LONDON, April 14, 2015 /PRNewswire/ --
The first of four significant resource plays for small-cap Canadian explorer Madalena has been described as a "sleeper" that has now awakened, with successful horizontal well testing at Loma Montosa in Argentina showing 860 barrels of oil equivalent per day.
On 8 April, Madalena Energy Inc. (TSXV: MVN and OCT:MDLNF) announced the completion of testing at a horizontal well in the Loma Montosa formation at Puesto Morales, which is only one of four strategic resource plays in the company's ambitious Argentina portfolio.
The Loma Montosa well was drilled and cased to a total depth of 2,600 meters and a horizontal length of 1,095 meters, flowing a total of 860 boe/d including 480 barrels of oil per day plus 2,300 mcf/d of gas. Over the last five days, 2,140 barrels of oil plus gas volumes were produced here.
The Loma Montosa oil resource play is one of Madalena's high-impact plays that with successful well testing for oil and gas flows promised to be a game-changing play for the small-cap company, which is the only junior left in Argentina's shale.
The company has also finished drilling and completion operations at a fourth horizontal well in Argentina's Sierras Blancas at Coiron Amargo, in which it has a 35% working interest. The well was drilled to a total depth of 4,214 meters with a horizontal lateral section of 1,011 meters, and testing began on 15 March. The well was tied into production facilities on 27 March at a total rate of 600 boe/d, including 480 barrels of oil per day and 730 mcf/d of associated gas.
But it is the Loma Montosa that everyone is eyeing right now. Success here set the company up for a large, scalable in-place oil play at Puesto Morales, and it is sure to attract the attention of the major oil companies that already surround Madalena in Argentina. And Madalena has 100% working interest here.
At Loma Montosa, Madalena is using North American horizontal multi-frac technology to increase recovery and improve the economics of play, which internal geological mapping of 60 historic vertical wells already shows a cumulative oil production of around 2.3 million barrels.
And this is only one of four Argentina plays for Madalena this year. The other three include the prized Vaca Muerta shale and the Agrio shale-both oil plays-and the liquids-rich gas play at Mulichinco.
All told, Madalena holds over 950,000 net acres across five provinces in Argentina, which is poised be the venue for the next North American-style shale boom.
Argentina is home to 27 billion barrels of recoverable oil and 802 trillion cubic feet of natural gas and its two shale basins could end up being bigger than the Eagle Ford and Bakken. But adding to the attraction is another significant aspect at a time of slumping oil prices: For producers in Argentina, the price of natural gas and oil is fixed at $7.5 per million British Thermal Units (BTU) and $77 per barrel respectively, well above international prices.
Not only is Argentina shaping up to the be the next big-time shale venue, but Madalena's acreage is right in the middle of massive unconventional exploration activities of some of the world's biggest companies, including ExxonMobil (NYSE: XOM), Royal Dutch Shell (NYSE: RDS.A), Total (NYSE: TOT), Petronas, Wintershall, Chevron (NYSE: CVX) and Argentina's state-owned YPF. All this positioning and drilling activity has significantly de-risked the Madalena resource plays, and makes it a target for takeover in 2015.
There has been talk of this company potentially doubling its share price this year, even if it struck oil at only one of the four strategy resource plays in Argentina-now with the Loma Montosa success, this prediction is set to become a reality.
By. James Burgess of Oilprice.com