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Reports Horizontal Well Results and Debenture Extensions
Jan 08, 2009 11:43AM
January 8, 2009
Madison Energy Reports Horizontal Well Results and Debenture Extensions
CALGARY, ALBERTA--(Marketwire - Jan. 8, 2009) - Madison Energy Corp (TSX VENTURE:MDC) is pleased to report that its first horizontal well in SE Saskatchewan was placed on production, Christmas Eve, 2008. The well is currently pumping at stabilized rate of 60 barrels of light oil per day (27 net to the Company) with a 70% water cut. Pump optimization will be ongoing.
The well was drilled to a vertical depth of 1018 meters and a total depth of 1730 meters. The horizontal section was approximately 580 meters. The well was fracture stimulated with 5 individual treatments over an interval of 460 meters.
Madison management notes that the outcome was within range of expected results and will begin planning additional wells in the same pool on the Manitoba side of the border. Madison is seeing significant cost savings in drilling and completion operations at this particular point in time. The lower capital costs, the relatively low operating cost environment of south east Saskatchewan and Manitoba, and royalty incentives make additional drilling in the area feasible. Madison will endeavor to add to existing production though the drill bit while continuing to maintain a healthy balance sheet.
As of December 31, 2008, debenture holders representing $650,000 of the total $800,000 have agreed to extend the term of their investment for an additional 24 months, to August 7, 2011. The terms of the convertible debentures follow: $525,000 of the Debentures bear a coupon rate of 12% per annum, with interest payable quarterly and will be convertible at any time into common shares of the Company at the holder's option at $0.25 per Common Share. $125,000 of the Debentures bear a coupon rate of 9% per annum, with interest payable quarterly and will be convertible at any time into common shares of the Company at the holder's option at $0.20 per Common Share. The Company retains the option to prepay Debentures at anytime after the date of issue upon 30 days notice and payment of an additional one month of interest.
Madison is a Calgary-based corporation engaged in the acquisition, exploration and development of resource properties. The Company continues to generate drilling prospects internally to complement its strategy of combining organic growth with the continual evaluation of potential acquisitions with compelling exploitation opportunities.