Canadian Madalena Energy Inc. has approved a CDN$ 36 million budget for the remainder of 2014 and stated its future priorities are to invest the company’s resources in its conventional opportunities, and to execute a delineation strategy on its unconventional shale and tight sand resources within the Neuquén basin.
According to the Madalena press release, the company aims to concentrate on a combination of lower risk development activities and a unconventional shale and tight sand delineation strategy.
In Argentina, on the Coiron Amargo, Puesto Morales and Rinconada South blocks, the Company plans to execute horizontal drilling programs in both the Sierras Blancas light oil reservoir and the Loma Montosa oil resource play. In Western Canada, the Company plans to drill additional horizontal Ostracod oil wells to increase oil production and to further advance this project across the Company’s prospective land base.
Horizontal drilling operations in the Sierras Blancas and Ostracod oil developments will proceed through the remainder of 2014 with the drilling of four to five wells. A multi-well drilling program in the Loma Montosa oil resource play is being planned for 2015 at the Puesto Morales field.
Additionally, Madalena is planning to execute a multi-well workover program in 2014 and 2015 to optimize production across its producing fields in Argentina. Specifically, the Company plans to conduct four workovers in its Puesto Morales field before the end of 2014.
Madalena has increased its activity in the unconventional blocks within the Neuquén basin and in the evolving shale and tight sand plays at Corion Amargo, Curamhuele and Cortadera. Madalena is also planning to conduct vertical and/or horizontal activities in the Vaca Muerta shale, Lower Agrio shale and Mulichinco tight sand plays.
For the remainder of 2014, on the Coiron Amargo block, Madalena plans to continue its delineation activities in the Vaca Muerta shale with a fracture treatment at the CAS.x-15 vertical well (previously drilled) and a new vertical well to be drilled and multi-stage fracced at the CAS.x-16 location. Rigs have been secured for these activities. Also in 2014, on the Cortadera block, Madalena expects to conduct a re-entry targeting the Mulichinco tight sand in the previously drilled CorS.x-1 deep vertical test.
The Company also plans to move forward at Curamhuele on its unconventional resources in the Lower Agrio shale and Mulichinco tight sands by re-entering two existing wells (Yp.x-1001 and Ch.x-1) to conduct drilling, multi-stage frac and testing operations in these zones of interest. Timing of this work is currently planned for late 2014 or Q1-2015. Madalena is currently working to source a drilling rig and other services for this program. In response to offsetting industry activity, Madalena is also further evaluating the Vaca Muerta shale across the Curamhuele block.
Madalena plans to recommence drilling operations in both Argentina and Western Canada in August 2014. At Madalena’s Coiron Amargo block in the Neuquén basin, drilling operations are commencing on a three well program with the initial well a horizontal well on the Sierras Blanca light oil play. Upcoming drilling operations in Western Canada will include two horizontal development wells on the Ostracod oil play.
Financially, Madalena’s strategy is to focus the Company’s cash flow and financial resources on its development assets and the delineation of its unconventional resources – as described above. The Company will concurrently pursue a farm-out strategy to create value on select exploration and appraisal blocks.
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