September 2010
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September 2010

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September 2010

September 2010


Forward looking statements

This presentation includes forward-looking statements, which are statements other than of historical fact, such as information regarding drilling potential and production forecasts. Factors that could cause actual results to differ materially from our expectations include exploration and development risks, commodity prices and operating hazards.

A barrel of oil equivalent (boe), derived by converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil, may be misleading, particularly if used in isolation. A boe conversion is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

This slide is limited as to space in order to be readable if projected. Please review detailed risks and limitations statements at the end of this document.

Forward Looking Statements


Management

Management

Dwayne H. Warkentin: President and Chief Executive Officer, Director

Mr. Warkentin is an experienced petroleum industry executive with 31 years of diversified experience in the oil and gas industry. He previously held the position of Senior Vice President and Chief Operating Officer of Madalena for the past 4 years. Mr. Warkentin has worked in the oil and gas industry in Canada, the United States, Europe, the Middle East, the Far East, South East Asia and South America. These include Vice President and Chief Operating Officer of Antrim Energy Inc., Vice President and Chief Operating Officer of Camberly Energy Ltd., Manager, Development of Lasmo Indonesia Limited, and Petroleum Engineering Manager of Ultramar Oil & Gas Limited. During his tenure with these companies Mr. Warkentin was actively involved in all aspects of international oil and gas operations including acquisitions and divestitures, corporate development, and the management of exploration and development operations in both offshore and onshore international jurisdictions.

Anthony J. Potter: Vice President Finance and Chief Financial Officer, Director

Mr. Potter is a Chartered Accountant with over 24 years of experience with public international oil and gas exploration and development companies.  Mr. Potter has provided strategic planning, tax and risk management advice in senior management capacities in the private and public oil and gas sectors, including extensive involvement in Canadian and international operations in Argentina, United Kingdom and Eastern Europe.  He has been involved with numerous equity and debt financings, new listings on the London Alternative Investment Market (AIM) and Oslo Stock Exchange and other corporate transactions, including foreign acquisitions and divestitures.  Mr. Potter’s previous positions include Chief Financial Officer with Antrim Energy Inc., Vice-President Finance with a US exploration company and a Principal with Coopers & Lybrand Chartered Accountants. Mr. Potter is a member of the Institute of Chartered Accountants of Alberta.

Argentina and Canada Management, Consultants and Advisors

Jesica Juri, Juan Lucino, Martin Gene, Ruy Riavitz, Raul Munoz, Allan Carswell, Ken Broadhurst, Michael Leith


Board of directors

Board of Directors

Raymond G. Smith: Chairman of the Board

Dwayne H. Warkentin: Director

Anthony J. Potter: Director

Ving Woo: Director

Michael J. Lock: Director

Jay Reid: Director

Keith Macdonald: Director

Barry Larson: Director


Madalena tsxv mvn

Financial

No debt

Working Capital End Q1/10 $12 million

International financial structure in place

178.4 MM common shares outstanding – basic

230 MM fully diluted including outstanding warrants

10% (fully diluted) held by Officers, Directors and Management

Valued Asset Base

Light Oil Opportunities in Argentina

Substantial Exploration and Development Drilling defined

Strategic alliances

Acquired large seismic data base to explore for and develop oil and gas opportunities

Madalena- TSXV (MVN)


Madalena s growth history

2006

$27MM raised in 3 equity offerings

Farm-in at Remada Sud, Tunisia

2007

Acquire 3 exploration blocks in Neuquén Basin, Argentina

2008

Successfully drill Discovery in Tunisia testing 200 bopd

Successfully repair and production test two existing wells in Curamhuele, Argentina

3D seismic surveys shot at Cortadera and Curamhuele, Argentina

Acquire and reprocess 3D seismic over Coiron Amargo, Argentina

2009

Successfully drill CAN X-2 light oil discovery at Coiron Amargo, Argentina

$10 MM financing

2010

Multi-well farm-out on Coiron Amargo block, Argentina

Sold Tunisia - US $4.0MM

Preparing drill sites and acquiring environmental approvals for new exploration wells at Coiron Amargo and Curamhuele, Argentina

Madalena’s Growth History


Argentina

Low Operating Costs

Low Royalties

Low F&D Costs

Excellent Prospectivity

Large Land Blocks

Attractive Netbacks

ARGENTINA


Argentina neuqu n basin

Highly prolific oil and gas producing basin in Central Western Argentina

Extensive pipeline and facility infrastructure

Highly developed service industry

Industry receptive Provincial Government

3 prospective blocks acquired by Madalena in September and October 2007 (278,000 acres gross)

CURAMHUELE

CORTADERA

COIRON AMARGO

Priority access to over 100,000 km of 2D seismic, 15,000 sq km of 3D seismic and over 2000 well files and logs

ARGENTINANEUQUÉN BASIN


Madalena prospect inventory

Coiron Amargo:

