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National Bank says Madalena's Ostracod well results support “rapid production ramp-up” in 2013
Tue 11:15 am by Carrie White and Deborah Bacal
National Bank analyst Darrell Bishop reiterates his outperform rating for Madalena Ventures, noting that the company’s “positive” results from its Ostracod development wells are supportive of “rapid production ramp-up” in 2013.
National Bank analyst Darrell Bishop has reiterated his outperform rating for Madalena Ventures (CVE:MVN), noting that the company’s positive results from its Ostracod development wells are supportive of a “rapid production ramp-up” in 2013.
The analyst also maintained his $1.00 per share price target on the company, saying the current levels offer “an attractive entry point ahead of key well results” and the company’s first resource report across all Argentinean assets.
Madalena on Monday provided an operational update, saying it continues to ramp up production through its horizontal resource plays in Western Canada, while also driving forward plans to further unlock value across its shale assets within the Neuquen basin in Argentina.
The junior oil and gas company said that it has boosted its productive capability to around 2,000 barrels of oil equivalent per day (boe/d) - a 900-per-cent increase from its production level last October.
It has a current base production of roughly 1,200 boe/d - 43 per cent weighted toward oil and natural gas liquids - with more than 1,200 boe/d of tested volumes behind pipe from the recently completed Ostracod horizontal development wells.
Bishop highlighted recent results from Ostracod, which showed that well #1 flowed at 707 boe/d at 39 per cent with 37° API oil, above his type curve estimate of 300 boe/d, while well #2 flowed at 566 boe/d at 24 per cent oil over three days.
“Although both wells tested over a short period, we believe they show the high potential the play may have,” the analyst remarked in a morning research note.
Madalena controls about 55 net sections of land and a significant inventory of drill-ready horizontal locations on the Ostracod oil trend in the Paddle River area in Western Canada. It plans to drill additional horizontal wells on this play throughout the remainder of the year, focusing on increasing production and reserves.
Casimir Capital analyst Ryan Galloway on Monday noted that Ostracod “could rapidly drive production higher in the second half of 2013”. Casimir has a speculative buy rating on the company and a $1.30 price target.
Meanwhile, at Madalena's Argentina operations, the company said Monday its planned 2013 program involves a combination of workovers, 3D seismic, new development drilling and exploration drilling - focused on its unconventional resources in the Vaca Muerta and Lower Agrio shales.
Madalena's exposure to multiple, high impact tight sand plays in the Neuquén Basin is key, specifically the Vaca Muerta shale - which the company calls the most tangible shale play outside of North America. Its international assets consist of three large blocks - Coiron Amargo, Curamhuele, and Cortadera.
The Coiron Amargo block, where the company is now working on a drill program with partners, is located within the heart of the Vaca Muerta oil play and is also within kilometres of the recently announced Chevron and Bridas proposed billion dollar farm-in deals on Argentina-based YPF’s lands.
Shell also recently announced a Vaca Muerta shale oil discovery in Argentina, which is the first shale discovery in the country. The discovery well tested at 465 barrels per day of 35 degree API oil. The well is located on the Sierra’s Blancas block which is located directly south and adjacent to Madalena Ventures' Coiron Amargo block.
Mackie Research's Bill Newman also maintained his buy rating and $2.15 target price on the company on Monday, citing the junior oil and gas play's production in Canada and "shale resource upside" in Argentina.
200, 707 – 7th Avenue S.W.
Calgary, Alberta T2P 3H6 Telephone: (403) 262-1901 Facsimile (403) 262-1905 TSXV Trading Symbol: MVN Madalena Provides an Update on its Domestic and International Operations and Increases its Production Capability to Approximately 2,000 boe/d Madalena Ventures Inc. (TSXV: MVN) (the "Company" or "Madalena") is pleased to provide operational updates across its Western Canadian ("domestic") and International assets. With the focus on production growth to start 2013, Madalena’s productive capability is approximately 2,000 boe/d (44% oil and natural gas liquids ("NGLs")), representing a 900% increase from the Company’s October 2012 production level. The Company has a current base production of approximately 1,200 boe/d (43% oil & NGLs) with in excess of 1,200 boe/d of tested volumes behind pipe from recently completed Ostracod horizontal development wells. Western Canada Operations Update – Greater Paddle River Core Area Horizontal Resource Play #1 – Ostracod light oil
At Paddle River, fracing and testing operations have been completed at Madalena’s two recently drilled 100% working interest Ostracod horizontal oil wells. The first well reached a total depth of 2,776 metres, including a 1,056 metre horizontal trajectory. Completion operations included a 13-stage multi-frac program where a total of 6,094 barrels of water-based load fluid was pumped. The well was subsequently production tested for three days during which time the well flowed continuously and recovered a total of 4,633 barrels of load fluid (76%). During the three day test, the well flowed 37 API oil and gas at an average rate of 707 boe/d (39% oil). Flowing pressures remained relatively stable at approximately 1,400 kPa during the final 24 hours of the test. After accounting for shrinkage and NGLs recovery at the local production facility, sales production over the final 24 hours would equate to approximately 719 boe/d (46% oil & NGLs). The second well reached a total depth of 2,880 metres, including a 1,140 metre horizontal trajectory. Completion operations included a 14-stage multi-frac program where a total of 6,320 barrels of water-based load fluid was pumped. The well was subsequently production tested for three days during which time the well flowed continuously