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Madalena Energy's initial test results at vertical exploration well "very encouraging"

The well flowed at 408 boepd over 24 hours on a 9.5mmchoke

The results are very encouraging, but it still early days

Madalena Energy (CVE:MVN) declared itself extremely pleased with the vertical exploration well at its 90%-owned block at Curamhuele in Argentina.

The well, Yapai.x-1001, was completed with four hydraulic fractures, all of which are believed to have penetrated the primary target in the Lower Agrio shale.

The well pumped an aggregate of some 430,000 pounds of sand and 13,700 barrels of frac water over four days and, more importantly, flowed back on controlled choke settings over eight days a total of 1,609 barrels of oil and 5,444 barrels of water.

Madalena added that the well flowed at 408 barrels of oil equivalent per day (boepd) over the final 24 hours of the flow test on a 9.5 millimetre choke, comprised of 350 barrels a day of oil, 389 barrels a day of water and 350mln cubic feet a day of gas at a flowing pressure of 1,050 pounds per square inch.

The oil is light sweet oil with a field estimated gravity of 40 API.

The well continued to record an increase in the oil cut and a corresponding decrease in the water proportion throughout the test.

"We are extremely pleased with the results from this vertical exploration well at Curamhuele and oil discovery in the Lower Agrio shale. Ultimately this Lower Agrio shale play, like the Vaca Muerta shale, will be developed with horizontal multi frac wells which are expected to yield considerably more than a typical vertical well," said Kevin Shaw, president and chief executive officer of Madalena.

The company did, however, caution that these results, while very encouraging, are only preliminary and may not necessarily be indicative of the long-term performance of the well.

The relatively low gas rates throughout the test suggest that the Mulichinco tight sand formation is not yet contributing significant rates of gas and condensate and the oil volumes being produced are believed to be coming solely from the Lower Agrio shale, Madalena opined.

This could be in part due to the lower reservoir pressure of the Mulichinco, which would delay the production response, or a less effective hydraulic fracture treatment in that zone.

The company intends to continue additional testing operations, fluid sampling and production well logging to evaluate the opportunity to optimize the deliverability of the well.

Quick facts: Madalena Energy Inc

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Market: TSX-V
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