Madalena Energy Inc. ("Madalena" or the "Company") (TSX-V:MVN) and
(OTCQX:MDLNF) announces its operating and financial results for the
three and twelve months ended December 31, 2017. Selected
information is outlined below and should be read in conjunction
with Madalena's audited consolidated financial statements for the
three and twelve months ended December 31, 2017, the associated
management's discussion and analysis (“MD&A”) and the Annual
Information Form (the "AIF") for the year ended December 31, 2017,
which are available for review under the Company's profile at
www.sedar.com and on the Company's website at
www.madalenaenergy.com.
SUMMARY FINANCIAL AND OPERATIONAL
RESULTS
|
Three months endedDec
31 |
Twelve months endedDec
31 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
Financial – ($000s, except per share amounts) |
|
|
|
|
Oil and
gas revenue |
8,601 |
|
10,543 |
|
38,187 |
|
50,152 |
|
Funds
flow from (used in) continuing operations(1) |
1,630 |
|
(325) |
|
(2,096) |
|
5,494 |
|
Per share
- basic & diluted(1) |
- |
|
- |
|
- |
|
0.01 |
|
Net loss
from continuing operations |
(19,386) |
|
(9,402) |
|
(33,796) |
|
(32,100) |
|
Per share
- basic & diluted(1) |
(0.03) |
|
(0.02) |
|
(0.06) |
|
(0.06) |
|
Capital
expenditures |
2,601 |
|
331 |
|
3,749 |
|
6,339 |
|
Working
capital (deficiency) |
(1,043) |
|
(4,413) |
|
(1,043) |
|
(4,413) |
|
Common
shares outstanding - 000s |
543,860 |
|
543,780 |
|
543,860 |
|
543,780 |
|
|
|
|
|
|
Operating |
|
|
|
|
Average
Daily Sales |
|
|
|
|
Crude oil
and Ngls – Bbls/d |
1,588 |
|
1,947 |
|
1,782 |
|
2,072 |
|
Natural
gas – Mcf/d |
1,702 |
|
2,303 |
|
1,894 |
|
2,569 |
|
Total - Boe /d |
1,872 |
|
2,330 |
|
2,098 |
|
2,500 |
|
Average
Sales Prices |
|
|
|
|
Crude oil
and Ngls - $/Bbl |
53.41 |
|
53.59 |
|
52.79 |
|
60.09 |
|
Natural
gas - $/Mcf |
5.09 |
|
4.47 |
|
5.57 |
|
4.87 |
|
Total -
$/Boe |
49.95 |
|
49.18 |
|
49.88 |
|
54.81 |
|
|
|
|
|
|
|
|
|
|
Operating Netbacks(2) - $/Boe |
5.95 |
|
11.20 |
|
9.77 |
|
20.27 |
|
|
|
|
|
|
|
|
|
|
(1) This table contains the term "funds flow from continuing
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 continuing operations to
analyze operating performance and considers funds flow from
continuing 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
continuing operations and cash flows from operating activities can
be found in the MD&A. Funds flow from continuing 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.
Recent Highlights in 2018
- Madalena announced that Pan American Energy LLC (“PAE”) has
successfully commenced completion operations of the second
horizontal multi-frac well CAS.x-14 in the Vaca Muerta Shale
Formation at the Coiron Amargo Sur Este (“CASE”) block in
Argentina. A cement bond log has been run and 60 hydraulic fracs in
25 stages have been performed with approximately 10,300 klb of
proppant.
- None core AssetsVinalar Block: Salta province granted a block
extension to file an investment plan, which expired on November 11,
2017. The Company notified the province of Salta that it is
not interested in a contract extension. Vinalar facilities and
wells have been mothballed.
Recent Highlights in 2017
- Coirón Amargo Sur-Este (“CASE”)Madalena closed
the Coirón Amargo-Sur Este (“CASE”) transaction in January 2017,
providing the Company with cash payments of $10 million, $3 million
of which was received in December 2016 and the balance on
closing.Pursuant to the Pan American Energy LLC, Sucursal Argentina
(“PAE”) transaction in Q1 2017, the 2017 work program at Coirón
Amargo – Sur Este (“CASE”), pursuant to which the Company has a
maximum of $5.6 million carry and has been carried for $5.1 million
in capital costs in the CAS.x-15 and CAS.x-14 wells. The
CAS.x-15 well was successfully re-entered and drilled horizontally
for approximately 1,000 metres in the Vaca Muerta unconventional
oil resource play at a vertical depth of approximately 3,200
metres. The well tested an average of 430 barrels of oil per day
through 3mm choke during the first 3 weeks of production. In March
2018 PAE has successfully commenced completion operations of the
second horizontal multi-frac well CAS.x-14 in the Vaca Muerta Shale
Formation.
