Q2 highlights
- US $76 Oil: Oil in Argentina is currently set at $76 per barrel versus $39 for WTI. This is a huge advantage for a company like to Madalena to increase production and grow cash flow. On top of this the company is eligible for a US $3 per barrel for increased production;
- Active Drilling: The company is actively drilling in Coiron Amargo and is about to start a re-entry in Curamhuele targeting oil in the Lower Agrio shale and liquids-rich natural gas in the Mulichinco tight sandstone;
- Increased Production: Oil and gas production increased to 3,996 boe/d, up 155% from Q2-2014 and 11% from Q1 – 2015;
- Strong Netbacks: Corporate operating netbacks were $34.18/boe (Argentina $37.39/boe);
- Puesto Morales Extension: Extended Rinconada Puesto Morales exploitation concession for 10 additional years. This is really a big deal as the company drilled the successful Loma Montosa well there which there is a substantial amount of inventory to drill. Under the New National Hydrocarbon Law, the Company has the right for another 10-year extension past 2026 should it desire to further extend the block. The Puesto Morales block is the Company’s largest producing concession representing approximately 44% of Madalena’s Q2-2015 production and is a core area of focus for Madalena; and
- Monetize Past Oil Credits: Subsequent to the quarter, the Company was notified by the Argentina Secretary of Energy that Madalena will receive US $11.1 million in government bonds for settlement of past Petroleum Plus incentive credits. This receivable did not show up previously on the balance sheet as it did not qualify as a receivable for GAAP purposes.