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Madalena Energy Boosted By Argentina Election Result

|Includes: Madalena Energy Inc (MDLNF)

Madalena Energy (CVE:MVN, OTCMKTS:MDLNF) is among the potential stock market winners following the election of Mauricio Macri, according to analysts at Mackie Research Capital.

Argentina's president elect, who will formerly takeover from president Christina Kirchner on December 10, is described by Mackie as 'the center right' candidate.

Macri, who is described as pro-business, is expected to scrap certain capital controls in order to promote foreign investment and has also pledged to negotiate with the country's bondholders.

Both measures could help "re-open" Argentina to international capital markets, Mackie highlighted.

"Macri supports changes that will promote foreign investment into the energy sector in order to reduce Argentina's energy deficit and eventually lead to energy independence," analyst Bill Newman said in a note.

"We believe these policies could attract investors that avoided Argentina during the Kirchner government."

Significantly for Madalena, and its peers, the new president is expected to provide support to the country's oil and gas sector - which is host to one of the most significant shale resources outside the United States.

Newman added: "The resource potential from Argentina's emerging unconventional plays is large enough to attract new investment from major and supermajor oil and gas companies.

"With the potential for increased competition, companies with established land positions could look more attractive."

Madalena Energy, rated by Mackie as a 'buy' with a target of C$0.70, is described by Newman as "best positioned" to capitalise on the improving investment environment in Argentina, while he also repeats 'buy' recommendations for Americas Petrogas and Crown Point Energy.

"Madalena continues to focus on the appraisal of four potentially large resource plans including the Loma Montosa and Mulichinco tight sand plays and the Vaca Muerta and Agrio shale plays," he said.

The analyst highlights that Madalena's Coiron Amargo block appears to be in Vaca Muerta's "sweet spot" and pointed to a November 2015 resource estimate which predicted some 91.5mln barrels oil equivalent at the project.

He also points to the success of Chevron, Shell and YPF close by, which he says has derisked the project significant - with the chance to discovery now seen as 100%, and the chance of development set at 60%.

Newman added: "With the new government in place, some of the risks associated with the Chance of Development may have improved."

In New York, Madalena's OTC Markets quoted shares gained around 5% to US$0.252 on Monday while on the Toronto Ventures Exchange the stock was up 1.5% at C$33.5.