Tusk Says Canadian Drilling Program on Track
|Friday, November 12, 2004
TUSK has completed the drilling of six of the ten wells scheduled for the current program in the Gage area of northwestern Alberta. Five have been cased as oil wells and one has been cased as a service well. Of the remaining four wells, two are drilling below the primary objective and two will spud before the end of November. TUSK has an average working interest of 50% in these wells. The balance of the interest (50%) is held by TKE Energy Trust.
Of the five oil wells drilled to date, four are capable of production from the primary target zone. Pay thickness ranges from 4 metres to 9 metres. The thickest well was completed last week and flowed 34 degrees API oil at an initial rate, after stimulation, of 2 cubic metres per hour (300 bopd). It will be placed on production in the next 7-10 days after the evaluation of uphole gas zones encountered in the wellbore. Initial production rates for this well are expected to be 100-120 bopd. The other three oil wells already drilled which encountered the primary target should contribute gross production of approximately 60 bopd per well. Net aggregate production to TUSK from the four oil wells which encountered the primary target zone will be approximately 145 bopd.
Both of the currently drilling wells have penetrated significant thicknesses in the primary target zone and will continue drilling until a secondary target is evaluated. Both have thick potential pay sections of 10 metres or more indicated while drilling.
TUSK has applied for a holding on approximately 1/3 of the defined field area and is preparing similar applications for the balance of the field area so that infill drilling can occur in 2005. Construction of a central facility for the handling of both gas and fluids will commence shortly and should be finished in approximately 2 months. Once the facility has been commissioned TUSK will apply for an increase in the allowable production rate.
The Gage field was discovered by TUSK approximately 22 months ago. The Company had four wells capable of production prior to the recent drilling campaign. Of these, two produce oil from the primary zone, one is capable of production from the zone but is shut-in until the central battery facility is completed and one produces gas from a shallower zone.
Current corporate production for TUSK is approximately 200 boepd. The Company anticipates that net production will increase more than three-fold to approximately 700 boepd by the end of the year with the addition of production from the already drilled Gage wells, from the Gage wells currently drilling or to be drilled and from the start of production from the Devonian discovery of the Company made by TUSK Energy Inc. during the 2003-2004 winter drilling season.
TUSK was formed pursuant to a Plan of Arrangement which closed November 2, 2004. The Arrangement resulted in the reorganization of TUSK Energy Inc. into TUSK and the TKE Energy Trust. The common shares, which are listed on the Toronto Stock Exchange, commenced trading on November 5, 2004 under the trading symbol "TSK".
Pursuant to the Arrangement, TUSK has issued approximately 17.7 million common shares. Pro forma the issue of an additional three million common shares by way of a private placement approved as a part of the Arrangement, the total number of common shares issued and outstanding will be approximately 20.7 million.
Including the last part of the active drilling program currently underway in the Gage area TUSK will participate in the drilling of up to 15 additional wells prior to March 31, 2005. Four to six of these will be drilled at Gage with the balance being drilled on TUSK prospects in northern Alberta.