Tamarack Valley Energy Provides Q3 and Q4 Production Guidance and Operational Update
October 27 2011 - 7:00AM
Marketwired
Tamarack Valley Energy Ltd. (TSX VENTURE:TVE) ("Tamarack" or the
"Company") is pleased to announce the following operational
updates. Third quarter production increased 27% from the previous
quarter to approximately 1,100 boe/d of which approximately 42% is
oil and natural gas liquids. Tamarack expects third quarter cash
flow from operations to increase approximately 34%-36% from the
second quarter, with netbacks averaging approximately $36-$37 per
boe. Tamarack's total debt as at September 30, 2011 was
approximately $6.0 million which equates to less than 0.6 times
debt to annualized estimated third quarter cash flow. Tamarack's
strong balance sheet enables the Company to continue to deliver
organic growth on an absolute and per share basis.
Buck Lake Update and Drilling Outlook
Tamarack's 75% working interest Buck Lake well, located at
3-35-46-6 W5M, was completed in mid- August 2011 with an 18-stage
oil fracture stimulation. This well recovered all 7,787 bbls of
load oil over an 11 day period and was subsequently tied-in to the
Keyera Minnehik-Buck Lake gas plant in late September. The well
averaged 1,239 boe/d, consisting of 450 bopd (338 net) of oil and
natural gas liquids and 4.73 mmcf/d (3.6 net) of natural gas over a
14 day test. The well is currently producing 983 boe/d consisting
of 300 bopd (225 net) of oil and natural gas liquids and 4.1 mmcf/d
(3.1 net) of natural gas.
Tamarack's third well in the Buck Lake area, located at
4-34-46-6 W5M (75% WI), was spudded on September 20, 2011 and
frac'd on October 18, 2011. This well has recovered approximately
90% of its load oil to date and testing results will be released in
November 2011. This well is exhibiting a higher oil rate and less
natural gas production than the 3-35 well at this point during the
load recovery.
Tamarack is very excited about the Buck Lake well results and
believes shareholders will benefit from excellent production and
cash flow in this newly de-risked core area. A development plan
will be contained in an updated corporate presentation on the
company's website.
Saskatchewan Heavy Oil
Tamarack added an additional 10.4 net sections of undeveloped
land to its 37.3 net sections of land secured in June 2011.
Tamarack has done this by adding a second Saskatchewan First
Nations deal as well as the addition of Crown and freehold lands.
This new core area gives the Company the ability to add low cost
production and reserves and provides diversity to Tamarack's
portfolio which is predominantly high impact, light oil assets.
This flexibility compliments Tamarack's overall oil play strategy
by decreasing finding costs, increasing rate of return and managing
risk by drilling wells with lower per well costs. Tamarack has
identified 22 exploration and development drilling locations along
with 46 un-risked contingent locations. The Company has also
drilled two net heavy oil wells in October, with completions
expected by early November. Two to four additional locations are
expected to be drilled by year end.
Increased Credit Facility
Tamarack is also pleased to announce its' credit facilities were
reviewed and as a result, the revolving operating demand loan was
increased to $12.0 million from $6.5 million and the development
loan was increased to $3.0 million from $2.0 million. The next
credit facility review is scheduled for March 31, 2012.
Q4 Production Forecast
In conjunction with the success experienced at Lochend,
Garrington and the recently drilled Buck Lake 3- 35 well, fourth
quarter production from existing producing wells will be between
1,400 and 1,500 boe/d. In addition, the Company expects its' fourth
quarter production average will exceed that range as a result of
the production adds from the Buck Lake 4-34 well and the two
recently drilled heavy oil wells. The Company will update fourth
quarter production guidance with the new well results in November.
Tamarack also anticipates it will exit 2011 with total debt of less
than one times annualized cash flow.
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 and has assets at Lochend,
Garrington/Harmattan, Buck Lake and Quaich areas in Alberta;
southeast of Lloydminster in Saskatchewan; and at Wilder in
northeast British Columbia.
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 ("NI
51-101"). Boe's may be misleading, particularly if used in
isolation.
Forward Looking Information
This press release contains certain forward-looking statements
within the meaning of applicable securities laws, including
statements relating to expected drilling plans and operational
activities and results. The use of any of the words "expect",
"anticipate", "continue", "estimate", "may", "will", "should",
"believe", "intends", "equates", "forecast", "plans", "guidance"
and similar expressions are intended to identify forward-looking
statements or information. The intended drilling plans,
infrastructure additions, operational activities and results are
based on assumptions relating to the timing of past operations and
activities in the planned areas of drilling as well as information
from consultants on regulatory processes, drilling and fracturing
techniques. The statement regarding the impact of the two new Buck
Lake wells are forward looking statements based on the assumption
that current results continue and that infrastructure additions
provide the benefits expected and commodity prices do not decline
significantly.
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 involve
inherent risks and uncertainties (both general and specific) and
risks that forward-looking statements will not be achieved. 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.
The forward-looking statements contained in this news 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. The TSX has neither approved nor
disapproved the contents of this press release.
Contacts: Tamarack Valley Energy Ltd. Brian Schmidt President
& CEO 403.263.4440 Tamarack Valley Energy Ltd. Ron Hozjan VP
Finance & CFO 403.263.4440www.tamarackvalley.ca