AUGUST 2014 1

How Can Western Canadian And International Experience Be Transposed

To Drive Success In Argentina?

Jeremías Guitarte Business Development Manager

Madalena e n e r g y inc.

Shale Gas World Argentina 2014

www.madalenaenergy.com

Head Office: MADALENA ENERGY INC. Suite 200, 707 - 7th Avenue SW Calgary, Alberta, Canada T2P 3H6

International Office: MADALENA ENERGY S.A. 421 Lola Mora, 13th Floor C1107DDA, Buenos Aires, Argentina

NOT FOR DISSEMINATION

AUGUST 2014 2

Introduction to Madalena: • Our operations in the Western Canadian Basin and in the

Neuquén Basin • The integration with Gran Tierra Argentina

Lessons learned from international operations

Operations and results in Canada and Argentina. The way forward in the Neuquén Basin

What is Madalena’s strategy for continuous growth?

Agenda

AUGUST 2014 3

Madalena Energy • Madalena can be considered a relatively small-

size company that is however: – Operating in Canada and Argentina over a big

acreage About 100,000 net acres in Canada More than 135,000 net acres in Neuquén Province

AUGUST 2014 4

Madalena Energy • Recently acquired Gran Tierra Argentina’s assets:

– Incremented its assets in the Neuquén Basin and added others in the Northwest Basin

About 205,000 net acres in the Neuquén Basin More than 752,000 net acres in the Northwest Basin

Mendoza La Pampa

Rio Negro

Neuquén

Curamhuele

Cortadera

Coirón Amargo

Puesto Morales

Puesto Morales

Este

Rinconada

Vaca Mahuida

Salta

Jujuy Formosa

Santa Victoria

Valle Morado

El Vinalar

Balbuena Este (Palmar Largo)

Surubí

Palmar Largo

El Chivil

Bolivia

Paraguay

AUGUST 2014 5

A balanced and strategic approach – ~4,900 Boe/d (72% oil) Pro Forma on closing – Expected growth to 5,500 – 6,000 Boe/d in 12 - 18 months in addition to

continued delineation & prove-up of shale assets – Stable production platform which generates cash flow for reinvestment into

conventional development and unconventional shale delineation and prove-up

– Inventory of locations for high-impact horizontal oil development – 3 Key Blocks: Coiron Amargo, Puesto Morales and Surubi – Palmar Largo, Sierras Blancas (Tordillo) and Lomo Montosa formations – Inventory of production focused workovers and conventional vertical drilling – Unbooked upside via enhanced oil recovery (EOR) / waterflood programs

– Unconventional Exposure to: Vaca Muerta shale, Lower Agrio shale, Mulichinco tight sands, Los Monos shale

– 6 Key Blocks: Coiron Amargo, Curamhuele, Cortadera, Santa Victoria, Puesto Morales and Rinconada

– Exploration & Appraisal upside on all 14 blocks – 20+ conventional prospects / leads identified

Solid Production Base

Exploration & Appraisal

Upside

Conventional

Development Inventory to

Grow Production & Reserves

Delineation of Unconventional Shale & Tight Sand Resources

AUGUST 2014 6

• Definition of the completion technology to be used – the target/goal to be achieved

• Trial and error, in the first wells, of main variables that could impact operational and economic results

• Standardization of operations and cost reduction

The learning process

AUGUST 2014 7

• In a single operation, the production liner is run in hole together with liner packers for open-hole, that divide the well in multiple sections, isolating each one of them.

• Afterwards, the sliding sleeves that are located in-between the packers are opened sequentially and the frac fluids/proppants are pumped through, stimulating the zones of interest.

The learning process The technology used in Canada and Argentina

AUGUST 2014 8

• In a single operation, in a period of less than 20 hs, MVN performed up to 14 frac-stages. The system can speed up conventional fractures that would take 4-5 days in just 1 day.

• The cost reduction is mainly due to rig time reduction. • This technology can be use in both horizontal and vertical wells. • The technology can be use for sandstones, limestones and shale,

indistinctly.

The learning process The technology used in Canada and Argentina

AUGUST 2014 9

• There is a long learning curve on the road to an economic horizontal multi-frac project.

• The key is to begin by understanding the rocks and then, as quickly as possible, determine the limitations that the rocks are going to put on the frac operation.

• The goal is to efficiently converge on an economic and effective frac program and then implement it and ultimately fine-tune it over time.

• Transferring our international experience to Argentina rocks is not solely about equipment and technology, but it is also about implementing the learning process described before.

The learning process Conclusions

AUGUST 2014 10

Operations and results in Canada

– In the Western Canadian Basin, in the Greater Paddle River Area, MVN drilled 8 horizontal wells, all of them completed with multi-stage fracs, which allowed MVN to significantly increase production

– The lateral sections of the wells ranged 1000 to 1200 m, and the TD varied between 1500 and 2000 m.

– Each lateral section has been fractured in 10 to 14 stages.

AUGUST 2014 11

Operations and results in Argentina

– In Puesto Morales, GT Argentina drilled its first horizontal well in Loma Montosa formation in 2012 to prove a new development concept different from the ones used until that moment for those low-permeability dolomites. The well was fractured with the multi-stage system and demonstrated the economic feasibility of the new concept.

– The well TD was 1500 m with a horizontal section of 500 m.

– The well initial production was equivalent to 5 vertical wells and its stabilized production rate is similar to 5-8 vertical wells.

AUGUST 2014 12

– The horizontal section was fractured in 5 stages and currently MVN is evaluating the benefits of extending the section and the increase of stages.

– This completion technology is the same used in Greater Paddle River Area.

Operations and results in Argentina

AUGUST 2014 13

The way forward

• Multi-well horizontal program being executed in Paddle River in 2014/2015 (target Ostracod oil)

• Multi-well horizontal multi-stage frac program in Puesto Morales in 2015 (target Loma Montosa resource play - oil)

• First horizontal well (multi-stage frac) in Coirón Amargo in 2015 (target Vaca Muerta shale)

AUGUST 2014 14

MVN’s strategy for continuous growth

Short term

• Development of high impact horizontal resource plays and low-permeability reservoirs by applying the proven North American based technology and gaining experience from the learning process

• Delineation and prove-up of its unconventional shale assets in the Vaca Muerta shale and Agrio shale

Medium term

• Enter/integrate the unconventional resources know-how and industry learnings to Madalena execution

• Unlock value from Madalena’s unconventional resources in the Neuquén Basin

AUGUST 2014 15

MVN’s strategy for continuous growth

HHRR

Flat organization with great “fast decision making” capability

Experienced and motivated professionals

Portfolio

Balanced portfolio of conventional and

unconventional projects

Look for synergy between assets

Projects with easy market accessibility

Increase assets value through lessons learned

Business Development

JV with strategic partners