Forward Looking Statements

Transcription

1 Corporate Presentation January 2012

2 Forward Looking Statements This presentation includes forward-looking statements, which are statements other than of historical fact, such as information regarding drilling potential and production forecasts. Factors that could cause actual results to differ materially from our expectations include exploration and development risks, commodity prices and operating hazards. A barrel of oil equivalent (boe), derived by converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil, may be misleading, particularly if used in isolation. A boe conversion is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. This slide is limited as to space in order to be readable if projected. Please review detailed risks and limitations statements at the end of this document. 2

3 Board of Directors Dwayne Warkentin: President and Chief Executive Officer, Director Anthony J. Potter: Vice President Finance and Chief Financial Officer, Director Ray Smith: Barry Larson: Michael J. Lock: Keith Macdonald: Jay Reid: Ving Woo: Chairman, Madalena Ventures Inc. and President and CEO, Bellatrix Exploration Ltd. VP and COO, Parex Resources Inc. (formerly Petro Andina) President, Upsilon Holdings Ltd. President, Bamako Investment Management Ltd. Partner, Burnet, Duckworth and Palmer LLP Vice-President, Engineering and COO, Bellatrix Exploration Ltd. 3

4 Madalena TSXV (MVN) Corporate No debt Strong balance sheet 260 MM common shares outstanding 274 MM fully diluted Valued Asset Base Acquired initial acreage in Argentina in 2007 Focused exclusively on the Neuquén Basin, Argentina Large acreage blocks close to key infrastructure Mix of conventional and non-conventional targets Lower risk development high impact exploration Well positioned in both shale oil and shale gas windows Competitive fiscal terms Strong strategic alliances 4

5 Argentina Overview Source: US EIA Source: US EIA Recent Argentina Gas Price Dynamics ($/mmbtu) Imports (LNG, Bolivia) New Gas (Gas Plus) NQN Old Gas $0 $5 $10 $15 $20 5

6 Neuquén Basin Established Infrastructure Established oil and gas pipeline network Capacity available within existing network including export capacity Experienced work force Major center for services Strong candidate to be one of the first major non-conventional resource areas to be developed outside North America Madalena s acreage located in both oil and gas window close to major pipelines and facilities 6

7 Neuquén Acreage and Shale Oil and Gas Activity Madalena s Acreage: 280,000 gross acres (437 sections) 135,000 net acres (211 sections) Basin has attracted several major new entrants including: Curamhuele 90% EOG et al Exxon et al Shell et al VM Drilling Cortadera 40% Coiron Amargo 35% New entrants are farming-in or acquiring existing blocks in order to build meaningful acreage position 50 km 7

8 Madalena Opportunities Neuquén Basin Source & Reservoir S. Blancas O&G L. Troncoso O&G Avile O&G Lotena Gas Mulichinco Gas Lotena Gas Quintuco O&G L. Agrio O&G Lajas Gas Vaca Muerta O&G L. Agrio O&G Los Molles Gas Conventional Oil and Gas Tight Sands, Shale Oil and Gas 8

9 Neuquén Basin Stratigraphic Diagram S S Gas Oil S S Source Shales Oil Gas Oil and Gas 9

10 Source Shales Major source of new oil and gas production in United States Source: EIA Annual Energy Outlook 2011 World class source shale in Neuquén Basin Source: EIA World Shale Gas Resources, April

11 Unconventional fields: Neuquén's potential Shale gas world class targets Haynesville Barnett Marcellus Woodford Vaca Muerta Horn River Eagleford Lithology Siliceous Marl Siliceous Shale Siliceous Shale Chert Siliceous Marl Chert Calcareus Shale Average Mature TOC (%) 3 to 4% 4 to 5% 4 to 7% 4 to 8% 3 to 5% 3 to 6% 4 to 8% Net Thickness (Ft) 225 to to to to to to to 280 Maturity (Ro) 1.7 to to to to to to to 1.8 Pressure Gradient (ppg) 13.5 to to to to to to to 14.5 Porosity (%) 7 to 9% 4 to 8% 7 to 9% 5 to 6% 7 to 12% 4 to 10% 4 to 10% Permeability (nd) 100 to to to to to to to 1500 Well IP (mcfd peak month) 8 to 25 3 to 7 4 to 10 2 to 6 2 to 12 5 to 8 2 to 17 GIP*/Sq Mi (GCF) 150 to to to to to 800 (BBN) 175 to to 250 EUR**/Well (GCF) 8 to 12 3 to to to 5 8 to 20 4 to 10 2 to 6 * Gas in place ** Estimated Ultimate Recovery The geological features of the Neuquén Basin are similar to the shale gas fields in North America. In particular, the Vaca Muerta (Neuquén) is most similar to the Eagleford and Haynesville formations. Source: Gas y Petroleo del Neuquen 11

