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Wednesday, 27 March 2013
Madalena Ventures sees significant activity by oil majors on neighbouring lands
Madalena Ventures's (CVE:MVN) CEO Kevin Shaw says that two recent events on oil activities in Argentina are significant for the company, as they show that the regional Vaca Muera shale, within the oil window in the Coiron Amargo region, is "evolving with continued offset activity" by oil majors.
The Calgary-based company has a massive 233,000 net acre land position in Western Canada and in Argentina, split between 135,000 acres in the Neuquén Basin across three key blocks and 98,000 acres in Alberta within the Great Paddle River Core area.
Its plan is to grow existing production through its lower-risk, horizontal development wells in Canada, and to continue to prove up its large in-place shale assets in Argentina.
Madalena's exposure to multiple, high impact tight sand plays in the Neuquén Basin is key, specifically the Vaca Muerta shale - which the company calls the most tangible shale play outside of North America.
Indeed, there is proof. Shell recently announced a Vaca Muerta shale oil discovery in Argentina, which is the first shale discovery in the country. The discovery well tested at 465 barrels per day of 35 degree API oil.
The well is located on the Sierra’s Blancas block which is located directly south and adjacent to Madalena Ventures' Coiron Amargo block, and is in-line with other well results from the Vaca Muerta in the area.
The Coiron Amargo block, where the company is now working on a drill program with partners, is located within the heart of the Vaca Muerta oil play and is also within kilometres of the recently announced Chevron and Bridas proposed billion dollar farm-in deals on Argentina-based YPF’s lands.
Meanwhile, Dow Chemical (NYSE:DOW) also signed a memorandum of understanding with Argentina's state run oil company YPF - the largest land owner in the region - to invest in shale gas.
The companies are now entering into talks on how to work out the final details of a deal to uncover unconventional gas in the so-called Orejano block in Argentina's resource-rich Neuquen province.
Argentina stopped exporting gas in 2004 to ensure it had enough gas to meet domestic demand that was rising alongside its then booming economy.
But demand for gas grew at a faster pace than production, turning the country into a net importer and requiring the government to spend billions a year on imported energy.
YPF is attempting to reverse this, putting Argentina on a path to energy independence by investing in exploration and production and getting other local and foreign companies to do the same.
Madalena's position in Argentina is in a prime spot. Its properties are spread across three blocks - Coiron Amargo, which stretches 35,027 net acres and where Madalena holds a 35% weighted interest, Curamhuele that spans 50,400 net acres, and Cortadera, which totals 49,600 net acres.