Large Argentina acreage position
Madalena Energy (TO:MVN) is an Argentina-focused E&P player, which holds material positions in the Neuquen and Nororeste basins. Its interests in 13 concessions cover 950,000 acres and contain risked contingent recoverable resources of 105.2mmboe (172.7mmboe unrisked), with additional risked recoverable prospective resources of 192mmboe (unrisked 1.5bnboe). Importantly, the company has been able to grow production, reserves and resources over time, including a 374% increase in best estimates of risked contingent resources for its Vaca Muerta shale (at Coiron Amargo alone) over 2012 levels. Existing production realises healthy netbacks ($36.6/boe in Q315) despite the fall in oil prices, providing useful cash flows. The company should see continued catalysts in 2016 to unlock the material resources contained in the acreage.
Massive acreage position in Argentina
MVN has existing production (3.5mboe/d in Q315), primarily in Argentina. It operates in regions occupied by large companies, including conventional and unconventional plays (Vaca Muerta shale, Lower Agrio shale, Los Monos), as well as tight sand plays (Mulichinco) and the scalable oil play at Puesto Morales. The shales compare well to global peers (ranging from 100-1,000m thick), driving the continued investment in the region. In acreage offsetting MVN’s Vaca Muerta assets, N:CVX/N:YPF are drilling 40+ horizontal wells and investing more than US$3bn over a two-year period, while N:RDSa is ramping up horizontal drilling on blocks neighbouring MVN’s. Exxon (N:XOM), Total, Wintershall and Petronas (KL:PGAS) are also present.
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