12 Neuquén Basin - Vaca Muerta Shale Thickness The Vaca Muerta is comprised of a series of wedges that prograde toward the north and west The lower portion of each wedge typically contains the best source rock characteristics Excellent shale resource play exists over most of the mature part of the area where Vaca Muerta is present Barnett 90m Eagle Ford 60m Bakken 30 m A large part of the Vaca Muerta is oil prone, with gas dominating in the deeper, thicker (700 m+) western area around the Cortadera block 50 km C.I. = 100m 12

13 Neuquén Basin - Vaca Muerta Shale Maturity Maturity is based on vitrinite reflectance values Modified YPF presentation based on Madalena rock evaluation data Coiron Amargo is within the oil window; Cortadera within the gas window; Curamhuele is in a transitional area 10 km north of Coiron Amargo, VM well has produced ~750MBOE Immediately west and covering 428 km 2, YPF announced 927 MMBOE VM resource discovery * Each block uniquely situated for world class oil and gas resource development 50 km 13

14 Block I: Coiron Amargo Land area: 100,077 acres or 405 km² (156 mi²) Sierras Blancas Structures Recent successful drilling on trend Multiple Stacked Formations Sierras Blancas Five light oil discoveries to date, multi-well development. North area facilities development. Lotena Gas CAN.x-2 Gas pools on east and west sides of block Quintuco Oil shows on block, producing pools nearby Vaca Muerta m thick oil saturated section over entire block Lajas Gas prone deep zone Faults on Sierras Blancas CAS.x-1 CAS.x-2 Drill after CAS.x-4 Adjacent to announced YPF major VM shale oil discovery 10 km CAS.x-4 Spud Full Core VM 14

15 Block I: Coiron Amargo Vaca Muerta Vaca Muerta Thickness The total Vaca Muerta section has been shown to be productive several km s to the west by YPF All wells drilled on the block have exhibited oil shows while drilling the Vaca Muerta A highly prospective section of the Vaca Muerta on the block is the lower Vaca Muerta which ranges from 40-65m thick - produced 750 MBOE in a well 10 km north of block 50 km C.I. = 5m 15

16 YPF Success in Vaca Muerta AnN.x Coiron Amargo 404 km 2 vs. 428 km 2 for YPF lands proven to date Source: YPF: Nov 2011 YPF reports 927 MMBOE resource over 428 km2 (5.6mmboe/section) in the Vaca Muerta, and November 2011 production of about 5,000 B/D 16

17 YPF Examples of Production Logging % of total production from each zone by PLT 17

18 Block I: Coiron Amargo Shale Oil: Vaca Muerta in Coiron Amargo Vaca Muerta Log VM Fracture Modelling High GR High resistivity Good SP Response Over-Pressured Excellent oil shows while drilling TOC 7%, Type II 3 Stage / 1 mm lbs / Geochem work from 22,000 bbls northeast to 11 wells logged southwest 300 km 3D seismic 1 well full core 1 vertical fracture 18

19 Block II: Curamhuele Land area: 56,000 acres or 227 km² (88 mi²) Tested Hydrocarbons: L. Agrio Existing light oil well on block, more section to test, oil tested in 2 other wells on block Mulichinco: Existing gas well on block, lower sandier section yet to be tested Untested - Shale: Vaca Muerta: m over block. To be drilled or deepened with an existing well. Majors have secured surrounding blocks. 19

20 Block II: Curamhuele Lower Agrio Shale Thickness The Lower Agrio cycle begins with a marine flooding event that creates a good source rock in the centre of the basin, before the remainder of the cycle fills the basin with dominantly sandstone Preparing for fracture stimulation to test Shale Basin Intrusive body replacing L Agrio The northern part of the Curamhuele block is ideally located in a thick area with >180m of section, where depth is sufficient to cause oil generation 25 km C.I. = 25 m 20