Vertical and Horizontal well locations in the Sierras Blancas in Numerous Structures on Trend

Vaca Muerta Oil Shale Prospect (potential to use N. America Shale Resource Technology)

Lotena fractured Gas Prospectivity

Quintuco Oil Potential using under-balanced drilling Technology

Curamhuele:

Faulted Thrust Play, Oil and Gas Continuation of Filo Morado/ El Porton Trend from North

L. Troncoso, Avile, Mulichinco

Truncation Oil Play Up-Structure from existing Cur X-1 oil shows and tests against Igneous Intrusion Trap

L. Troncoso, Avile

Cortadera:

Faulted Thrust Play, L. Troncoso, Avile and Mulichinco zones identified through Field Work

Mulichinco Tight Gas Play trending on to block

Potential Structure plays outside 3D area

Madalena Prospect Inventory


Coiron amargo 405 km

Coiron Amargo (405 km²)

Located on east side of Neuquén Basin

Multi-zone potential

Close proximity to prolific oil and natural gas pools following fault structure

High working interest: 70%

Attractive royalty structure – 12% Provincial royalty

Provincial oil company 10% partner responsible for funding its share of costs after exploration phase

3 year Exploration Extension

25 year lease term upon commerciality

High productivity wells offsetting Coiron Amargo

7 well Horiz. Development


Coiron amargo

Coiron Amargo

  • Major Farm-out to Apco

  • 2 stage multi-well commitment to

  • drill up to 4 earning wells

  • Up to $US 18 million commitment

  • After earning Madalena retains

  • significant 35%-52.5% interest in

  • block

  • Horizontal drilling application

  • Potential for up to 38 locations identified on 7 separate prospect features identified on 3D with multi 4 zone potential

  • Can X-3 well drilled and cased August 2010


Coiron amargo horizontal type wells

Coiron Amargo – Horizontal-Type Wells


Curamhuele 227 5 km and cortadera 500 km

Located on north - south trending fault structure

Close proximity to prolific oil and natural gas pools following fault structure and in plains area

High working interests: 70-90%

Attractive royalty structure – 12% Provincial royalty

Provincial oil company 10% responsible for funding its share of costs after exploration phase

Both Blocks have 3 year Extension to Exploration

25 year lease terms upon production

Oil and natural gas tested on blocks

CURAMHUELE(227.5 km²)and CORTADERA(500 km²)


Curamhuele prospect identified on 3d

CURAMHUELE – Prospect Identified on 3D

  • TRUNCATION PLAY

  • World class drilling opportunity

  • Madalena majority 70% ownership in block

  • New 3D seismic program on the block indicates the existence of a igneous dome in the south portion of the block

  • Offsetting analogous blocks have government estimated individual recoverable proven reserves estimate of between 150-400 million

  • Both the Avile and Troncoso are structurally trapped at the proposed Curamhuele X-1001 location

  • Ch X-1 produced oil from the Avile formation far downdip on the same structure

  • Preparing 2 Truncation drilling locations


September 2010

Curamhuele X-1001 Truncation

Disturbed

Zone (Seal)

L. Troncoso


Troncoso pampa tril

Troncoso - Pampa Tril

Tronosco

Anhydrite

Tronosco

Dune

Tronosco

Fluvial Channel

Upper

Agrio


Curamhuele truncation play

Curamhuele Truncation Play


Curamhuele truncation type wells

CURAMHUELE – Truncation Type Wells


Curamhuele truncation type wells1

CURAMHUELE – Truncation Type Wells


Curamhuele drilling prospects identified on new 3d

CURAMHUELE – Drilling Prospects Identified on New 3D

  • THRUST FAULT PLAY

  • World class drilling opportunity

  • Madalena majority 70% ownership in block

  • New 3D seismic program on the block indicates the extension of the Avile, Troncoso, and Mulichinco formations from the offsetting Filo Morado Block

  • Offsetting Filo Morado field has recovered 64 million barrels of oil equivalent to date

  • Anticipate drilling after the Truncation well


September 2010

Yapai X-1 Test – (existing well on Curamhuele Block)

Volcano

Filo Morado Facilities


Curamhuele yapai x 2

Curamhuele – Yapai X-2

  • Faulted thrust block

  • Potential to access formations with

  • deviated wellbore

  • Potential for horizontal equivalent

  • productivity from shallower

  • interval

  • Developed road access and existing

  • well pad will result in significant cost

  • reduction


Curamhuele thrust play type wells

CURAMHUELE – Thrust Play Type Wells


Estimated p p reserves mmboe

Thrust Plays

(40-50% oil) mmboe

Filo Morado 69

El Porton 92 

4 Chihuido Fields257

Curamhuele

Thrust Play 69?

Truncation Plays

(90% oil) mmboe

El Trapial500

Lomita Sur200 

Sierra Negra180

Curamhuele

Truncation Play77?

