(All dollar figures are expressed in
United States dollars unless
otherwise stated)
CALGARY, Nov. 22, 2016 /CNW/ - Madalena Energy Inc.
("Madalena" or the "Company") (TSXV: MVN and OTCQX: MDLNF)
announces its operating and financial results for the three and
nine months ended September 30,
2016. Selected information is outlined below and should be
read in conjunction with Madalena's unaudited condensed interim
consolidated financial statements for the three and nine months
ended September 30, 2016 and the
associated management's discussion and analysis ("MD&A"), 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
ended
September
30
|
Nine months
ended
September
30
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
Financial –
($000s, except per share amounts)
|
|
|
|
|
Oil and gas
revenue
|
11,728
|
20,816
|
39,609
|
63,824
|
Funds flow from
continuing operations(1)
|
840
|
15,959
|
5,821
|
25,369
|
Per share - basic
& diluted(1)
|
0.00
|
0.03
|
0.01
|
0.05
|
Net income (loss)
from continuing operations
|
(12,715)
|
7,939
|
(22,697)
|
6,345
|
Per share - basic
& diluted(1)
|
(0.02)
|
0.01
|
(0.04)
|
0.01
|
Capital
expenditures
|
622
|
14,453
|
6,008
|
28,257
|
Working capital
(deficiency)
|
(3,839)
|
462
|
(3,839)
|
462
|
Common shares
outstanding - 000s
|
543,780
|
541,000
|
543,780
|
541,000
|
|
|
|
|
|
Operating
|
|
|
|
|
Average Daily
Sales
|
|
|
|
|
Crude oil and Ngls –
Bbls/d
|
1,853
|
2,705
|
2,114
|
2,817
|
Natural gas –
Mcf/d
|
2,368
|
3,843
|
2,659
|
4,064
|
Total - Boe
/d
|
2,247
|
3,346
|
2,557
|
3,494
|
Average Sales
Prices
|
|
|
|
|
Crude oil and Ngls -
$/Bbl
|
61.65
|
75.76
|
62.10
|
75.81
|
Natural gas -
$/Mcf
|
5.60
|
5.54
|
4.99
|
4.98
|
Total -
$/Boe
|
56.72
|
67.62
|
56.53
|
66.91
|
|
|
|
|
|
Operating
Netbacks(2) - $/Boe
|
17.23
|
29.59
|
23.04
|
30.00
|
(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.
|
Crude oil and NGL sales volumes for the three months ended
September 30, 2016 ("the Quarter" or
"Q3-2016") decreased to 1,853 boe/d from 2,705 boe/d for the three
months ended September 30, 2015
("Q3-2015"). The change compared to Q3-2015, can be attributed to
production declines at both Surubi and Rinconada - Puesto Morales.
Natural gas sales volumes for the Quarter of 2,368 mcf/d, decreased
compared to 3,843 mcf/d for Q3-2015 due to lower production at
Rinconada - Puesto Morales and CA-Norte.
While the decrease at Rinconada - Puesto Morales was from
natural declines, the Surubi decline was a function of a delay in
remedial work. Subsequent to September
30, 2016, the remedial work program at Surubi commenced and
is currently ongoing. The Company believes that the remedial
work program will allow incremental production to be brought back
on line.
While the Argentine government has not announced adjustments to
regulated Medanito oil pricing, the Company was advised by the
refineries to which it delivers its oil production that the oil
price it will receive for November and December 2016 oil production will be reduced by
approximately 30%, bringing prices to be received in those months
in line with international levels. The Company is undertaking
a review of its operating assets in order to determine the extent
of the financial impact caused by lower oil prices. While this
analysis is not complete, it is clear that the reduction in oil
prices communicated to the Company by the refiners will have a
significant negative impact.
As at September 30, 2016, the
Company had a working capital deficit of approximately $3.8 million and continued to face significant
liquidity challenges. Of that amount, approximately $2 million relates to overdue amounts payable to
the operator at Coiron Amargo-Norte ("CA-Norte"). This payable is
fully recorded as part of trade and other payables in the condensed
interim consolidated statements of financial position at
September 30, 2016.
Madalena has received a notice from this operator relating to
Madalena's overdue payable and has been advised that Madalena's
share of oil and gas sales are being applied against the
outstanding payable. The Company is in discussions with the
operator to satisfy the outstanding payable. Should the matter not
be resolved prior to April 21, 2017,
a potential outcome is the ultimate forfeiture of Madalena's
working interest at CA-Norte.
Management in Canada and
Argentina have been taking
measures for some time now to reduce expenses and conserve cash.
Office and field personnel have been reduced in both countries,
office space has been downsized in Canada and other costs saving measures have
been implemented wherever possible. Cash has been preserved by
deferring the payment of amounts owed to directors and management
fees owed to the Interim CEO of the Company. In addition, all
capital spending has been limited or deferred.
Strategic Alternatives Update
The strategic
alternatives process previously announced continues. The Company,
along with its financial advisor, Evercore Group LLC, is actively
involved in negotiations with a number of parties who have
expressed interest in various transactions with Madalena. There can
be no assurance that such transactions will be consummated.
Outlook
The current year-to-date losses, current
working capital deficiency, the expectation of reduced near term
cash flow resulting from lower oil prices in Argentina, as well as the capital commitments
in 2016 and 2017 are expected to result in cash outflows that
exceed anticipated future funds from operations. The Company
continues to include a note of going concern uncertainty in the
condensed interim consolidated financial statements. Without an
infusion of capital and/or a successful outcome from the strategic
alternatives process in the near term, Madalena may not be able to
continue as a going concern.
About Madalena Energy
Madalena is an independent,
Canadian headquartered 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.
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 properties held by the Company, production
levels, the strategic value and opportunities available to
Madalena, operational 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 or continue operating at all. 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 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.
SOURCE Madalena Energy Inc.