Madalena Announces Re-Pricing of Bought Deal Offering

NEWS RELEASE TRANSMITTED BY Marketwired 
FOR: Madalena Energy Inc. 
TSX VENTURE SYMBOL:  MVN
PINKSHEETS SYMBOL:  MDLNF 
JUNE 4, 2014 
Madalena Announces Re-Pricing of Bought Deal Offering 
CALGARY, ALBERTA--(Marketwired - June 4, 2014) -  
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE
U.S. 
Madalena Energy Inc. ("Madalena" or the "Company") (TSX
VENTURE:MVN)(PINKSHEETS:MDLNF) announces that it has re-priced its previously
announced subscription receipt ("Subscription Receipts") offering.
Pursuant to the amended agreement, the Company will issue 98,100,000
Subscription Receipts, on a bought deal basis, at a price of $0.51 per Common
Share for aggregate gross proceeds of $50,031,000 (the "Offering"). 
Madalena has also granted the underwriters under the Offering an option (the
"Over-Allotment Option") to purchase up to an additional 14,715,000
Subscription Receipts at a price of $0.51 per Common Share to cover
over-allotments, if any, for additional gross proceeds of up to approximately
$7,504,650. The Over-Allotment Option is exercisable in whole or in part at any
time up to the date that is 30 days following the closing of the Offering. 
As previously announced, the Company will use the net proceeds from the
Offering to fund the remaining cash component for the acquisition (the
"Acquisition") of the Argentinean business units of Gran Tierra
Energy Inc. ("Gran Tierra"). The purchase price for the Acquisition
is US$63 million, payable in US$49 million cash and US$14 million in common
shares of Madalena ("Common Shares"). Pursuant to the definitive
agreements underlying that Acquisition, Madalena must pay the share
consideration amount at the same deemed issue price as the Offering;
accordingly, Madalena will issue 29,831,537 Common Shares for the share
consideration amount for the Acquisition. 
The Subscription Receipts will be offered by way of a short-form prospectus to
be filed in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba,
Ontario, New Brunswick and Nova Scotia pursuant to National Instrument 44-101 -
Short Form Prospectus Distributions. Madalena will apply to list the
Subscription Receipts and the Common Shares thereunder on the TSX Venture
Exchange. 
The gross proceeds from the Offering will be held in escrow pending the
satisfaction of all conditions to the completion of the Acquisition (other than
funding), provided that the closing date of the Acquisition is on or before
July 31, 2014, upon which time each Subscription Receipt will entitle the
holder to receive a Common Share, without further payment or action on the part
of the holder, upon the closing of the Acquisition. If the Acquisition is not
completed on or before July 31, 2014 or it is terminated at an earlier time,
then the purchase price for the Subscription Receipts will be returned to
subscribers, together with a pro rata portion of interest earned on the
escrowed funds. 
Completion of the Acquisition and the Offering are subject to certain
conditions including the receipt of all necessary regulatory approvals,
including the approval of the TSX Venture Exchange. Closing of the Offering is
expected to occur on or about June 24, 2014 and the Acquisition is expected to
close on or about June 30, 2014. 
Madalena estimates pro forma consolidated annual cash flow from operations of
US$35 - US$45 million over the next twelve months with the Corporation having
the ability, when combined with cash on hand and available credit, to execute a
US$50 - US$60 million capital program over the next 12 to 18 months while
maintaining a strong balance sheet. Madalena will provide additional go-forward
guidance subsequent to the closing of the Acquisition and the approval of a
consolidated budget by the Corporation's board of directors.  
Pro forma the Acquisition and the Offering and after all transaction costs, the
Company estimates positive working capital of approximately US$5.0 million. 
Updated Acquisition Highlights 
/T/ 
--  Acquisition cost per flowing boe of approximately US$19,091, based on 
current estimated production at the expected closing date of the 
Acquisition of 3,300 boe/d; 
--  Reserve life index of 5.41 years, based on current estimated production 
and adjusted 2P reserves; 
--  Recycle ratio of approximately 2.1x, based on Q1-2014 operating property 
netbacks of US$33.93/boe and acquisition costs of approximately 
US$16.12/boe; 
--  Key producing infrastructure, including batteries and pipelines; 
--  Approximately 890,000 net acres of developed and undeveloped lands; and 
--  Lands have an average working interest of approximately 83%, and the net 
production acquired is more than 94% operated.  
