Friday, November 27, 2015

Madalena Energy reports third quarter results and issues operational update

Link:

Madalena Energy, my Argentina oil and gas explorer with huge Vaca Muerta acreage reported third quarter results and issued an operational update. I am not going to go through the whole report but suffice to say that the company continues to positively advance its projects in Argentina. My thesis has always been that the company was foresighted enough to acquire a huge land package in the very prospective shale areas in Argentina.

The company properties are surrounded by major oil companies and their properties. As these various large oil companies prove out the shale concept it adds value to madalena's properties. Of course Madalena is also drilling wells and proving up additional resources on its own land (374% increase in resources).

I expect that eventually as the full potential of this emerging shale property is realized that madalena will get taken out by a larger more financially capable company looking to bolster their reserves.

The other good news is that the pro business candidate Mauricio Marci just got elected as President of Argentina. This can read as a net positive for the country and the development of this asset. I think oil prices are near a low and that these sustained low prices will set the stage for the next rally in oil prices over the next couple of years. I suspect Madalena gets taken out at a premium during the next oil price up cycle.


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