Sunday, August 10, 2014

Madalena Energy lays out development plan


Madalena Energy (CVE:MVN) is in a much stronger position today than it was even just a few short months ago, according to chief executive Kevin Shaw, with the company amassing a large land position in a country with the fourth largest technically recoverable shale oil resource in the world, behind only Russia, the US and China.

The company, following its acquisition of Gran Tierra's Argentinean assets in June, now has 14 concessions across Argentina over 1 million net acres of land, compared with 3 blocks over 132,000 acres previously. It also has a land base with more than 150 net sections in Western Canada, with a large inventory of horizontal development locations.

Over the next 17 months, the company is planning to invest its cash flow and financial resources on a combination of lower risk, conventional development drilling and on unconventional shale and tight sand delineation in the Vaca Muerta and Lower Agrio shales of Argentina's well-known Nequen Basin. It will also continue to seek potential partners on its multiple blocks to deliver on its farm-out strategy.

Madalena Energy's share price took a hit recently due to the recent "default" that Argentina experienced. It was not really a default it was a group of hedge funds that would not accept less than 100% of the value for Argentine bonds that they had bought in the past. A US court blocked Argentina from making a payment and Argentina was declared technically in default. Anyway the share price of Madalena got hit but I look at this as a buying opportunity. The upside here is massive and the company has a plan to develop, with its own cash flow, their huge holdings. A bluesky upside is that  a big oil company wanting exposure to the Vaca Muerta shale comes in and farms into Madalena's acreage. Nevertheless this continues to be a great speculation as this is a multi billion barrel potential play.

A hedge fund has been critical of Madalena and their strategy of having both Canadian and Argentina assets and not focusing on one of the other.

another New York based fund has sent a warning to Madalena Energy’s management this morning.
In a powerful yet to the point press release this morning, Joshua Silverman of Iroquois Capital Management, LLC stated, “As a shareholder of Madalena we are very concerned with management’s failure to generate shareholder value. We expect to hear some concrete steps the Company is taking to better manage their assets for maximum value creation during their investor conference call tomorrow.”

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