21 Curamhuele L Agrio Cross Section Upper Agrio Yp.x-1 swabbed a small amount of 40º oil after acid treatment Lower Agrio Ch.x-1 flowed 26 m3/d of 36º-41 oil without stimulation: Over-Pressured 0.74 psi/ft Appears similar to the Vaca Muerta Formation Lower Agrio Shale Ch.x-1 will be fractured and tested in 2012 Mulichinco Quintuco The green fill between Resistivity and Sonic curves indicates high TOC, potential unconventional reservoir; The Lower Agrio Shale zone is continuous and similar over the northern part of the block and several adjacent wells. 21

22 Block II: Curamhuele Curamhuele Mulichinco Play Rapid thickening of the Mulichinco near the Cortadera and Curamhuele blocks These blocks have potential to contain the lowermost and coarser clastic part of the formation that was deposited during the initial lowstand period The Yp.x-1 penetrated very little of this clastic section The clastic section in Cur X-1 also remains to be tested Mulichinco tested 10mmcfd in Yp.x-1 Potential area of coarse lowstand sandstone west of this line 25 km Mulichinco ~ 1TCF in Sierra Chata field 22

23 Curamhuele Mulichinco Reservoir Block II: Curamhuele The production test of Yp.x-1 after acidizing yielded 10 mmcfd of gas and 500 bpd of 51º condensate Lower Agrio The upper portion of the Mulichinco tested in Yp.x-1 has a high carbonate content This well was not drilled deep enough to encounter much of the sandier lowstand cycle Mud gas readings rose by 2 orders of magnitude at the top of Mulichinco Mulichinco Any future well drilled to test the Vaca Muerta on the block will also penetrate the sandy lowstand Mulichinco objective Quintuco Mulichinco Lowstand 23

24 Block II: Curamhuele Vaca Muerta Thickness and Maturity Maturity is based on vitrinite reflectance values: Pink = Dry gas window Yellow = Wet gas window Green = Oil window The Vaca Muerta has not yet been penetrated in Curamhuele Field outcrop sampling including joint Vaca Muerta and Agrio study in progress Based on studies, either a reentry or new drill will be chosen to test the Vaca Muerta on Curamhuele 25 km Isopach C.I. = 100m 24

25 Land area: 124,000 acres or 500 km² (193 mi²) CorS X-1 well cased to 4,500m targeting both tight gas and shale gas Block III: Cortadera Primary targets: Mulichinco: 206m thick Vaca Muerta: 708m thick Secondary targets: Quintuco: 617m thick Agrio CorS.x-1 Regional seismic line Multi-horizon completion, fracturing, testing planned in Q1/2012 Additional 3D seismic

26 Block III: Cortadera Cortadera - Mulichinco Rapid thickening of the Mulichinco near the Cortadera and Curamhuele blocks Both blocks have potential to contain the lowermost and coarser clastic part of the Mulichinco that was deposited during the initial lowstand period Potential area of coarse lowstand sandstone west of this line Chihuidos Anticline That lowstand cycle does not exist in the majority of the central part of the basin 25 km High mud gas readings in CorS.x-1 Mulichinco gas in these wells Mulichinco ~ 1TCF in Sierra Chata field 26

27 Vaca Muerta Thickness and Maturity Maturity is based on vitrinite reflectance values: Pink = Dry gas window Yellow = Wet as window Green = Oil window Maturity map is modified from a YPF presentation Both blocks are highly prospective for Vaca Muerta unconventional shale plays Cortadera block has tremendous thickness in the Vaca Muerta Apache Nq.CorS.x-1 well Block III: Cortadera 25 km Isopach C.I. = 100m 27

28 Madalena 3 Block Summary Large, well situated blocks all with proven hydrocarbons and all with identified drill targets All blocks are in Neuquén Basin with superior access, services and infrastructure Significant exposure to one of the leading unconventional resource plays outside North America attracting majors Stacked zones, multiple play types: Stratigraphic/structure traps, broad resource plays Multi products: Oil, Gas, Condensate Steady increase in product prices All discoveries qualify for Gas Plus, Oil Plus Energy shortages mean increasingly expensive imports: bodes well for incentives and growth in domestic E&P Service companies preparing for growth in unconventional plays 28

