September 2018

What question or industry issue are you looking forward to hearing about at the World Energy Capital Assembly (WECA)?

One of the largest issues facing our industry is the uncertainty regarding the future market share of oil and gas in the energy mix. I am looking forward to hearing about the strategies that industry leaders are choosing regarding balancing reinvestment in conventional and unconventional upstream assets and investing in other segments of the energy complex. I am also very interested in hearing how industry leaders are balancing their portfolios between liquids and gas.

You’ll be sitting on the Latin America panel at WECA. Latin America is arguably currently the hottest region for oil and gas potential in the world. How do funders view the potential in the region?

Latin America has rightly been identified as a region that has tremendous potential. There are many basins which have been underexplored and contain large potential conventional prizes to be claimed. In addition to this there is a unique opportunity in Argentina with the immense resource potential of the Vaca Muerta shale play. We have seen a general shift in the region from governments that proved to be less responsive to the upstream industry and capital markets over the past decade, to governments that value investment in the energy sector and the ability for companies to access capital markets to accelerate and increase these investments.

They are recognizing the success story of Colombia and are shifting their policies in order to incentivise private investment. This is creating an environment where the development of existing reserves and discovery of new fields is more likely. From a funder’s perspective, I think investors are still cautious regarding political governance issues and potential instability, but we have seen great strides regarding market-oriented reforms. Investors need to be comfortable with management teams that have the requisite expertise in navigating the region to unlock its potential.

In your tenure at Madalena Energy so far, what has been the greatest challenge you have faced?

Since becoming CEO in May of 2017 the largest challenge has been balancing the long-term goals and value of the company with the short term focus of equity markets. The upstream business inherently has a long-term horizon and the value creation process is measured in years. The investment cycle on exploration projects is even longer. This presents a communication challenge that makes it important to show short term progress to the market, which has a quarterly focus, while still articulating the company’s long-term focus and goals.  In this sense we have tried to explain the need for shorter term conventional plays that provide cashflow with our very large position in the Vaca Muerta, which will take more time and investment to develop.

What are your ambitions for 2019?

Madalena is firmly focused on growth in order to increase our production and reserves. Our ambition is to grow organically through the drill bit on our conventional assets in Argentina and our JV in Vaca Muerta with Pan American Energy. We are also focused on inorganic growth through acquisitions of producing conventional assets.

What are three things left on your bucket list?

• First, I would like to really see Madalena’s position in the Vaca Muerta developed. This is very exciting, and I am working hard to make this happen; I would like to see many loyal and supportive shareholders benefit from the realization of this enormous value.
• Dedicate more time to riding horses and eventually participate in the Olympics.
• And winning a WECA award of excellence, we are very honoured to have been nominated this year in the small cap category.

About Jose Penafiel: