Madalena Energy Inc. is pleased to announce the results of a multi-rate production test for its CAN-15(h) horizontal well, which is the Company’s second horizontal well drilled on its international assets in the Neuquén Basin in Argentina as well as a production update and drilling program update on its assets in the Neuquén Basin, Argentina:
International Update: Neuquén Basin, Argentina -Coiron Amargo Block
Sierras Blancas Test Results at CAN-15(h): Second Horizontal Well of a Multi-well Program in 2014
The CAN-15(h) well was recently drilled horizontally in the Sierras Blancas light oil reservoir in the Coiron Amargo block to a total measured depth of 3,750 metres with a horizontal lateral section of approximately 692 metres in length. This well is the second horizontal well drilled into the Sierras Blancas which is a conventional light oil reservoir sourced from the Vaca Muerta shale across the Coiron Amargo block. The well was subsequently cased and completed with a 3.5” slotted liner and a multi-rate production test was carried out through temporary production facilities. Throughout the multi-rate production test, the CAN-15(h) well flowed without artificial lift equipment and was tested for approximately 75 hours at various choke settings ranging from 6 mm to 12 mm in size with the following flow rates observed during the test:
With the production test only being carried out on a portion of the horizontal lateral section as planned, the highest rates were achieved on a 12 mm choke setting, when the CAN-15(h) well was flowed at a rate of 1,393 bbls/d of oil with 3,301 mcf/d of associated natural gas for a total of 1,943 Boe/d (72% oil) over a 5 hour period and at an average flowing pressure of approximately 1,263 psi.
On an 8mm choke setting, the CAN-15(h) well was flowed at a rate of 745 bbls/d of oil with 1,990 mcf/d of associated natural gas for a total of 1,077 Boe/d (69% oil) over a 29 hour period and at an average flowing pressure of approximately 1,629 psi.
During the test period of 75 hours, the total gross produced cumulative volumes were approximately 2,553 barrels of oil and approximately 7,210 mcf of natural gas, for a total of approximately 3,754 barrels of oil equivalent (68% oil) gross. No significant flowing pressure declines were observed throughout the testing period and water cuts ranged from 0% to 3% throughout the test period. Madalena has a 35% working interest in the CAN-15(h) well.
Production Update at CAN.xr-2(h): First International Horizontal Well Exceeding Expectations
The CAN.xr-2(h) well, which was Madalena's first use of horizontal drilling technology internationally, was re-entered and drilled horizontally in the Sierras Blancas light oil reservoir to a total measured depth of 3,751 meters with a horizontal lateral section of approximately 530 meters in length.
The CAN.xr-2(h) well has now been producing since late 2013 and has exceeded management’s expectations. The well has been producing oil at restricted rates for most of Q1 – 2014.
Cumulative oil production for Q1-2014, based on field estimates, was approximately 63,000 barrels of oil plus associated solution gas. Average daily production was approximately 700 bbls/d and 1,560 mcf/d of associated solution gas for a total of 978 boe/d (72% oil) over a three month period in Q1-2014. The well has been recently tied into a permanent pipeline system to the central plant and gas dehydration and compressor facility and, accordingly, associated solution gas volumes will be realized as sales in future quarters. Madalena has a 35% working interest in the CAN.xr-2(h) well.
International Drilling Program Update
The Company has an inventory of high impact horizontal locations across the Coiron Amargo block (35,000 net acres) and based on the horizontal results achieved to date is moving forward with its planned multi-well horizontal program in 2014. A third horizontal well targeting the Sierras Blancas light oil reservoir is expected to be drilled in Q2 into the same pool as that developed with the CAN-15(h) well which is one of the largest Sierras Blancas pools identified on the Coiron Amargo block to date. After this third horizontal is executed in the field, one to two additional horizontal wells targeting the Sierras Blancas light oil play is expected to be drilled, completed and tied-in to production facilities prior to year-end 2014.
Recently, the Company has intensified its focus on the Vaca Muerta shale with a view to further unlocking the unconventional resources across the block. The Coiron Amargo block is strategically positioned within the Neuquén basin in the shallower portion of the Vaca Muerta oil window and in an area where over 150 Vaca Muerta shale wells have been drilled over the last 12 to 14 months. Industry activity continues to increase offsetting the Coiron Amargo block where Madalena drilled the CAS.x-14 and the CAS.x-15 vertical wells in Coiron Amargo Sur (South) for the Vaca Muerta shale in 2013. The CAS.x-14 and CAS.x-15 wells were drilled and cased encountering approximately 105 and 114 metres respectively of Vaca Muerta shale on logs. Completion (stimulation work and/or multi-stage frac) and testing activities on these wells are expected to commence in Q2 – 2014.
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