(All dollar figures are expressed in
United States Dollars)
CALGARY, Dec. 7, 2016 /CNW/ - Madalena Energy Inc.
("Madalena" or the "Company") (TSXV: MVN and OTCQX: MDLNF) is
pleased to announce that it has entered into agreements with Pan
American Energy LLC, Sucursal Argentina ("PAE") relating to its 90%
working interest ("WI") in the Coiron Amargo Sur Este ("CASE")
block. Concurrent with this transaction, Madalena and PAE
have entered into an agreement whereby PAE will provide a limited
recourse loan to Madalena of up to $40
million, to be drawn-down as required to fund certain
capital expenditures.
Transaction Highlights:
- Madalena will receive cash payments of an aggregate of
$10 million by closing;
- Madalena will transfer a 55% WI and operatorship to PAE,
retaining a 35% non-operated WI in CASE;
- a 2017 work program ("Work Program") will be undertaken by PAE,
with a net benefit to Madalena of $5.6
million; and
- Madalena to obtain a limited recourse loan of up to
$40 million, to be drawn-down as
required to fund certain capital expenditures.
Payment
Madalena will receive a refundable deposit
within two business days with the balance of the $10 million due upon closing, which is expected
to occur within 90 days. Within that period, the parties must
obtain the approvals of Gas y Petróleo del Neuquén Sociedad Anómina
("GyP") and the Province of Neuquén, Argentina.
Working Interests and Operatorship
PAE will become the
operator at CASE, with resulting WI in the block as follows:
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PAE
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55%
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Madalena
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35%
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GyP
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10%
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Work Program
The Work Program will consist of either
two horizontal multi-frac completions in the Vaca Muerta shale
formation or one horizontal multi-frac in the Vaca Muerta and one
deep Grupo Cuyo sandstone gas test,
utilizing existing cased wellbores on the block.
Loan
PAE has agreed to provide up to $40 million to Madalena 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 5 years.
Benefits to Madalena
This transaction delivers a
number of positives for the Company. It provides
significant assistance to addressing the liquidity and working
capital challenges which Madalena has been facing. As well,
Madalena stands to benefit from its relationship with a
well-established, experienced operator which will provide the
necessary capital and expertise so that the CASE block can be
efficiently developed.
Strategic Alternatives Update
The strategic
alternatives process previously announced continues. The Company,
along with its financial advisor, Evercore Group LLC, is in
discussions with a number of parties who have expressed interest in
other aspects of Madalena's operations. As indicated previously,
there can be no assurance that such 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 Pan American Energy
Pan American Energy 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 for the past 10 years. In 2016, the
company will invest 1.4 billion
dollars, after having invested 13
billion dollars between 2001 and 2015.
Over the past 14 years, the company increased its oil production
by 34% and gas production by 67%.
PAE employs more than 12,000 people either directly or
indirectly and has 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
and 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.