Madalena Announces Operation Agreement on the Palmar Largo Concession With the Province of Formosa
28 November 2018 - 12:30AM
Madalena Energy Inc. ("Madalena" or the "Company") (TSXV: MVN and
OTCQX: MDLNF) is pleased to announce that Madalena has signed an
operation agreement with Recursos y Energía Formosa SA ("REFSA"),
an oil company belonging to the Province of Formosa (the
"Province"), over the Palmar Largo Concession in Formosa,
Argentina, effective December 1, 2018 (the "Operation Agreement").
Highlights
- The Palmar Largo
Concession’s average gross production during last quarter was 640
Bbls/d with a YTD operating netback of US$22 per barrel and with
the agreement Madalena’s net production is expected to increase by
approximately 550 Bbls/day
- 2 Year Operation Agreement
with a 1 year extension provided that Madalena fulfills its US$2M
Investment Commitment
- The Investment Commitment
consists of 2 workovers in 2 wells in order to increase production
and certain facility improvements
- Madalena will operate 100%
of the Palmar Largo Concession and will be required to pay the
existing 12% royalty on production revenues to the Province and an
additional 5.32% of production revenues is to be paid to REFSA
under the agreement
- Madalena will receive
82.68% of production revenues under the agreement and will be
responsible for the operation costs of the
field.
- Madalena operates two
adjacent areas (El Chivíl and Surubí) which will allow the
realization of significant synergies among the three
areas
In 1992, YPF as title holder entered into a
Joint Venture Agreement with Pluspetrol SA, Norcen International
Limited, CGC SA and Dong Won Co Ltd. with the purpose of exploring,
exploiting and developing the Area Palmar Largo. In 2005,
Gran Tierra Energy (whose Argentine operations were acquired by
Madalena Energy Argentina SA in 2014) acquired a 14% participation
interest in the Joint Venture from Dong Won.
Palmar Largo’s 25 year concession expired in
December, 2017. No agreement on the extension of the
concession was reached between the operator, High Luck, and the
Province, and as a result the Province issued Provincial Decree 301
dated November 5, 2018 which established a) the 25 year Palmar
Largo Concession awarded to YPF expired; b) the Concession area was
transferred to the Province and c) the Concession was awarded to
REFSA.
Madalena’s three areas in the Province (Palmar
Largo, Surubí and Chivíl) cover a surface of 422,960
acres.
The 2018 3rd Quarter average daily production of
Palmar Largo was approximately 640 bbls from 8 producing wells. The
associated gas is used in the field as fuel gas and for the gas
lift system. Madalena expects a significant uplift in production
from the 3 workovers planned in Palmar Largo and Surubi.
Jose David Penafiel, President and CEO of
Madalena commented:
“The Operation Agreement recently entered into
with REFSA which ultimately allows Madalena to increase its net
production by approximately 550 barrels per day effective December
1st clearly shows how the Company’s new strategy is working. Since
the current management took over in May 2017, our strategy has
centered on operational efficiency, and that focus has made us a
more effective organization. Our hands-on oversight and
participation has not only captured value through costs savings,
but has led to this accretive bolt-on opportunity, where REFSA has
acknowledged the company as an operator of choice because we are
efficient. We will continue to adhere to our key values of
patience, prudence, and discipline, and are confident that more
growth opportunities will materialize in the future.”
About Madalena EnergyMadalena
is an independent upstream oil and gas company with operations in
four provinces of Argentina where it is primarily focused on the
delineation of unconventional oil and gas resources. The Company is
implementing horizontal drilling and completions technology to
develop both its conventional and unconventional 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
PenafielChief Executive Officeremail: info@madalenaenergy.comphone:
(403) 262-1901 |
|
Alejandro Augusto
PenafielDirectoremail: info@madalenaenergy.comphone: (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 Palmar
Largo, Surubí and Chivíl interests held by the Company, the
strategic value and opportunities available to Madalena through,
among other things, the Palmar Largo concession and the Operation
Agreement, the opportunities and the ability of Madalena to execute
on such plans and opportunities, production volumes and
management's future expectations in relation thereto, and the
Company's ability to meet and finance its commitments under the
Operation Agreement and Palmar Largo concession 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; incorrect
assessments of the value of the benefits to be derived by the
Company from its interest in the Operation Agreement and Palmar
Largo concession, 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 under the
Operation Agreement will not be successful or that the Company's
oil and gas interests in the Palmar Largo concession will not
produce at rates anticipated or at all. 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.
Non-GAAP Measurements The
Company utilizes certain measurements that do not have a
standardized meaning or definition as prescribed by IFRS and
therefore may not be comparable with the calculation of
similar measures by other entities, including operating netback.
Readers are referred to advisories and further discussion on
non-GAAP measurements contained in the Company’s MD&A.
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.
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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