/T/ 
The following is a summary of production, land and reserves information that is
relevant to Madalena, prior to, and following, the Acquisition and the
Offering: 
/T/ 
Madalena(1) Acquisition(2) Adjustments(3)    Pro Forma
Current Production(6)                                                       
Oil and NGLs (Bbl/d)          960          2,610              -        3,570
Gas (Mcf/d)                 3,840          4,150              -         7990
Boe (Boe/d)                 1,600          3,300              -        4,900
Oil and NGLs (%)               60             79              -           72
Land (net acres)          239,000        890,000                   1,129,000
RESERVES(4)                                                                 
Proved                                                                      
Oil and NGL (Mbbl)          1,350          4,248           (612)       4,986
Gas (MMcf)                  8,032          5,599           (510)      13,121
MBOE (6:1)                  2,689          5,181           (697)       7,173
Proved plus Probable                                                        
Oil and NGLs (Mbbl)         2,373          6,295           (900)       7,768
Gas (MMcf)                 13,651          7,615           (900)      20,366
MBOE (6:1)                  4,648          7,563         (1,050)      11,161 
Proved FDC(5) (US$mm)          20             46            (21)          45
Proved plus Probable                                                        
 FDC (US$mm)                   33             77            (35)          75
Accretion Analysis       Madalena    Acquisition      Pro Forma    Accretion
Diluted Shares (mm)         413.5          127.9          541.4            -
Proved Reserves (Boe                                                        
 per mm Common                                                              
 Shares)                      6.5           40.5           13.3         104%
2P Reserves (Boe per                                                        
 mm Common Shares)           11.2           59.1           20.6          83%
Current Production                                                          
 (Boe/d per mm Common                                                       
 Shares)                      3.9           25.8            9.1         134% 
/T/ 
Notes: 
/T/ 
1.  Based on the independent reserve reports of Madalena evaluating the 
crude oil, natural gas liquids and natural gas reserves of the Company 
as at December 31, 2013 prepared by an independent reserves evaluator in 
accordance with National Instrument 51-101 - Standards of Disclosure for 
Oil and Gas Activities ("NI 51-101") and the COGE Handbook. 
2.  Based on the independent reserve reports of Gran Tierra evaluating the 
crude oil, natural gas liquids and natural gas reserves of Gran Tierra 
as at December 31, 2013 prepared by an independent reserves evaluator in 
accordance with NI 51-101 and the COGE Handbook. 
3.  Adjustments to the acquisition reserves were made pursuant to internal 
management estimates conducted by a qualified reserves engineer. 
Adjustments consisted of reduced PUD locations due to rescheduling or 
removal of proven undeveloped and probable locations on the subject 
assets and acreage consolidations. 
4.  Reserves are "gross reserves", being working interest share of reserves 
before the deduction of royalties owned by others. 
5.  "FDC" means future development costs. Please see the end of this news 
release for important information on FDC. Madalena converted to US$ at 
0.92US/CDN. 
6.  Based on field estimates.  
/T/ 
About Madalena - International and Domestic Assets (Pre-Acquisition) 
Madalena is an independent, Canadian-based, domestic and international upstream
oil and gas company whose main business activities include exploration,
development and production of crude oil, natural gas liquids and natural gas.   
Internationally, Madalena holds three large blocks within the Neuquen basin in
Argentina where it is focused on the delineation of large petroleum in-place
shale and unconventional resources in the Vaca Muerta and Lower Agrio shales,
in addition to multiple tight sand plays. The Company is also implementing
horizontal drilling and completions technology to high impact international
plays and is currently focused on a conventional oil play in the Sierras
Blancas formation. Madalena holds approximately 132,200 net acres on the Coiron
Amargo (34,950 net acres), Curamhuele (50,600 net acres) and Cortadera (46,650
net acres) blocks.   
Domestically, Madalena's core area of operations is located in the Greater
Paddle River area of west-central Alberta where the Company holds approximately
195 gross (153 net) sections of land (approximately 78% average W.I.)
encompassing light oil and liquids-rich gas resource plays. Madalena's
primary domestic focus is to exploit its large inventory of horizontal drilling
locations on its Ostracod oil and emerging oil & liquids-rich gas resource
plays.  
Madalena trades on the TSX Venture Exchange under the symbol MVN. Basic
corporate information, recent news releases and regularly updated corporate
presentations are available on the Company's website at
www.madalenaenergy.com. 
Reader Advisories  
Forward Looking Information 
The information in this news release contains certain forward-looking
statements. These statements relate to future events or our future performance,
in particular, but not limited to, with respect to the Acquisition, including
the characteristics of the Argentinean business units being acquired and other
expectations related thereto and the timing thereof, the Offering and the
timing thereof and the Company's expected use of proceeds from the
Offering. Statements relating to "reserves" are also deemed to be
forward looking statements, as they involve the implied assessment, based on
certain estimates and assumptions, that the reserves described exist in the
quantities predicted or estimated and that the reserves can be profitably
produced in the future. All statements other than statements of historical fact
may be forward-looking statements. Forward-looking statements are often, but
not always, identified by the use of words such as "seek",
"anticipate", "plan", "continue",
"estimate", "approximate", "expect",
"may", "will", "project", "predict",
"potential", "targeting", "intend",
"could", "might", "should", "believe",
"would" and similar expressions. In particular, this news release
contains forward-looking statements pertaining to operational activities to be
conducted by the Company. 
