LONDON, February 5, 2015 /PRNewswire/ --
Argentina is shaping up to be
the next venue for a shale revolution, American style, and again it
is the juniors with acreage parked right next to major explorers
who are set to turn the heads of investors.
Argentina is home to 27 billion
barrels of recoverable oil and 802 trillion cubic feet of natural
gas, primarily in and around multiple prolific shale basins in the
central Neuquen province, including the prized Vaca Muerta shale.
Here, Canada's Madalena Energy
(TSXV: MVN; OTC:MDLNF)-trading at less than 3 cents per barrel, is sitting on an astounding 3
billion boe of net recoverable resources and drilling in four
strategic resource plays this year.
Madalena's prime acreage is right in the middle of massive
unconventional exploration operations being conducted by some of
the biggest companies in the world.
Much as the shale revolution was led by junior players in the
US, in Argentina, too, Madalena
grabbed up prime acreage before the bigger players swooped in.
Today, this Canadian junior is one of the only juniors left on the
scene and it will be a major beneficiary of supermajor drilling
operations.
Madalena's acreage continues to rise in value as the industry
quickly de-risks what is becoming the next big unconventional shale
play worldwide.
Expectations have continued to soar with a major discovery in
August by Argentina's state-owned
YPF in the Agrio shale. For Madalena, with a 90% working interest
in the Curamheule block-near the YPF discovery-this has been a
particularly significant boost. Curamheule is estimated to
hold over 1.5 billion barrels of recoverable oil and natural
gas liquids. Madalena has put together ambitious plans to drill
this acreage this year, and uniquely in these dire oil times, it is
fully funded to do so.
Simultaneously, ExxonMobil (NYSE:XOM) has made two major
discoveries on its Vaca Muerta acreage, with the second discovery
only 20 kilometers from the first.
Also in the Vaca Muerta, joint ventures between Chevron
(NYSE: CVX) and YPF just offset to Madalena's Corion Amargo block, are seeing investments in
the order of $1.2 billion and
$1.6 billion, underscoring the
incredible position that such a small company has found itself
in.
At their Loma Campana
development, YPF and Chevron (NYSE:CVX) have 200
wells now in production from the Vaca Muerta shale and are driving
ahead investing significant dollars in Argentina's unconventional shale plays with
plans to drill an additional 160 wells (120 vertical and 40
horizontals) in 2015 in this area alone. This, too,
sits offset to Madalena's acreage.
At the same time, we're looking at a brilliant balance sheet.
Not only does Madalena have no debt, but its market cap is just
above a $100 million, yet the company
sits on assets which could prove to be worth 4-10 times this
value.
Madalena President & CEO
Kevin Shaw, formerly of ExxonMobil,
has strategically positioned the company in 2014 to unlock its
unique set of unconventional assets in Argentina by first establishing a sustainable
critical mass production base in Argentina which can now be used to fund its
strategic drilling on land that continues to increase in value.
Land is now attracting between $5,000 and
$15,000 per acre in oil-rich areas of the Vaca Muerta shale
and emerging Agrio shale plays, and as much as $5,000 in natural gas-rich locations. Madalena's
acreage in the Vaca Muerta alone could prove to be worth as much as
USD$600 million to $1 billion. Recent
new discoveries will further raise this value.
Nearly every supermajor is eyeing the enticing Vaca Muerta,
despite the plunge in global oil prices. In addition to ExxonMobil
and Chevron, Royal Dutch Shell
(NYSE: RDS.A), France's Total SA
(NYSE:TOT) and Petronas (PNAGF/PTG:Kuala Lumpur) have committed
more than $1 billion to the Vaca
Muerta in January alone. The oil-hungry Chinese are also said to be
eyeing sweet-spot acreage here through Sinopec (NYSE:SNP).
The best is yet to come for Madalena, which plans to drill a series
of high impact wells across four unconventional resource plays this
year, seeking to unlock its nearly 3 billion boe of net recoverable
resources in Argentina. If it
strikes oil in just one, its share price will double in the next 12
months.
Trading at less than 3 cents a
recoverable resource barrel on its shale assets
alone, Madalena is a highly attractive takeover
target in the current oil price atmosphere. In the meantime, it's
making history and forging the next shale revolution with its plans
to tap the Vaca Muerta-alone about three times the size of
Texas' Eagle Ford--and Agrio
alongside the Loma Montosa oil resource play and the Montney-like Mulichinco.
By James Burgess of
Oilprice.com
SOURCE Oilprice.com