Madalena Energy Inc. (TSX-V: MVN) (the "Company" or "Madalena") is pleased to announce the results of a multi-rate production test for the CAN.xr-2(h) horizontal well which is the Company's first horizontal well to be drilled on its international assets:
International Update: Neuquén Basin, Argentina
Coiron Amargo Block (35% Working Interest) - Si erras Blancas Test Results and Drilling Update
The CAN.xr-2(h) well was recently re-entered and drilled horizontally in the Sierras Blancas light oil reservoir to a total measured depth of 3,751 meters with a horizontal lateral section of approximately 530 meters in length. This horizontal well was subsequently cased and completed with a 3.5" slotted liner and a multi-rate production test was carried out through temporary production facilities. Throughout the multi-rate production test, the CAN.xr-2(h) well flowed without artificial lift equipment and was tested for approximately 42 hours at various choke settings ranging from 4 mm to 12 mm in size with the following flow rates observed during the test:
The highest rates were achieved on a 12mm choke setting, when the CAN.xr-2(h) well was flowed at a rate of 1,791 bbls/d of oil with 2,683 mcf/d of associated natural gas for a total of 2,238 Boe/d (80% oil) over a three-hour period and at an average flowing pressure of approximately 1,304 psi.
On an 8mm choke setting, the CAN.xr-2(h)) well was flowed at a rate of 912 bbls/d of oil with 1,364 mcf/d of associated natural gas for a total of 1,139 Boe/d (80% oil) over a 16-hour period and at an average flowing pressure of approximately 1,433 psi.
During the test period of 142 hours, the total produced cumulative volumes were approximately 2,736 barrels of oil (38 degree API) and approximately 4,154 mscf of natural gas, for a total of approximately 3,428 barrels of oil equivalent (80% oil). No significant flowing pressure declines were observed throughout any of the test rates and no water was produced throughout the test period.
This well represents the first horizontal well drilled into one of the six Sierras Blancas conventional light oil pools discovered to date on the Coiron Amargo block. The Company has an inventory of horizontal development locations on the Coiron Amargo block and a second horizontal well targeting the Sierras Blancas light oil reservoir (CAN-15(h)) is now expected to spud in January 2014 once the drilling operations are completed at CAS.x-15 (see below) and the drilling rig is moved to the CAN-15(h) location. The CAN-15(h) horizontal well will be drilled into one of the largest Sierras Blancas pools on the block and targets a separate pool than was drilled by the CAN.xr-2(h) horizontal well.
The Company is currently drilling a Vaca Muerta shale delineation well at the CAS.x-15 location in the southern portion of the Coiron Amargo block.
Completion and testing operations on this well and on a previously drilled nearby Vaca Muerta shale well at the CAS.x-14 location are both expected to be carried out as part of a multi-well completion and frac program in 2014. The CAS.x-14 well was previously drilled and cased with approximately 105 meters of Vaca Muerta shale on logs.
While Madalena is very encouraged by the initial results from the CAN.xr-2(h) horizontal well, the flowback information disclosed above should be considered preliminary and is not indicative of the well's long-term performance. Ongoing technical work and operational enhancements are expected to continue to improve the Company's understanding of the ultimate potential of its Sierras Blancas horizontal oil play.
About Madalena - International and Domestic 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.
Internationally, Madalena holds three large blocks within the Neuquén basin in Argentina where it is focused on the delineation of large petroleum in-place shale and unconventional resources in the Vaca Muerta and Lower Agrio shales, in addition to multiple tight sand plays.
The Company is also developing a conventional oil play in the Sierras Blancas formation. Madalena holds approximately 132,200 net acres on the Coiron Amargo (34,951 net acres), Curamhuele (50,595 net acres) and Cortadera (46,656 net acres) blocks.
Domestically, Madalena's core area of operations is located in the Greater Paddle River area of west-central Alberta where the Company holds approximately 200 gross (>150 net) sections of land (78% average W.I.) encompassing light oil and liquids-rich gas resource plays. Madalena's primary domestic focus is to exploit its large inventory of horizontal drilling locations on its Ostracod oil and emerging Nordegg oil & liquids-rich gas resource plays.
