Looks like the DEAD COW rose today after being tipped over in the night, Madalena up 6 cents to 70 cents Canadian today.
Drilling activity is ramping up in an aggressive form in the Vaca Muerta shale of Argentina, with YPF --- Argentina's largest shale oil producer --- just announcing two contracts valued at a total of $1.2 billon to lease another 15 drilling rigs to develop the formation, a boon to smaller companies like Madalena Energy (CVE:MVN) (OTC:MDLNF) that have properties in the region.
YPF's five-year accords, which add rigs to the company’s existing 65, were signed with Norwegian Archer Ltd.’s DLS Argentina Ltd. unit, and Helmerich & Payne Inc. Helmerich & Payne, based in Tulsa, Oklahoma, will provide 10 rigs, while Hamilton, Bermuda-based Archer will provide the rest. The contracts have an option for a three-year extension, YPF said.
State-backed YPF is pledging to invest $37 billion through 2018 and is seeking to develop Vaca Muerta, which is believed to be the world's second largest shale gas and fourth largest shale oil formation. The area contains an estimated 27 billion barrels fo shale oil.
Madalena also has a rig running in this area, and is currently drilling a second high impact horizontal on its Coiron Amargo block, which offsets the Loma de Lata area where YPF is drilling. It also plans to drill another three to four horizontal wells this year, alongside a multi-well vertical program in the Vaca Muerta shale.
The Canadian junior oil and gas play is the owner of over 132,000 net acres in the prolific Nequen Basin of Argentina, stretching across three separate blocks. Coiron Amargo is Madalena's prized block, where drilling and acquisition activity has been rampant.
Rig levels in this area are likely to approach upwards of 40 within 12 months with the latest YPF deals. The Argentina-based producer is also expected to have an impressive 20,000 barrels of oil per day on production from the Vaca Muerta shale via vertical development, just west of Madalena's Coiron Amargo block, where it signed a $1.25 billion deal with Chevron.
Another similar billion plus dollar deal is set to be inked with Petronas, with a recent memorandum of understanding signed by YPF and Petronas in the area right next to Coiron Amargo. This key region is quickly emerging as the "North Dakota" of the Neuquen Basin, with hundreds of wells expected to be drilled over the next 15 to 24 months and rig counts looking to double by year-end.
The Vaca Muerta play has been likened by industry experts to the Bakken, with the belief that Vaca Muerta has the potential to be bigger than the formation on the subsurface of the Williston Basin.
Madalena has been a significant holder of acreage in the Argentina shale since 2007, back when the whole play was just an engineering pipe dream. It wasn't until three years later, in November 2010, when Argentine state-owned major oil player YPF brought the country's first shale oil well online that activities began to get heated in the Vaca Muerta.
In early 2012, Madalena completed its first test of the Vaca Muerta, showing a test rate of 314 barrels a day, increasing this to 1,340 barrels per day just a few months later from a light oil reservoir sourced from the Vaca Muerta. The company's learning curve has continued, with recent well results showing even better performance.
Two months ago, it drilled its first horizontal well, with rates coming in at 2,238 barrels of oil equivalent per day.
I suspect the Kansas land is borderline at best for this play, HOWEVER, the Colorado land just across the border sits right on the east side of Dundy county I believe and that area has always been productive. I think close to 80,000 acres on the Colorado side of the border
lets remember last quarter ended at the end of January so they have 2 solid months of very ugly weather. On the plus side the gathering system has a lot of their stuff hooked in. On the down side fracking, Rockpile, might be hurt badly.
That said the summer months look very bright with the third Rockpile spread coming online just as spring rolls in
The speculation is that the undeveloped lower formations may contain as much as double the oil in the Forties where they are current producing. Also that we will get a modest boost in the Forties reserve numbers.
With the shares I have right now a 10 bagger sounds sweet...........
I would however settle for much less
"SM Energy recently announced the successful completion of a well five miles to the southeast side of Riverside on Walker/San Jacinto County line
What I appreciated about the company PR is they titled it "Iona Energy Announces Production Increase"
Makes it sound a lot more sexy than production update
Turns out well is actually in San Jacinto county just east of Walker County. I is from early last year
DENVER--(BUSINESS WIRE)--Apr. 15, 2013-- SM Energy Company (NYSE: SM) announces today the successful completion of an exploratory test well in San Jacinto County, Texas. The Horizon Properties 2H (SM 100% WI), a horizontal completion in the Woodbine interval, produced approximately 740 BOE/d in a 24-hour test, flowing at 1,520 PSIG casing pressure on a 27/64ths inch choke, while cleaning up after fracture stimulation. Production consisted of 305 Bbl/d of 42 degree API gravity oil and 2,600 MCFD of rich gas (approximately 1250 BTU/scf). The well will be shut-in to await construction of a gathering system.
The Company has increased its acreage position in East Texas to approximately 105,000 net acres and expects to drill additional test wells targeting the Woodbine formation as well as other intervals of interest beginning in the third quarter of 2013. SM Energy expects to construct the necessary gathering system once several of these wells have been drilled. Capital for the 2013 delineation program will be funded largely from the Company’s existing New Venture budget.
SM Energy also announces that the borrowing base under the Company’s existing revolving credit facility has been increased to $1.9 billion, from $1.55 billion, as a result of its lenders’ regularly scheduled semi-annual redetermination process. The Company also amended the terms of its credit facility to increase the commitment amount from the bank group to $1.3 billion, from $1.0 billion, and to extend the maturity of the facility by approximately two years to April of 2018.
Tony Best, CEO, commented, “We are excited about the initial results in our first Woodbine test in East Texas. The Horizon Properties 2H well was a science well with approximately 2,500 feet of effectively stimulated lateral length. We expect to be able to improve our results on subsequent wells in this play. We have recently
Couple more points. SM is targeting the Woodbine with this well and the next 4 as well.
Also this was a very short lateral, 2500 ft, horizontal well
No mention of grade nor the expansion of the mine since it is open in multiple directions. Grade though is key and we know that as soon as the mine is up and running. That number could significantly move the share price
On the new March 5 SM Energy presentation they mention the Horizon 2H well. It had a 7 day IP of 873 boepd with 41% oil and very high gas btu content. The well is located in the center of Walker county
SM has targeted 8 more east Texas wells for 2014 with 4 of those in Walker county
I have close to 500K shares in IONA. In my opinion way under valued but it refuses to move up so I just buy more. Need to stop that I guess
I also like EEP as a divy play. Growth coming for them