- Argentina Credit facilities repaymentMadalena
repaid its $1.6 million Argentine debt facility in full in February
2017.
- Sale of Point Loma sharesMadalena sold all of
the remaining 1.6 million free-trading common shares of Point Loma
Resources Ltd. ("Point Loma") in January 2017 for net proceeds of
$0.5 million; and sold 4.7 million escrowed common shares in Point
Loma in April 2017 for gross cash proceeds of $0.8
million.
- Changes in board of directorsOn September 13,
2017, Messrs. Ruben Etcheverry, Ralph Gillcrist and Leonardo Madcur
have each joined the board of directors of the Company (the
"Board") as independent directors. The aforementioned
directors have replaced Messrs. Keith MacDonald, Jay Reid and Ving
Woo who each elected not to stand for reelection to the Board.
- Coirón Amargo-Norte (“CA-Norte”)On December
28, 2017 Madalena signed with their partners in Coirón Amargo-Norte
(“CA-Norte”), Gas y Petroleo de Neuquén S.A. (“GyP”) and Apco Oil
& Gas International Inc. Sucursal Argentina (“Apco”), the
implementation of “Carry petrolero”. With effective date, September
1, 2017 the contributions to be realized on behalf of GyP will be
recognized as higher assets and/or expenses as appropriate by
Madalena and Apco. Madalena and Apco acquired the assets and
liabilities that GyP had as of September 1, 2017 (10% interest), at
38.89% and 61.11% respectively, in exchange of the GyP receivable,
2 million and 3.1 million respectively. Madalena will carry GyP
account receivable out of books since the recovery of contributions
is contingent on the existence of oil production in the area.
- Madalena Ventures International Holding Company Inc.
(Barbados) in dissolution processMadalena Ventures
International Holding Company Inc. (Barbados) sold, assigned and
transferred unto Madalena Energy Inc. 8,329,825 common shares
without nominal or par value in the capital of Madalena Ventures
International Inc. (Barbados). On December 29, 2017 Madalena filed
the certificate of intent to dissolve its subsidiary Madalena
Ventures International Holding Company Inc. (Barbados).
- El VinalarVinalar facilities and wells have
been mothballed.
Summary of 2017 Reserves
The reserve report ("GLJ Report") was prepared
in accordance with the definitions, standards and procedures
contained in NI 51-101 and the COGE Handbook by GLJ Petroleum
Consultants. The GLJ Report contains several cautionary statements
that are required by NI 51-101 and the reserves information
presented is subject to the contents of the full reports.
Year End 2017 Reserves
Highlights:
- Argentina Proved plus Probable ("2P") reserves decreased from
9,899 MBoe to 8,101 MBoe, which include 1,375 Mboe associated with
the divestment of the 55% WI unconventional asset in the Vaca
Muerta shale;
- Argentina 2P reserve replacement ratio was 82%; and
- 2P BTax NPV 10%, is $65.7 million.
The following tables provide a summary of the
Company's oil and gas working interest reserves before royalties
and net present value of future net revenue at December 31, 2017
using forecast prices and costs.
|
|
|
Reserves |
|
Light/Medium Crude Oil |
|
Tight Oil(2) |
|
Conventional Natural Gas |
|
Shale Gas (2) |
|
Total Reserves |
|
Gross (Mbbl) |
|
Net (Mbbl) |
|
Gross (Mbbl) |
|
Net (Mbbl) |
|
Gross (MMcf) |
|
Net (MMcf) |
|
Gross (MMcf) |
|
Net (MMcf) |
|
Gross (Mboe) |
|
Net (Mboe) |
Proved |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed
Producing |
1,651 |
|
1,380 |
|
9 |
|
8 |
|
2,279 |
|
1,850 |
|
0 |
|
0 |
|
2,040 |
|
1,696 |
Developed
Non-Producing |
479 |
|
403 |
|
0 |
|
0 |
|
644 |
|
531 |
|
0 |
|
0 |
|
586 |
|
491 |
Undeveloped |
878 |
|
721 |
|
0 |
|
0 |
|
779 |
|
650 |
|
0 |
|
0 |
|
1,008 |
|
829 |
Total Proved |
3,008 |
|
2,503 |
|
9 |
|
8 |
|
3,702 |
|
3,031 |
|
0 |
|
0 |
|
3,634 |
|
3,016 |
Probable |
2,631 |
|
2,195 |
|
1,275 |
|
1,084 |
|
2,355 |
|
1,950 |
|
1,010 |
|
889 |
|
4,467 |
|
3,752 |
Total Proved Plus
Probable |
5,639 |
|
4,698 |
|
1,284 |
|
