BOE Report

Madalena Announces Third Quarter 2013 Financial Results and Operations Update

TSXV Trading Symbol: MVN

CALGARY, Nov. 28, 2013 /CNW/ – Madalena Energy Inc. (TSXV: MVN) (the “Company” or “Madalena”) is pleased to announce the filing on SEDAR of the unaudited interim consolidated financial statements and related Management’s Discussion and Analysis (“MD&A”) for the three and nine months ended September 30, 2013. Selected financial and operational information is outlined below and should be read in conjunction with Madalena’s unaudited interim consolidated financial statements and related MD&A which are available for review under the Company’s profile at www.sedar.com and on the Company’s website at www.madalena-energy.com.

SUMMARY FINANCIAL AND OPERATIONAL RESULTS

Three months ended
September 30		 Nine months ended
September 30
2013 2012 2013 2012
Financial – Canadian $000s, except per share amounts
Oil and gas revenue 4,840 1,762 12,327 2,533
Net loss (118) (916) (2,758) (3,932)
Per share – basic and diluted (0.00) (0.00) (0.01) (0.01)
Capital expenditures 7,146 3,633 30,174 16,542
Working capital 8,924 58,752 8,924 58,752
Equity outstanding – 000s
Common shares 338,698 314,307 338,698 314,307
Stock options 20,430 16,324 20,430 16,322
Operating
Average Daily Production
Crude oil and condensate – Bbls/d 401 250 338 121
Natural gas – Mcf/d 3,838 84 3,340 28
NGLs – Bbls/d 137 – 129 –
Total – boe /d(1) 1,177 264 1,024 125
Average Sales Prices
Crude oil and condensate – $/Bbl 89.51 75.11 83.01 75.66
Natural gas – $/Mcf 2.43 4.37 3.05 4.37
NGLs – $/Bbl 54.54 – 53.33 –
Total – $/boe(1) 44.72 72.52 44.11 73.81
Operating Netbacks(2)
$/boe(1) 14.82 35.15 14.61 26.16
(1) “boe/d” means barrels of oil equivalent (“boe”) per day. Refer to – “Oil, Natural Gas Liquids and Natural Gas Conversions to boe” in Advisory.
(2) Operating netbacks is considered a non-GAAP term. Operating netbacks are calculated by subtracting royalties, transportation, and operating costs from revenues before other income.

THIRD QUARTER 2013 HIGHLIGHTS AND OUTLOOK

  • Q3 -2013 production averaged 1,177 boe/d (46% oil and liquids), an increase of 345% from Q3 – 2012;
  • Subsequent to Q3 – 2013, the Company’s latest Ostracod horizontal (100% W.I.) was brought on stream in early November, 2013. During its initial 24 operating days of production, the average rate of this horizontal well was approximately 606 boe/d (84% oil & NGLs);
  • Closed a $7.25 million equity financing in early July, 2013;
  • Exited the third quarter with positive working capital of $8.9 million and unutilized credit facilities of $13 million;
  • On November 14, 2013 announced an $11 million financing through an $8 million bought deal and concurrent $3 million private placement. The private placement closed on November 21, 2013 and the bought deal is scheduled to close on or about December 3, 2013; and
  • On November 28, 2013 Madalena increased its 2013 capital budget to $42 million. The increased budget will be primarily allocated to the Company’s Ostracod oil project.

International Operations – Neuquen Basin, Argentina
Coiron Amargo Block

  • The exploration period for Coiron Amargo Sur (southern portion of the block) was extended until November 8, 2014 by way of an official decree signed by the Province of Neuquén in Argentina on November 12, 2013. Coiron Amargo Norte (northern portion of the block) is currently under a 25 year exploitation (development) concession;
  • The CAS.x-14 vertical well in the southern portion of the Coiron Amargo block was drilled and cased encountering approximately 105 meters of Vaca Muerta shale on logs. Completion activities on this well are expected to commence as part of a two-well completion program after the CAS.x-15 well is drilled in the fourth quarter of 2013;
  • The CAN.xr-2(h) well was re-entered and is currently being drilled and completed horizontally in the Sierras Blancas light oil reservoir. This well represents the first horizontal well drilled into one of the six Sierras Blancas conventional light oil pools discovered on the block to date; and
  • Two 3D seismic programs were shot at Coiron Amargo Sur during the second quarter and were subsequently processed in the third quarter of 2013. The Coiron Amargo block (both north and south regions) is now almost entirely covered with 3D seismic.

Curamhuele Block

  • The Company continues to examine opportunities in respect of a possible a joint venture or other transaction with respect to its 90% Curamhuele block in the Neuquén basin in Argentina. RBC Capital Markets (“RBC”), Madalena’s exclusive advisor related to its Neuquen basin assets, is in communication with a broad spectrum of parties to solicit interest in a joint venture or other transaction with the Company. The Company cautions that there are no assurances that an acceptable joint venture arrangement or other transaction will be reached.
  • Madalena is currently planning to shoot a 75 km2 3D seismic survey at Curamhuele during the first quarter of 2014. The Company plans to merge this newly acquired data with the existing 125 km2 3D survey on the block. This will provide 3D seismic coverage on the entire northern portion of the Curamhuele block.

Cortadera Block

  • On the Cortadera Block in the Province of Neuquén, the joint venture signed an amended contract agreement on September 24, 2013 to formalize a multi-year agreement for the extension of the initial exploration period and inclusion of subsequent exploration periods.
  • The Company plans to re-enter the CorS.x-1 well to conduct re-entry work to evaluate an uphole zone of interest in the wellbore. Re-entry operations at CorS.x-1 are planned to commence in late Q4, 2013 or during the first quarter of 2014.

Domestic Operations – Greater Paddle River Area, Alberta, Canada

  • Drilled, completed and tied-in a 100% working interest (“W.I.”) horizontal Ostracod oil well at 1-32-55-7W5M in the Paddle River area of west-central Alberta. This well commenced production in early November, 2013. During its initial 24 operating days of production the well flowed at an average rate of 476 bbls/d of 30° API oil and 838 mscf/d of raw natural gas for a total of 616 boe/d (77% oil). After accounting for shrinkage and NGLs recovery at the local production facility, the average rate over the initial 24 operating days would equate to approximately 606 boe/d (84% oil & NGLs). This well was drilled to a total depth of 3,250 metres with a horizontal length of 1,380 metres and was completed with a 16 stage multi-fracprogram.
  • In support