capital and decommissioning commitments, thanks to: i) the renegotiation of our commitments at Rinconada – Puesto Morales, and ii) the assignment to a third party of our interest in the El Vinalar concession. At the same time, we are happy to confirm a significant increase in production occurred in December, driven by our previously announced signing of an Operation Agreement with Recursos y Energía Formosa SA, giving us a 100% interest in the Palmar Largo concession. We continue to work towards finalizing our operating plans and budget for the year, but we can provide a preview of what we expect to be a very active year operationally in 2019, with both workover and drilling operations expected to commence in this quarter.”
Production
Q4 2018 production was approximately 1,730 barrels of oil equivalent (“boe/d”) (86% crude oil) before royalties, an increase of 8.8% from 1,590 boe/d in the prior quarter (87% crude oil). December production averaged 2,100 boe/d. A significant increase from prior months was driven by the signing of a new operation agreement giving Madalena a 100% interest in production from the Palmar Largo concession starting December 1, 2018 (as previously announced on November 27, 2018). This new agreement was also the key driver for production averaging above the Q4 guidance for 1,624 boe/d provided in November.
For Q1 2019, management expects production to average approximately 2,025 boe/d (91% oil).
Realized Pricing
Madalena’s fourth quarter average oil, NGLs and gas sales price was approximately $53.93 per boe (representing 78.6% of the Brent oil price of $68.60 per barrel), as compared with the third quarter 2018 average price of $56.54 per boe (representing 74.60% of the Brent oil price of $75.84 per barrel).
Operations Update
Rinconada – Puesto Morales; 100% operated
In June 2015, Madalena was granted a new 10 year exploitation concession for the Puesto Morales area.
As part of the terms and conditions of the extension, the Company had agreed to firm commitments of US$49.3 million in activities on the block over the next 10-year period.
US$24.7 million remained outstanding as of December 31, 2018. In order to keep the concession in good standing and to remain in compliance with the commitments, the company held negotiations with the Province of Rio Negro during both 2017 and 2018 with respect to extending the commitments. On January 4, 2019, the Secretary of Energy approved a re-schedule and conversion of the remaining commitments and updated the exploration and development plan. For 2019, a vertical exploratory well with an approximate cost of US$2 million is to be drilled during the second half of the year. The remaining commitments have been re-scheduled for 2020 and 2021.
Palmar Largo and El Surubi
A workover is planned for the Proa-3 light oil well (Surubí, 85% operated interest) in Q1/19. Synergies with the recently acquired adjacent Palmar Largo block (100% operated) are under evaluation, with the possibility the same rig may perform two workovers in this block following the Proa-3 workover.
Coiron Amargo Sur Este (CASE); 35% non-operated
Purchase and Service Contracts awarding is ongoing in preparation to spud the first Vaca Muerta horizontal multifrac well of phase 1 (five wells) of the eight well Pilot Plan.
Coiron Amargo Norte (CAN); 35% non-operated
A drilling location of one Lotena Gas Well is under discussion among partners in order to obtain drilling permits in time to drill it in the first quarter of 2019.
El Vinalar; previously 100% operated, now divested
In December, the Company signed an agreement assigning Madalena’s entire interest in the non-core and non-producing El Vinalar concession to a private Argentine oil and gas company. As a result, Madalena will be able to write off current liabilities related to decommissioning obligations in an expected amount of approximately $4 million.
Upcoming News Events
The Company expects to announce its full year 2019 production guidance, capital budget and work plan on or about February 15, our year-end reserves update on or about February 28, and its 2018 year-end financial results on or about April 11, 2019.
About Madalena Energy
Madalena is an independent upstream oil and gas company with both conventional and unconventional oil and gas operations in Argentina. The Company’s shares trade on the TSX Venture Exchange under the symbol MVN and on the OTCQX under the symbol MDLNF.
For further information please contact:
| Jose David Penafiel Chief Executive Officer email: info@madalenaenergy.com phone: (403) 262-1901 |
Alejandro Augusto Penafiel Director email: info@madalenaenergy.com phone: (403) 262-1901 |
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 oil and gas interests held by the Company, production volumes and management’s future expectations in relation thereto for 2019 and beyond, the Company’s ability to meet and finance its commitments under the Operation Agreement, Palmar Largo concession, and Puesto Morales concession, the Company’s expectation that it will be able to write off liabilities in El Vinalar (and the Company’s estimates of such amounts in relation thereto), expectations with respect to the commencement of operations in CAN, El Surubi, Puesto Morales and elsewhere, the expected timing for the announcements of the Company’s budget and work plan, year-end reserves update, and year end financials, and the expected or anticipated benefits to the Company contained in this news release either expressly or impliedly. 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; incorrect assessments of the value of the benefits to be derived by the Company from its oil and gas interests, 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. There is specific risk that the workovers, drilling and other operations of the Company will not be successful or that the Company’s oil and gas interests will not produce at rates anticipated. 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.
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.