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Madalena Energy Poised To Benefit From Argentina's Commitment To Unlocking Its Unconventional Energy Potential.

|Includes: Madalena Energy Inc (MDLNF)

Madalena Energy (CVE:MVN) (OTCQX:MDLNF), an Argentina focused oil and gas energy company, has been developing its unconventional oil assets in Argentina having secured a prime acreage position in the Vaca Muerta shale and has secured this core unconventional shale block offset Chevron, YPF, Shell, Petronas, and Wintershall (all of which are scaling up drill programs in the Vaca Muerta).

Argentina has one of the most important non-conventional oil deposits in the world at Vaca Muerta. Experts say that is the key to energy independence for Argentina, which would become a direct exporter of energy, taking advantage of this resource to attract foreign investment to boost public-private relationships and use these resources improve infrastructure and reduce social inequality.

The Vaca Muerta shale is believed to be the world's second largest shale gas and fourth largest shale oil formation, with the area containing an estimated 27 billion barrels of shale oil.

Unique to this size of company, Madalena holds a significant percentage of the country's Vaca Muerta resources in Argentina and has been a significant holder of acreage in the Vaca Muerta shale and Lower Agrio shale since 2007, and has started progressing these assets over the last couple of year.

The use of fracking, the unconventional oil extraction technique pioneered in North America, has revolutionized the global oil market. The United States has used the technique to great effect, increasing production and reducing imports. Its potential, however, can go beyond US borders. Researchers at the Houston based consultancy IHS, suggest that fracking would allow for the extraction of some 141,000 million barrels, almost twice the current annual production, estimated at 86.000 million barrels.

IHS has analyzed more than 170 conventional wells, whose output could rise exponentially through the use of fracking. Latin America and the Middle East account for two thirds of the hydrocarbons to be extracted. Argentina is one of the countries that would derive the greatest advantage of the use of fracking.

Argentina's state owned oil company YPF is determined to use fracking in order to exploit unconventional resources and Vaca Muerta is the target. Dr. Ernesto Gallegos, a geologist at the University of Buenos Aires, has worked to dispel any fears related to fracking techniques, having expressed full support in the project now known as "Energy Independence Argentina" trying to expose myths and truths about fracking and unconventional oil.

Indeed, fracking is not new. The technique has been applied to the extraction of shale oil and gas since the 1940's; modern technological advances have made it ever more commercially viable, efficient and safer to convert the resources into reserves.

Fracking is essentially hydraulic stimulation to enhance the permeability of conventional fields. It involves injecting high-pressure water with sand and about 12 additives, none of which are mysterious poisons or chemicals used.

But perhaps more important in countering the myth of the groundwater contamination, Vaca Muerta presents a particular geology that makes it especially suitable. While in other unconventional reservoirs the aquifers are relatively close to the stones to be subjected to fracking, at Vaca Muerta these are separated by some 2,000 meters of rock that separate them. Vaca Muerta is located on average at a depth of 2,000 meters and fractures are always less than 100 meters according to YPF.

YPF believes that even if 15% of Vaca Muerta's potential is harnessed, it could spell the end of energy dependence for Argentina, leaving much needed foreign exchange available to promote social programs and infrastructure development in the country.

Madalena, which is focused on delineating its key positions in the unconventional shale assets in Argentina while implementing horizontal technology into its Loma Montosa oil resource play and Sierras Blancas light oil developments.

In 2015, the company is pursuing operational plans to drill four strategic resource plays including the Loma Montosa oil resource play, the famous Vaca Muerta shale, emerging Lower Agrio shale and liquids-rich Mulichinco gas resource play in Argentina. It will also continue horizontal development of its Sierras Blancas light oil assets.

As Madalena announced on April 8, it has completed a horizontal well on its Puesto Morales block (over 30,000 net acres) in a strategic Loma Montosa oil resource play.

This horizontal well was completed with a 12 stage ball drop frac operation, the first ever executed in Argentina by an energy company, using a hybrid slickwater/gel frac that pumped a total of 10,900 bbls of water and 360 tonnes of sand.

Madalena, unlike many oil and gas juniors, has been able to weather the current downturn in oil prices, as oil prices in the regulated domestic market in Argentina continue to remain well above the Brent oil benchmark price. Indeed, the Medanito posted price for its Argentina oil production in February, March and April is US$76.00 per barrel.