Tanganyika Announces 2006 Operations and Capital Program Update

Tanganyika Oil Co. Ltd. has issued an update on its 2006 capital program and on its operations in Syria and Egypt.

The company's overall strategy is value creation in each of its contract areas, and its portfolio of high-quality oil fields in Egypt and Syria provides significant growth opportunities. Tanganyika is focused on development drilling to add increases to both production and proved reserves. Based on a 31-well program and a capital budget of US$24 million, the company has forecast a year-end exit gross production rate in the range of 17,000 to 19,000 barrels of oil per day, gross production (10,000 to 12,000 barrels of oil per day, shareable production, net of base crude production levels). The company is in the process of securing drilling rigs, workover rigs, and equipment to meet these targets.

The outlook for the remainder of 2006 is to continue with development drilling in both Syria and Egypt, begin testing the enhanced oil recovery potential for steam injection in the Oudeh and Tishrine areas in Syria, and explore potential field extensions in the Tishrine and Sheikh Mansour fields in Syria through a 3D seismic program. In April 2006, Tanganyika completed a private placement for net proceeds of US$51 million that will adequately fund the 2006 capital program.


Drilling rigs
Tanganyika has two drilling rigs currently operating in Syria under long-term contracts. The MB22 rig is drilling full-time in the Tishrine field and the Crosco 501 rig has resumed drilling in the Oudeh field. The company has signed a letter of intent on a third drilling rig that is capable of drilling in any of the fields in Syria and that is expected to commence operations in early September.

Drilling and workovers
So far this year, the company has drilled four wells at Oudeh, four wells at Tishrine, and one well at Sheikh Mansour. The following table summarizes the results of the wells drilled to date:

                                Oil Rate                     Gravity
Well          Formation (Barrels Per Day) Water Cut (%) (degrees API)
OD-143        Shiranish              200             1            14
OD-144(i)     Shiranish                0           100           N/A
OD-145        Shiranish               50            80            14
OD-146(ii)    Shiranish              135            10          11.4
SM-5H            Chilou               30             0            17
WT-H49   Chilou/Jaddala              400            38            18
WT-204   Chilou/Jaddala              155            56            15
WT-205   Chilou/Jaddala              235             7            18
WT-206   Chilou/Jaddala  Being completed               
(i) Awaiting workover to isolate water. 
(ii) Well has not yet been stimulated with acid.

The Sheikh Mansour 5 (SM-5) well verified the Chilou formation is thick and oil-saturated with an apparent low permeability. The SM-5 well will be acid-fractured over the next few weeks to enhance productivity. The OD-146 well was spud on June 7, 2006, and was the first well in the 2006 capital program drilled in the thicker grainstone area of the Oudeh field to the northwest. OD-146 was also the first well optimized for production and steam injection.

The average well in Tishrine is being drilled in 12 days at an average cost of US$500,000. The OD-146 well was drilled in 19 days at an approximate cost of US$1.25 million. The OD-147 well was drilled and the rig was released after 16 days. With the reduced drilling time and cost per well, the 2006 drilling objectives can be achieved with three rigs. The company continues, however, to search for a fourth drilling rig to further optimize the capital drilling program.

Tanganyika has three workover rigs operating in Tishrine and is negotiating to add another one. The company estimates it will perform 53 workovers during the remainder of the year in both Oudeh and Tishrine at a total cost of US$3.1 million.

Steam injection pilots
Plans to commence steam injection in both Oudeh and Tishrine are on schedule. Construction of the two steam generators was completed in China, and the steam generators are scheduled to arrive in Syria the first week of August 2006. All of the required equipment for the steam pilots is in Syria, and the first steam injection at both Oudeh and Tishrine is expected to begin in August 2006.

At present, the steam pilots will include two wells at Oudeh and two wells at Tishrine completed for high-temperature injection. The company has also purchased insulated tubing that will allow steam injection and steam stimulation in a number of other wells.

Seismic program
The contract for the 3D seismic program has been awarded to BGP and commenced on July 1, 2006. The 3D seismic program will cover 300 square kilometers at the Tishrine field and 180 square kilometers at the Sheikh Mansour and Sheikh Suleiman fields. Completion is expected prior to year-end 2006.

The current gross production level in Syria is 8,700 barrels of oil per day (approximately 1,600 barrels of oil per day, shareable production, net of base crude production levels). The company has forecast a year-end exit gross production rate for Syria of 17,000 barrels of oil per day gross (10,000 barrels of oil per day shareable, net of base crude production).

Tanganyika continues to have good success with acid stimulation and optimizing production pumps at Tishrine. Facilities upgrade projects are underway to eliminate the production reduction due to facilities and the impact of cold winter temperatures. In addition, a gas gathering system will be installed over the summer months to conserve natural gas and optimize oil production.


New discoveries Tanganyika currently has development licenses pending for new economic discoveries at West Hoshia, Arta, North Hoshia, and South Rahmi. The new discovery at North Hoshia has been tested at rates of 192 barrels of oil per day at a gravity of 12.3 degrees API and 36% water-cut. The company expects to receive approval of development licenses for these four new discoveries over the next 6 to 8 weeks. Drilling update The company is drilling exploration wells at East Arta, Saad, Hanna 12, and East Hoshia. In addition, it is drilling a third well at Arta to appraise the discovery. Drilling of these wells will be completed prior to the end of November, completing the 2006 exploration program.

Production update Current gross production from Tanganyika's fields in Egypt is 2,700 barrels of oil per day. Once the development licenses have been granted for the current pending fields, gross production will be increased to 3,500-4,500 barrels of oil per day.

Tanganyika Oil Co. Ltd. is a Canadian oil and gas company with production and exploration assets in Egypt and Syria.


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