Wednesday, 19 June 2013

Madalena Ventures to raise up to $6 mln through financings as Argentina development continues

Madalena Ventures (CVE:MVN) has made yet another announcement showing the oil and gas company's progress, this time saying it has secured financings for proceeds of up to $6 million. The news comes just two days after it announced it has hired a financial advisor to help with the farmout process for its Curamhuele block in Argentina and just a week after it extended the exploration period on the block by a year. 
The company also announced earlier this week that it boosted its bank line with the National Bank of Canada to a $10 million revolving facility and a $3 million acquisition line, supporting its capital program this year. 
In a statement Wednesday, the company said that Dundee Securities has agreed to purchase 7.35 million common shares of Madalena on a bought-deal basis, to be issued as "flow through" shares at a price of 34 cents each, for total proceeds of $2.5 million. 
In addition, the Canadian company, through a non-brokered private placement, will issue 806,452 common shares at a price of 31 cents each, 4.69 million flow through shares at 32 cents apiece and 5.15 million flow through sahres at 34 cents each. This will generate proceeds of $3.5 million, for a total of up to $6 million together with the new funds from the brokered financing. 
Madalena said Wednesday that members of its team are expected to participate in the non-brokered placement. The deals are expected to close around July 11, subject to regulatory approvals. 
The oil and gas company holds three blocks in the Neuquén Basin, which has lately caught the eye of many major oil producers on the hunt for new resources. Indeed, it was recently reported that ExxonMobil (NYSE:XOM) is investing $250 million to explore Argentina's unconventional Vaca Muerta shale, while another mega cap producer, Chevron (NYSE:CVX), also recently said it is driving toward signing an agreement in July for an initial US$1.5 billion deal with YPF for Vaca Muerta shale development.
An independent resource estimate, done by Ryder Scott, earlier this year showed 1.3 billion barrels of oil equivalent gross prospective resources of Vaca Muerta shale potential on Madalena's Curamhuele block - for which it has started a farmout process - and 414 million barrels of oil equivalent of Lower Agrio shale potential. 
Casimir Capital analyst Ryan Galloway wrote in a research note earlier this week, following the company's advisor announcement, that the resource estimate brings potential to get a large "international partner" involved. 
In early June, Madalena received an extension to its exploration period at Curamhuele to November 8, 2014, giving the company the time to satisfy the $13.8 million of remaining drilling and seismic commitments. 
"With RBC hired as a financial advisor for a farmout process on the Curamhuele block, Madalena has taken another step toward crystallizing some value on the block with a farmout partner," noted Galloway in his research. "We speculate that given the pace of other deals in country, we could see an update on the process in late Q3 to early Q4."
According to the Ryder Scott resource assessment, there are a total of 2.86 billion barrels of oil equivalent net to Madalena across its three blocks within the Neuquen basin, of which approximately 2.0 billion boe net hails from the Vaca Muerta shale alone. 
Aside from the shale assets in Argentina, Madalena is in production in Western Canada, where it holds more than 150 net sections across light oil and liquids-rich horizontal development plays in the Greater Paddle river area.

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