1,091 |
|
6,057 |
|
4,981 |
|
1,010 |
|
889 |
|
8,101 |
|
6,768 |
Possible |
2,647 |
|
2,216 |
|
1,590 |
|
1,351 |
|
763 |
|
645 |
|
1,289 |
|
1,134 |
|
4,579 |
|
3,864 |
Total
Proved Plus Probable Plus Possible |
8,286 |
|
6,915 |
|
2,874 |
|
2,443 |
|
6,820 |
|
5,626 |
|
2,300 |
|
2,024 |
|
12,680 |
|
10,632 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Present Values of Future Net Revenue
USD |
|
Before Income Taxes Discounted at
(%/year) |
After Income Taxes Discounted at
(%/year) |
Unit ValueBefore
taxDiscounted at 10%(1) |
Reserves
Category |
0%MM |
5%MM |
10%MM |
15%MM |
20%MM |
0%MM |
5%MM |
10%MM |
15%MM |
20%MM |
$/BOE |
Proved |
|
|
|
|
|
|
|
|
|
|
|
Developed
Producing |
5.6 |
11.0 |
13.2 |
13.9 |
|
13.9 |
|
5.6 |
11.0 |
13.2 |
|
13.9 |
|
13.9 |
|
7.80 |
Developed
Non-Producing |
9.9 |
8.1 |
6.6 |
5.3 |
|
4.2 |
|
9.2 |
7.6 |
6.1 |
|
4.9 |
|
3.9 |
|
13.39 |
Undeveloped |
7.8 |
4.2 |
1.5 |
(0.4) |
|
(1.9) |
|
5.4 |
2.2 |
(0.2) |
|
(1.9) |
|
(3.3) |
|
1.86 |
Total
Proved |
23.3 |
23.3 |
21.4 |
18.8 |
|
16.2 |
|
20.2 |
20.8 |
19.1 |
|
16.9 |
|
14.6 |
|
7.08 |
Probable |
82.2 |
59.7 |
44.3 |
33.4 |
|
25.5 |
|
65.6 |
46.2 |
33.1 |
|
23.9 |
|
17.4 |
|
11.81 |
Total
Proved Plus Probable |
105.5 |
83.1 |
65.7 |
52.2 |
|
41.8 |
|
85.8 |
67.0 |
52.2 |
|
40.8 |
|
31.9 |
|
9.7 |
Possible |
136.8 |
98.5 |
74.2 |
57.7 |
|
46.2 |
|
101.6 |
71.7 |
52.8 |
|
40.2 |
|
31.4 |
|
19.19 |
Total Proved Plus Probable Plus Possible |
242.3 |
181.6 |
139.8 |
109.9 |
|
87.9 |
|
187.3 |
138.7 |
105.0 |
|
81.0 |
|
63.3 |
|
13.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:(1) Unit values are based on Corporation Net Reserves.(2)
These are unconventional Vaca Muerta Shale reserves at CASE and the
costs incurred to December 31, 2017 are included in exploration and
evaluation assets in the Corporation’s consolidated financial
statements.
Health, Safety, Environment ("HSE") and Corporate Social
Responsibility ("CSR")
Madalena has a comprehensive HSE management plan
for its employees and all contractors. In 2017 the Company key
performance benchmarking indicators showed: For the 378,476 +
person hours worked, there were nine lost time incidents at any of
the Company's facilities or operations. Also, in 2017 the Company
recorded four reportable spills. The Company takes pride in its CSR
initiatives in Argentina. The Company is actively involved in
supporting the communities in which it operates, through a number
of initiatives including local employment programs, access to
health care and improvement in the quality of services, education,
water quality and technical assistance on sustainable agricultural
production. In 2017 the Company continued with the implementation
of its community relations programs in both districts that it
operates.
About Madalena
EnergyMadalena is an independent, Canadian
head-quartered Argentina upstream oil and gas company with
operations in four provinces of Argentina where it is focused on
the delineation of 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.
For further information please
contact:
Jose David Penafiel
Chief Executive Officer
E-mail:jpenafiel@madalenaenergy.comPhone: (403) 262-1901
Ezequiel Martinez Ariet Chief
Financial OfficerE-mail: ezequielariet@madalenaenergy.comPhone:
(403) 262-1901
Reader Advisories
Forward Looking InformationThe
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 BoeThe 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.
Well Test ResultsWell test
results should be considered as preliminary and not necessarily
indicative of long-term performance or of ultimate recovery.
Neither a pressure transient analysis nor a well-test
interpretation has been carried out on the well test data contained
herein and therefore the data contained herein should be considered
to be preliminary until such analysis or interpretation has been
done.
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.
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