CALGARY, ALBERTA--(Marketwired - Jun 25, 2013) - Tamarack Valley Energy Ltd. ("Tamarack" or the "Company") (TSX VENTURE:TVE) is pleased to provide the following operational and drilling update from its 2013 spring drilling program.
Cardium Drilling Results
On March 9, 2013 Tamarack commenced a three well Cardium drilling program. The first two 100% owned wells in Lochend, Alberta were located at 14-32-26-3 W5M and at 3-29-26-3 W5M. The 3-29 well was stimulated using an 18 stage slick water fracture treatment and the 14-32 well was stimulated with a 21 stage slick water fracture treatment. Permanent facilities were installed for both wells during the second week of June 2013. Based on field estimates, the Lochend 3-29 well averaged 521 bbls/d of oil and 732 mcf/d of natural gas or 643 boe/d (81% oil weighted) over a 21 day period and the Lochend 14-32 well averaged 510 bbls/d of oil and 714 mcf/d of natural gas or 629 boe/d (81% oil) over a 15 day period. Both wells offset the prolific Lochend 2-29 well which was brought on production in mid-May 2012 and averaged 645 boe/d over it first 30 days of production and 474 boe/d over the first 60 days. The Lochend 2-29 well reached payout (when net operating income surpassed total capital expenditures) in only 10 months. Tamarack believes that based on current commodity prices and the assumption that the wells will continue to mirror the production profile of the 2-29 well, both the 3-29 and 14-32 wells should reach their payouts in less than 12 months.
The third 100% owned well of the spring Cardium drilling program was fracture stimulated in mid-June 2013 in the Garrington area of Alberta. Tamarack will install permanent facilities and tie-in the associated solution gas in July 2013. The Company expects to provide updated production rates in late August or early September 2013.
During the third quarter of 2012, Tamarack participated in the drilling of two (1.0 net) Cardium oil wells in the Lochend area. Both wells were temporarily brought on production during the third week of September 2012 and then shut-in until February 2013, when permanent production facilities were installed by the operator. Both wells produced at restricted rates until the expansion of the oil handling facility was completed in late-April 2013. Actual production to the end of April 2013, as reported by the operator based on producing day rates, are as follows: the Lochend 13-36-27-4 W5M (50% working interest) well averaged 353 bbls/d of oil (177 net) and 142 mcf/d of natural gas or 377 boe/d (188 net) (93% oil weighted) over a 67 day period and the Lochend 15-36-27-4 W5M (50% working interest) well averaged 319 bbls/d (160 net) of oil and 126 mcf/d of natural gas or 340 boe/d (170 net) (93% oil) over an 57 day period. On a combined basis the two have produced over 42,000 (21,000 net) barrels of oil. Based on field estimates in June 2013, both wells continue to produce over 200 boe/d (100 net) each.
Redwater Drilling Results
Tamarack commenced its 2013 spring drilling program on February 23, 2013 in the Redwater area of Alberta. The Company drilled, completed and equipped five (4.7 net) Viking oil wells. All five wells commenced production in early-April 2013. Tamarack has continued to focus on reducing capital costs associated with development drilling in Redwater to reduce payout periods to 12 months or less. As a cost reduction measure, Tamarack installed smaller pumping equipment on the most recent five well program, which caused the wells to initially produce at restricted rates. This program also successfully experimented with a new completion technique that will further reduce well costs and improve the overall quality of fracing.
On June 6, 2013, the Company also began a four well Viking oil program in the Redwater area. These four wells will all be completed with the new frac design and smaller pumping equipment which is expected to bring the total cost to drill, complete and equip each well under $1 million. These four wells are expected to commence production near the end of July 2013.
Tamarack has drilled 16 wells in the Redwater area since acquiring the property in April 2012; four were drilled in the summer of 2012; seven in the fall of 2012 and five in the spring of 2013. The 90-day average production rate for the first 11 wells was 69 bopd. Redwater production rates continue to outperform the Company's expectations. The five wells brought on production in April 2013, averaged 52 bopd over its first 60 days, but were restricted by smaller pumping equipment during that period. The Company anticipates these wells will not decline as quickly as the offsets, due to the equipment restrictions.
With the Company's 2013 spring drilling program now completed, Tamarack expects to meet its second quarter 2013 production target of 2,800 to 2,900 boe/d. The Company remains on target of achieving its 2013 average production guidance of 2,900 to 3,000 boe/d.
About Tamarack Valley Energy Ltd.
Tamarack is an oil and gas company involved in the identification, evaluation and operation of resource plays in the Western Canadian sedimentary basin. The Company uses a rigorous, proven modeling process to carefully manage risk and identify growth opportunities. Tamarack's diversified suite of oil-focused assets provides exposure to the high impact Cardium light oil resource plays in Lochend, Garrington/Harmattan and Buck Lake in Alberta, low cost Viking light oil resource plays in Redwater, Foley Lake and Westlock in Alberta and highly economic heavy oil opportunities southeast of Lloydminster in Saskatchewan.
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Unit Cost Calculation
For the purpose of calculating unit costs, natural gas volumes have been converted to a barrel of oil equivalent ("boe") using six thousand cubic feet equal to one barrel unless otherwise stated. A boe conversion ratio of 6:1 is based upon an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. This conversion conforms with Canadian Securities Regulators' National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities. Boe's may be misleading, particularly if used in isolation.
This press release contains certain forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "believe", "plan", "potential", "intend", "objective", "continuous", "ongoing", "encouraging", "estimate", "expect", "may", "will", "project", "should", or similar words suggesting future outcomes. More particularly, this press release contains statements concerning Tamarack's planned acquisitions and future drilling plans and operations. The forward-looking statements contained in this document are based on certain key expectations and assumptions made by Tamarack relating to prevailing commodity prices, the availability of drilling rigs and other oilfield services, the timing of past operations and activities in the planned areas of focus, the drilling, completion and tie-in of wells being completed as planned, the production performance of new and existing wells, the application of existing drilling and fracturing techniques, the continued availability of capital and skilled personnel, surface access to leases, the ability to continue to deliver crude oil and natural gas to market, the ability to maintain or grow the banking facilities and the accuracy of Tamarack's geological interpretation of its drilling and land opportunities. Although management considers these assumptions to be reasonable based on information currently available to it, undue reliance should not be placed on the forward-looking statements because Tamarack can give no assurances that they may prove to be correct.
By their very nature, forward-looking statements are subject to certain risks and uncertainties (both general and specific) that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: risks associated with the oil and gas industry (e.g. operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures); commodity prices; the uncertainty of estimates and projections relating to production, cash generation, costs and expenses; health, safety, litigation and environmental risks; and access to capital. Due to the nature of the oil and natural gas industry, drilling plans and operational activities may be delayed or modified to react to market conditions, results of past operations, regulatory approvals or availability of services causing results to be delayed. Please refer to Tamarack's revised Annual Information Form ("AIF") dated March 27, 2013 for additional risk factors relating to Tamarack. The AIF is available for viewing under the Company's profile on www.sedar.com.
The forward-looking statements contained in this press release are made as of the date hereof and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, except as required by applicable law. The forward-looking statements contained herein are expressly qualified by this cautionary statement.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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President & CEO
Tamarack Valley Energy Ltd.
VP Finance & CFO