Forward Looking Statements

Transcription

1 Corporate Presentation June 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 / Management Dwayne Warkentin: President and Chief Executive Officer, Director Anthony J. Potter: Vice President Finance and Chief Financial Officer, Director Ruy Riavitz: Country Manager, Madalena Austral S.A. 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. President, Upsilon Holdings Ltd. President, Bamako Investment Management Ltd. Partner, Burnet, Duckworth and Palmer LLP Vice-President and COO, Bellatrix Exploration Ltd. 3

4 Madalena TSXV (MVN) Corporate Strong balance sheet Working capital end Q1 - $70 million No debt 314 MM common shares outstanding 328 MM fully diluted Valued Asset Base Focused exclusively on the Neuquén Basin, Argentina Large acreage blocks close to key infrastructure 280,000 gross acres (437 sections) 135,000 net acres (211 sections) Mix of conventional and non-conventional targets Well positioned in both shale oil and shale gas windows Lower risk development high impact exploration 4

5 Argentina Overview % % Source: US EIA 2011 Data: Argentine Institute of Oil and Gas Technically Recoverable Shale Gas Resources Source: EIA World Shale Gas Resources, April

6 Neuquén Basin Stratigraphic Diagram S S Gas Oil S S Source Shales Oil Gas Oil and Gas 6

7 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 7

8 Neuquén Basin - Vaca Muerta Shale Maturity Maturity is based on vitrinite reflectance values Modified YPF presentation based on Madalena rock evaluation data (every new well provides refined maturity outlook) 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 * In February 2012, YPF released results of Ryder Scott audit reporting a total resource of 22.8 billion BOE over 2 million acres Each block uniquely situated for world class oil and gas resource development 50 km 8

9 World Class Source Shales 9

10 Neuquén Basin Acreage Madalena Gross Acres Net Acres Coiron Amargo 99,923 34,973 Curamhuele 56,216 50,595 Cortadera 123,503 49,401 Total 279, ,969 Other large acreage holders include: YPF S.A. Total Curamhuele 90% Cortadera 40% Apache Petrobras Pluspetrol Americas Petrogas Coiron Amargo 35% New entrants have farmed-in or acquired existing blocks in order to build meaningful acreage positions: 10

11 Neuquén Basin Nearby Block Activity Curamhuele Coiron Amargo 11

12 Neuquén Shale Oil and Gas Activity Majority of drilling to date has been adjacent to or on Coiron Amargo Block Coiron Amargo 404 km 2 vs. 428 km 2 for YPF lands proven to date 12

13 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 13

14 Block I: Coiron Amargo Land area: 100,077 acres or 405 km² (156 mi²) Northern 108 km 2 converted to 25 year exploitation licence in March 2012 Sierras Blancas Structures CAN 5 Drilled May 2012 CAN 7 Drilled June 2012 Multiple Stacked Formations Sierras Blancas Six light oil discoveries to date, multi-well development. North area facilities development. Lotena Gas 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 / Las Molles Gas prone deep zones Faults on Sierras Blancas 10 km CAS.x-1 CAN.x-2 CAS.x-2 Drilled March 2012 CAS.x-4 Drilled Feb 2012 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 Adjacent to YPF SA major discovery YPF reports 927 MMBOE resource over 428 km2 (5.6mmboe/section) in the Vaca Muerta * CAS.x-1 Frac d Q

16 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 16

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

18 Neuquén Shale Resources Early Development Stage Operators in early stages of determining how best to create manufacturing play: Varying pumping and pressure requirements within and between basins Use of vertical versus horizontal development wells Determination of the most effective proppant, number of stages and size Identification of sweet spots within each basin Accurate cost versus benefit analyses associated with various completion techniques Basin Bakken N. Dakota Current Prod. Est. 420,000 bopd # Wells to Date est. 3,000 producers Eagle Ford 300,000 boepd 4, # Wells 2012 est. 2,300 3, Type Wells Mainly Horizontal Mainly Horizontal Neuquén Unconv 5,000+ boepd (VM) Mainly Vertical Drilling Rigs Frac Stages Horsepower 2012 est. 400,000 2,300, ,000 Frac Crews Rigs Serviced per Frac Crew Source: Compiled by Madalena from various contributors 18

19 Land area: 56,000 acres or 227 km² (88 mi²) Tested Hydrocarbons: Lower 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. Block II: Curamhuele 19

20 Block II: Curamhuele Lower Agrio Shale 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 Marine flooding event created a good source rock in the centre of the basin, before the remainder of the cycle fills the basin with dominantly sandstone The Lower Agrio Shale zone is continuous and similar over the northern part of the block and several adjacent wells Shale Basin Intrusive body replacing L Agrio 25 km C.I. = 25 m 20

21 Curamhuele L Agrio Cross Section 200+m SJ.Nq.Yp.x km SJ.Nq.Ch.x-1 Correlation 0 API US/MT MV IN KG/MT 2898 Correlation 350 US/MT 500 B/E 20 Upper Agrio 0 API in OHMM US/MT OHMM V/V KG/MT US/MT 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 TD= Mulichinco TD= Quintuco The green fill between Resistivity and Sonic curves indicates high TOC, potential unconventional reservoir 21

22 Curamhuele Lower Agrio Shale Fracture Stimulation Madalena operated (90% ownership) Preparing for 3 stage hydraulic fracture stimulation at Curamhuele X- 1 well location First hydraulic fracture stimulation of Lower Agrio in the Neuquén Basin Layered and brittle makes it ideal to frac 22

23 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 23

24 Block II: Curamhuele Curamhuele Mulichinco Reservoir Correlation 0 API MV 50 6 IN KG/MT US/MT 90 0 B/E 20 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 3700 Mud gas readings rose by 2 orders of magnitude at the top of Mulichinco This well was not drilled deep enough to encounter much of the sandier lowstand cycle 3750 Mulichinco Any future well drilled to test the Vaca Muerta on the block will also penetrate the sandy lowstand Mulichinco objective Quintuco Mulichinco Lowstand 24

25 Block II: Curamhuele Vaca Muerta 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 25

26 Vaca Muerta Field Outcrop Sampling Vaca Muerta section 1300 m thick (plan view) Samples taken every 5 m Very good mineralogy for hydraulic fracture stimulation: Block II: Curamhuele 26

27 Land area: 124,000 acres or 500 km² (193 mi²) Thickest potential section in basin Primary targets: Mulichinco: 206m thick Vaca Muerta: 708m thick Secondary targets: Quintuco: 617m thick Agrio Block III: Cortadera CorS X-1 well cased to 4,500m targeting both tight gas and shale gas Two stage hydraulic fracture of Vaca Muerta formation performed in Q1/2012 Additional uphole formations (Quintuco, Mulichinco, and Agrio zones) yet to be tested CorS.x-1 Regional seismic line 27

28 Block III: Cortadera Cortadera - Mulichinco Potential area of coarse lowstand sandstone west of this line Potential liquid rich tight sands 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 Lowstand cycle does not exist in the majority of the central part of the basin Chihuidos Anticline High mud gas readings in CorS.x-1 Mulichinco gas in these wells Mulichinco ~ 1TCF in Sierra Chata field 25 km 28

29 Vaca Muerta 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. Potential for condensate in the northern portion of block. 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 Application approved for Gas Plus pricing 25 km Isopach C.I. = 100m 29

30 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 30

31 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 31

32 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 32

33 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. 33