These statements involve substantial known and unknown risks and uncertainties,
certain of which are beyond the Company's control, including: the impact
of general economic conditions; industry conditions; changes in laws and
regulations including the adoption of new environmental laws and regulations
and changes in how they are interpreted and enforced; fluctuations in commodity
prices and foreign exchange and interest rates; stock market volatility and
market valuations; volatility in market prices for oil and natural gas;
liabilities inherent in oil and natural gas operations; uncertainties
associated with estimating oil and natural gas reserves; competition for, among
other things, capital, acquisitions, of reserves, undeveloped lands and skilled
personnel; incorrect assessments of the value of acquisitions; changes in
income tax laws or changes in tax laws and incentive programs relating to the
oil and gas industry; geological, technical, drilling and processing problems
and other difficulties in producing petroleum reserves; and obtaining required
approvals of regulatory authorities. The Company's actual results,
performance or achievement could differ materially from those expressed in, or
implied by, such forward-looking statements and, accordingly, no assurances can
be given that any of the events anticipated by the forward-looking statements
will transpire or occur or, if any of them do, what benefits the Company will
derive from them. These statements are subject to certain risks and
uncertainties and may be based on assumptions that could cause actual results
to differ materially from those anticipated or implied in the forward-looking
statements. The forward-looking statements in this news release are expressly
qualified in their entirety by this cautionary statement. Except as required by
law, the Company undertakes no obligation to publicly update or revise any
forward-looking statements. Investors are encouraged to review and consider the
additional risk factors set forth in the Company's Annual Information
Form, which is available on SEDAR at www.sedar.com.  
Non-GAAP Measures 
This document contains the term "cash flow" and "net
backs", which do not have a standardized meaning prescribed by Canadian
generally accepted accounting principles ("GAAP") and therefore may
not be comparable with the calculation of similar measures by other companies.
Madalena uses cash flow and net backs to analyze financial and operating
performance. Madalena feels this benchmark is a key measure of profitability
for Madalena. This term is commonly used in the oil and gas industry. Cash flow
is not intended to represent operating profits nor should it be viewed as an
alternative to cash flow provided by operating activities, net earnings or
other measures of financial performance calculated in accordance with GAAP.
Cash flows are calculated as cash flows from operating activities less changes
in non-cash working capital.  
Information Regarding Disclosure on Reserves  
The reserve estimates contained herein are estimates only and there is no
guarantee that the estimated reserves will be recovered. In relation to the
disclosure of estimates for individual properties, companies or business units,
as adjusted, such estimates may not reflect the same confidence level as
estimates of reserves and future net revenue for all properties, due to the
effects of aggregation. 
Meaning of Boe 
The term "boe" or barrels of oil equivalent may be misleading,
particularly if used in isolation. A boe conversion ratio of six thousand cubic
feet of natural gas to one barrel of oil equivalent (6 Mcf: 1 bbl) is based on
an energy equivalency conversion method primarily applicable at the burner tip
and does not represent a value equivalency at the wellhead. Additionally, given
that the value ratio based on the current price of crude oil, as compared to
natural gas, is significantly different from the energy equivalency of 6:1;
utilizing a conversion ratio of 6:1 may be misleading as an indication of
value. 
Finding and Development Costs 
NI 51-101 specifies how finding and development costs ("F&D
costs") should be calculated if they are reported. Essentially NI 51-101
requires that the exploration and development costs incurred in the year along
with the change in estimated F&D costs be aggregated and then divided by
the applicable reserve additions. The calculation specifically excludes the
effects of acquisitions and dispositions on both reserves and costs. Since
acquisitions can have a significant impact on annual reserve replacement costs,
excluding these amounts could result in an inaccurate portrayal of
Madalena's cost structure. F&D costs disclosed herein are based on
working interest gross reserves. The aggregate of the exploration and
development costs incurred in the most recent financial year and the change
during that year in estimated future development costs generally will not
reflect total F&D costs related to reserve additions for that year. 
Neither the TSX Venture Exchange nor its Regulation Service Provider (as that
term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release. 
THE SECURITIES OFFERED HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT
REGISTRATION OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS. THIS PRESS
RELEASE SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY NOR SHALL THERE BE ANY SALE OF THE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL. 
-30-
FOR FURTHER INFORMATION PLEASE CONTACT: 
Kevin Shaw, P.Eng, MBA
President and Chief Executive Officer
Madalena Energy Inc.
Phone: (403) 262-1901 (Ext. 230)
kdshaw@madalenaenergy.com
or
Thomas Love, CA
VP, Finance and Chief Financial Officer
Madalena Energy Inc.
Phone: (403) 262-1901 (Ext. 227)
tlove@madalenaenergy.com 
INDUSTRY:  Financial Services - Commercial and Investment Banking 
SUBJECT:  FNC 
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