REGULATED ARGENTINA OIL PRICE MARKET
In Argentina, oil prices are set by
the government for product sold into the domestic oil market, which is
where Madalena sells the oil from its Argentine operations. For many
years Argentina's domestic oil prices were well below the Brent oil benchmark price. Since May 2014, oil prices in Argentina have remained above USD $83 per barrel while Brent oil prices have sharply declined from USD $115 per barrel to USD $53 per barrel.
The regulators in Argentina have set January 2015 oil pricing at approximately USD $77 per barrel for Medanito crude quality oil compared to the December 2014 posted price of approximately USD $83.90 per barrel of oil. The USD $77 posted Medanito crude oil price in Argentina for January 2015 is approximately 37% higher than the comparative period Brent price of USD $56 per barrel.
MADALENA 2015 CAPITAL BUDGET
Madalena's board approved a 2015 Capital Budget of up to CDN $48 million as press released on December 15, 2014. This 2015 Budget was based on USD $80 per barrel Medanito oil pricing. Each dollar change in oil price in Argentina represents approximately +/- CDN $1 million to the full year funds flow of the Company. Given the changes to the commodity price environment, Madalena plans to defer CDN $3.6 million of budgeted capital expenditures between Argentina and Canada.
With approximately 90% of the Company's oil production priced relative to Argentina's
regulated oil prices, the Company continues to be well positioned and
expects to fully fund the 2015 capital program with funds generated from
operations and existing working capital. Madalena also expects to end
2015 with positive working capital.
Management and the Board will continue to monitor its political,
market and commodity price environment, with a view to protecting
Madalena's financial position in the context of its contractual and
regulatory obligations.
ABOUT MADALENA – International and Domestic Assets
Madalena is an independent, Canadian-based, international and
domestic upstream oil and gas company whose focus is on exploration,
development and production of crude oil, natural gas liquids and natural
gas in Argentina.
In Argentina, Madalena holds over
950,000 net acres across five provinces where it is focused on the
delineation of large petroleum in-place shale and unconventional
resources in the Vaca Muerta and Agrio shales, in addition to multiple
tight sand plays. The Company is implementing horizontal drilling and
completions technology to develop its high impact conventional and
resource plays.
In Canada, Madalena's production operations are located in the Greater Paddle River area of west-central Alberta
where the Company holds approximately 200 gross (150 net) sections of
land (approximately 79% average W.I.) producing light oil and
liquids-rich gas. Madalena's domestic production is largely operated and
contains a significant inventory of additional horizontal development
locations.
Madalena trades on the TSX Venture Exchange under the symbol MVN and on the OTC under the symbol MDLNF.
For more information, please visit : www.madalena-ventures.com