Madalena Ventures (MVN-V) to drill up to five wells at Paddle River
Dec 6, 2012 - News Release
Madalena Ventures Inc. is releasing the following operational update.
Canadian operations update -- greater Paddle River core area
Madalena has moved two drilling rigs into its core area of operations located in the greater Paddle River area of central Alberta, where the company holds a significant acreage position of 197 gross (153 net) sections of land (78-per-cent average working interest and largely operated by Madalena) across multiple light oil and liquid-rich gas resource plays. Madalena's focus domestically is to exploit its large inventory of horizontal development locations with the expectation to increase production and cash flow year over year.
The plan between now and spring breakup is to drill, multistage frac, equip and place on production four to five gross (4.0 to 4.2 net) horizontals focused across three key resource plays. To increase production and reserves, the focus throughout 2013 will be to drill horizontals targeting:
1.Ostracod oil;
2.Notikewin/Falher/Wilrich liquid-rich-gas stacked development plays;
3.Nordegg oil and liquid-rich gas.
Horizontal resource play No. 1 focuses on Ostracod light oil and is highlighted by a 54-net-section position on the play and over 50 already identified drill-ready horizontal locations. Madalena's most recent Ostracod horizontal (Paddle River 01-05), which was put on stream in mid-October, 2012, is currently exceeding the company's expectations, with this horizontal continuing to flow without the assistance of pumping equipment. In July, 2012, the well tested at an average rate of 438 barrels of oil equivalent per day (73 per cent oil and liquids) over a three-day period following a 14-stage frac completion. The initial-production 30-day average rate on this horizontal was 307 barrels of oil equivalent per day (65 per cent oil and liquids).
Horizontal resource play No. 2 focuses on the low-risk development of Madalana's regionally stacked Mannville channel trend, highlighted by 133 net sections with liquid-rich Notikewin/Falher/Wilrich stacked development plays, vertical well production or control throughout, already-in-place underutilized pipeline and infrastructure in the area, with liquid contents in the range of 28 barrels per million cubic feet to 35 barrels per million cubic feet, and significant running room for horizontal development.
Horizontal resource play No. 3, which is expected to be drilled, multistage fraced and tested in the near term, involves an emerging oil and liquid-rich Nordegg play. Madalena has 144 net sections of Nordegg rights containing or proximal to vertical well production that produces oil and/or high-liquid-rich-content gas of over 100 barrels per million cubic feet. Madalena plans to utilize North American horizontal technology to test this emerging resource play, which is widespread across its sizable land position.
International operations update -- Neuquen basin
Madalena, which holds three large blocks (or concessions) within the prolific Neuquen basin in Argentina, continues to move forward to delineate its large in-place oil and gas unconventional resources with shale positions in the Vaca Muerta, Agrio and Los Molles shales. Madalena holds 135,000 net acres across the Coiron Amargo (35,027 net acres), Curamhuele (50,400 net acres) and Cortadera (49,600 net acres) blocks.
On the Coiron Amargo block (35-per-cent working interest), the CAN 8 development well, located 800 metres southeast of the CAN 7 well, is drilling ahead at approximately 7,824 feet to a planned target depth of approximately 10,430 feet. The objectives for the CAN 8 well are both the conventional light oil in the Sierras Blancas formation as well as to further delineate and assess the Vaca Muerta shale on the block. Offset to CAN 8, production from the CAN-7 Sierras Blancas alone has now reached over 60,000 barrels since coming on stream in July this year and continues to flow at over 300 barrels of oil per day gross with associated gas.
At the end of November, Argentina announced plans to increase gas prices to $7.50 per million British thermal units for new gas developments. With import prices significantly above this, gas-related drilling activity in the country will contribute to reduced gas imports while receiving a substantially higher price than obtained previously. All three of Madalena's blocks have the potential to benefit in the future from this recent announcement through the contribution of new gas production from both conventional zones of interest and the large in-place unconventional shale resources.
Corporate update -- newly focused team, production update and balance sheet strength
With a full-cycle corporate, technical and operational team now in place, Madalena is well positioned, with expertise to operate assets both domestically and internationally, and is focused on delivering results in 2013 onward. Madalena's current corporate production is approximately 950 barrels of oil equivalent per day net (60 per cent oil and liquids), including an estimated 650 barrels of oil equivalent per day net (51 per cent oil and liquids) from its domestic assets and 300 barrels of oil equivalent per day net (81 per cent oil and liquids) from its international assets. Madalena continues to have a strong balance sheet for go-forward growth, with approximately $36-million in positive working capital, zero debt and an undrawn initial $4.75-million bank facility with a major Canadian bank.
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