Estimated P+P Reserves (mmboe)


Curamhuele summary

Curamhuele Summary

Madalena majority 70% ownership in block

Two high quality drilling prospects located on block:

- Truncation Play - new 3D seismic indicates the existence of an igneous dome

creating trapping mechanism on block analagous to offsetting blocks

- Offsetting analogous blocks have government estimated individual recoverable

proven reserves estimate of between 150-400 million barrels of oil equivalent

(National Secretary of Energy of Argentina)

- Fault Thrust Play - new 3D seismic program on the block indicates the extension of

the primary plays on the block, the Avile and Troncoso formations from the

offsetting Filo Morado field

- 0ffsetting Filo Morado field has recovered 64 million barrels of oil equivalent to date

(National Secretary of Energy of Argentina)

Hydrocarbon accumulations and value in existing wellbores owned by Madalena on the Curamhuele block

Drill locations selected and surveyed on Truncation and Fault Thrust and environmental permitting and drilling approvals underway


Cortadera

Cortadera

Excellent drilling candidate with multiple zone exploration targets

Extensive field mapping completed to date

Field mapping and 3D seismic indicates presence of source rock and reservoir quality rock

New 3D seismic program

Structures potentially similar in size to Filo Morado

Strong Industry interest to participate on block


Cortadera1

Cortadera

  • New 3D seismic shot over block

  • Extensive field work conducted over block

  • Presence of Avile and Troncoso reservoir rock identified on block at surface

  • Thick high porosity Eolian dunes identified on the block

  • Tight Gas play in Mulichinco formation on eastern side of block


Argentina overview

Three significant exploration blocks in the Neuquén basin with extensive 2D and 3D seismic coverage and drilling potential

Majority working interests – 70% to 90%

Attractive royalty structure – 12%

Farmout Agreement in place for significant third party farmout investment at Coiron Amargo - up to $US 18 million. Madalena remains with a significant 35% to 52.5% WI after farmout

Extensive remaining low risk development drilling potential after farmout

25 year lease term granted upon commerciality

Extensive low risk vertical and horizontal development drilling potential with low projected F&D costs

ARGENTINA - OVERVIEW


Argentina overview continued

Attractive netbacks during periods of high and low world oil prices resulting from low operating costs and low royalties

In 2008 the Argentina Government announced the “Gas Plus” and “Oil Plus” Plans to encourage oil and gas exploration and production, significantly improving future netbacks from new discoveries and tight gas discoveries

November 20, 2009, media press release that Argentina Government will announce a revised Gas Plus program enabling producers to sell natural gas at US$4-5 per MBTU

100% of Madalena’s oil and gas production will qualify for Gas and Oil Plus programs

Well established Madalena corporate structure in Argentina with experienced international team

ARGENTINA – OVERVIEW (Continued)


Forward looking information and statements

The information in this presentation contains certain forward-looking statements. These statements relate to future events or our future performance. 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 Corporation’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 Corporation’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 that the Corporation 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 Corporation’s forward-looking statements are expressly qualified in their entirety by this cautionary statement. The forward-looking information and statements contained in this presentation speak only as of the date hereof, and the Corporation assumes no obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws. Except as required by law, the Corporation 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 Corporation's Annual Information Form which is available on SEDAR at www.sedar.com.

Forward Looking Information and Statements


Information regarding disclosure in this presentation of oil and gas reserves and other volumes

All amounts in presentation are stated in Canadian dollars unless otherwise specified. In accordance with Canadian practice, reserve and similar volumes and production volumes and revenues are reported on a gross basis, before deduction of royalties, unless otherwise stated.

Where applicable, natural gas has been converted to barrels of oil equivalent ("BOE") based on 6 Mcf:1 BOE. The BOE rate is based on an energy equivalent conversion method primarily applicable at the burner tip and does not represent a value equivalent at the wellhead. Use of BOE in isolation may be misleading.

This presentation also contains references to "PIIP" and the term "recoverable", which are not and should not be confused with references to oil and gas reserves.

PIIP is that quantity of petroleum that is estimated to exist originally in naturally occurring accumulations. It includes that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet to be discovered. PIIP is comprised of Discovered PIIP and Undiscovered PIIP

Discovered PIIP is that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production

All references throughout this presentation referring to oil and natural gas reserves and production rates have been obtained from the National Secretary of Energy of Argentina and are stated as proven plus probable reserves. The estimates of proven plus probable reserves have not been prepared in accordance with the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook") or National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and the Corporation cannot confirm whether such estimates have been prepared by a person who meets the definition of a "qualified reserves evaluator" in NI 51-101; therefore, the estimates may differ materially from estimates prepared in accordance with the COGE Handbook and NI 51-101.

Information Regarding Disclosure in this Presentation of Oil and Gas Reserves and Other Volumes


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