and recovered a total of 2,430 barrels of load fluid (38%). During the three day test, the well flowed 33 API oil and gas at an average rate of 566 boe/d (24% oil). Flowing pressures remained relatively stable at approximately 5,400 kPa during the final 24 hours of the test. After accounting for shrinkage and NGLs recovery at the local production facility, sales production over the final 24 hours would equate to approximately 547 boe/d (38% oil & NGLs). Both wells are currently shut-in and operations to equip them for production and tie-in the solution gas to existing Madalena facilities are ongoing. The Company anticipates that these two horizontal wells will be brought on production during the second quarter of 2013. While Madalena continues to be very encouraged by the initial results from these horizontal wells, it cautions that these test results are not indicative of their long-term performance. Ongoing technical work continues to improve the Company’s understanding of its Paddle River Ostracod oil play and the ultimate potential of the assets. Madalena controls approximately 55 net sections of land and a significant inventory of drill-ready horizontal locations on the Ostracod oil trend in the Paddle River area. The Company plans to drill additional horizontal wells on this play throughout the remainder of 2013, focusing on increasing production and reserves. Horizontal Resource Play #2 – Stacked Mannville Channel Trend
At Niton, the Company’s recently drilled and completed 100% working interest Notikewin horizontal well was placed on production in Q1 2013. Since early March, the well has produced at relatively stable rates of approximately 400 boe/d (14% NGL’s). Madalena has 133 net sections of land across its regional Mannville channel trends and has a significant inventory of horizontal drilling locations focussed on the liquids-rich Notikewin and Wilrich formations. Horizontal Resource Play #3 – Nordegg oil & liquids-rich gas
In the Wildwood area, Madalena is continuing its evaluation of its recently drilled and completed 100% working interest Nordegg horizontal well. With the onset of spring break-up the Company has temporarily shut-down operations on this location with plans to re-commence evaluation operations as soon as road and lease conditions improve. Madalena holds 144 net sections of Nordegg rights containing or proximal to vertical well production which produces oil, and/or high liquids-rich content gas. International Operations Update – Neuquen Basin
In Argentina, Madalena has commenced its planned 2013 activity program involving a combination of workovers, 3D seismic, new development drilling, and exploration drilling focused on the Company’s unconventional resources (in the Vaca Muerta shale and Lower Agrio shale), alongside conventional zones of interest.
In March, Madalena and its partners commenced the first of multiple planned workovers for 2013 at its Coiron Amargo (35% W.I.) block to optimize current field production. To begin the workover program, Madalena conducted a successful cement squeeze, perforation and fracture stimulation of its CAN X-3 well to enhance oil recoveries from the Sierras Blancas light oil formation. Prior to the workover, CAN X-3 was producing approximately 25 bbls/d of oil gross (9 bbls/d net). After completing the workover, CAN X-3 was put back on stream in late March and is currently producing approximately 115 bbls/d of oil gross (40 bbls/d net). Additional workovers will be executed in 2013 to optimize the existing field assets. In early May, the Company anticipates commencing 3D seismic operations to acquire up to 160 square kilometers of data in the south-west and east-central areas of the Coiron Amargo block. This seismic data is being acquired directly offsetting a horizontal multi-stage frac well that was recently tested in the regional Vaca Muerta shale, resulting in a new oil discovery by the operator of the block (a major integrated E&P company). Madalena and its partners at Coiron Amargo are currently working to contract a rig for an upcoming drilling program involving multiple Vaca Muerta shale wells in the southern part of the block and the Company’s first horizontal Sierras Blancas (light oil) development well in the north. Madalena expects to mobilize a drilling rig for this program during the second quarter of 2013. Madalena is also working to move forward activities on its other two blocks within the Neuquen basin at both Cortadera (40% W.I.) and Curamhuele (90% W.I.). About Madalena – Domestic and International Assets Madalena is an independent, Canadian-based, domestic and international upstream oil and gas company whose main business activities include exploration, development and production of crude oil, natural gas liquids and natural gas. Domestically, Madalena holds a significant acreage position in Western Canada, with a core area of operations located in the Greater Paddle River area, where the company holds approximately 200 gross (>150 net) sections of land (78% average W.I.) across multiple light oil and liquids-rich gas resource plays. Madalena’s focus domestically is to exploit its large inventory of horizontal development locations in its Ostracod oil, Notikewin/Wilrich liquids-rich gas, and Nordegg oil & liquids-rich gas resource plays. Madalena also holds more than 100 net sections (100% W.I.) which are prospective for the Duvernay shale. Internationally, Madalena holds three large blocks within the prolific Neuquén basin in Argentina and is focused on the delineation of its large petroleum in-place shale & unconventional resources in the Vaca Muerta and Agrio shales, alongside plays in the Quintuco, Mulichinco and Sierras Blancas formations. 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.
Madalena trades on the TSX Venture Exchange under the symbol MVN. Basic corporate information, recent news releases and regularly updated corporate presentations are available on the Company’s website at www.madalena-ventures.com.
| Market: | TSX-V |
| Sector: | Oil & Gas Exploration & Production |
| EPIC: | MVN |
| Latest Price: | 0.29 (-4.92%  ) |
| 52-week High: | 0.61 |
| 52-week Low: | 0.21 |
| Market Cap: | 91.15M |
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