(All dollar figures are expressed in
United States Dollars)
CALGARY, Jan. 11, 2017 /CNW/ - Madalena Energy Inc.
("Madalena" or the "Company") (TSXV: MVN and OTCQX: MDLNF) is
pleased to announce that its previously announced transactions with
Pan American Energy LLC, Sucursal Argentina ("PAE") relating to
Madalena's 90% working interest ("WI") in the Coiron Amargo Sur
Este block ("CASE") have closed and Madalena has received the
balance of the $10 million
consideration owed.
As a result of the transactions, PAE holds a 55% WI in, and
operatorship of, CASE. Madalena retains a 35% non-operated WI
in CASE, with the remaining 10% ownership of CASE held by Gas y
Petroleo del Neuquén, the provincial oil and gas company in the
Province of Neuquén, Argentina. Concurrently, PAE has agreed,
subject to certain conditions, to provide Madalena with a loan of
up to $40 million, on a limited
recourse basis, to be drawn-down as required to fund certain
capital expenditures. This limited recourse loan will bear interest
at 7% per annum and is repayable in five years from the net revenue
generated from the capital expenditure program.
The 2017 work program at CASE described in the Company's
December 7, 2016 news release,
comprised of, among other things, two well re-entries, will be
undertaken by PAE as the new operator of CASE, with a net benefit
to Madalena of up to $5.6 million in
carried capital costs. PAE intends to initiate the first of
two well re-entries as soon as possible.
Use of Proceeds
The proceeds from the transactions
will be used to partially address the liquidity challenges
currently being experienced by the Company. In particular, Madalena
expects that the overdue amounts payable to the operator at Coiron
Amargo Norte (described in the November 22,
2016 news release) will be satisfied and therefore the risk
of forfeiture avoided.
Strategic Alternatives Update
The previously announced
strategic alternatives process continues. The Company, along with
its financial advisor, Evercore Group LLC, is in ongoing
discussions with multiple potential counterparties. As indicated
previously, there can be no assurance that any additional
transactions will be consummated.
About Madalena Energy
Madalena is an independent,
Canadian headquartered, Argentina
focused 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.
About PAE
PAE is the largest private hydrocarbon
producing company in Argentina. It
contributes 18% of hydrocarbon produced in the country and has had
the highest growth rate and the highest reserve replacement ratio
in Argentina over the past 10
years. In 2016, PAE invested $1.4
billion, after having invested $13
billion between 2001 and 2015.
Over the past 14 years, PAE increased its oil production by 34%
and gas production by 67%.
PAE employs more than 12,000 people either directly or
indirectly and has a presence in the four major hydrocarbon
producing basins in Argentina:
Golfo San Jorge, with the largest
oil production in Cerro Dragón, the largest oilfield in the
country; Neuquina, the largest gas basin and the hub for the future
development of unconventional reservoirs; Noroeste (province of
Salta) and the Austral Basin (located offshore Tierra del Fuego),
with significant production of gas, the main source of energy in
the country.
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 matters related to the
transactions described herein, the associated work program, the use
of proceeds from the transactions described herein and their impact
on the Company's liquidity challenges and matters related to
the strategic review. 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.
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.