29 Madalena 2012 Activity Block I - Coiron Amargo: Test Vaca Muerta oil resource play Transition from exploration to development thru additional drilling Determine most effective drilling and hydraulic fracture program / technique Move acreage from exploration license to 25 year production lease Block II - Curamhuele: Frac lower Agrio shale resource play Drill or deepen existing well to test thick Vaca Muerta shale resource potential Further evaluate sandy lowstand Mulichinco objective Block III - Cortadera: Test multiple formations (tight gas and shale gas) in CorS X-1 well Prove up resource potential within tight sand and shale play 29

30 Forward Looking Information and Statements The information in this presentation contains certain forward-looking statements. These statements relate to future events or our future performance. All statements other than statements of historical fact may be forward-looking statements. Forwardlooking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "approximate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "would" and similar expressions. These statements involve substantial known and unknown risks and uncertainties, certain of which are beyond the Corporation s control, including: the impact of general economic conditions; industry conditions; changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced; fluctuations in commodity prices and foreign exchange and interest rates; stock market volatility and market valuations; volatility in market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; uncertainties associated with estimating oil and natural gas reserves; competition for, among other things, capital, acquisitions, of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry ; geological, technical, drilling and processing problems and other difficulties in producing petroleum reserves; and obtaining required approvals of regulatory authorities. The Corporation s actual results, performance or achievement could differ materially from those expressed in, or implied by, such forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do, what benefits that the Corporation will derive from them. These statements are subject to certain risks and uncertainties and may be based on assumptions that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. The Corporation s forward-looking statements are expressly qualified in their entirety by this cautionary statement. The forward-looking information and statements contained in this presentation speak only as of the date hereof, and the Corporation assumes no obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws. Except as required by law, the Corporation undertakes no obligation to publicly update or revise any forward-looking statements. Investors are encouraged to review and consider the additional risk factors set forth in the Corporation's Annual Information Form which is available on SEDAR at 30

31 Oil and Gas Disclosures All amounts in this presentation are stated in Canadian dollars unless otherwise specified. In accordance with Canadian practice, reserve and similar volumes and production volumes and revenues are reported on a gross basis, before deduction of royalties, unless otherwise stated. Where applicable, natural gas has been converted to barrels of oil equivalent ("BOE") based on 6 Mcf:1 BOE. The BOE rate is based on an energy equivalent conversion method primarily applicable at the burner tip and does not represent a value equivalent at the wellhead. Use of BOE in isolation may be misleading. This presentation may also contain references to Original Oil-In-Place ( OOIP ) and Original Gas-In Place ( OGIP ) (collectively "PIIP ) and the term "recoverable", which are not and should not be confused with references to oil and gas reserves. PIIP is that quantity of petroleum that is estimated to exist originally in naturally occurring accumulations. It includes that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet to be discovered. PIIP is comprised of Discovered PIIP and Undiscovered PIIP Discovered PIIP is that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production; therefore, the estimates may differ materially from estimates prepared in accordance with the Canadian Oil and Gas Evaluation Handbook ( COGE Handbook ) and National Instrument Standards of Disclosure for Oil and Gas Activities ( NI ). *Analogous Information Certain information in this document may constitute "analogous information" as defined in National Instrument Standards of Disclosure for Oil and Gas Activities ("NI "), including, but not limited to, the reservoir data, resource estimates, production and decline rates and economics information relating to the areas in geographical proximity to exploratory lands held by Madalena or other shale plays in development in North America. Such information has been obtained from government sources, regulatory agencies or other industry participants. Management of Madalena believes the information is relevant as it helps to define the reservoir characteristics and the reserves and production potential in which Madalena holds an interest. Such information includes resource estimates using categories such as Original Oil-In-Place and Original Gas-In Place which are not derived from the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and have therefore not been prepared in accordance with NI Madalena is also unable to confirm that the analogous information was prepared by a qualified reserves evaluator or auditor. Such information is not an estimate of the resources attributable to lands held or to be held by Madalena and there is no certainty that the reservoir data, resource estimates, production and decline rates and economics information for the lands held by Madalena will be similar to the information presented herein. The reader is cautioned that the data relied upon by Madalena may be in error and/or may prove not be analogous to the lands be held by Madalena. 31