Tanganyika Reports on Ops in Syria, Egypt

Tanganyika Oil Company Ltd. on Thursday provided an update on its operations in Syria and Egypt.


Oudeh Field

Average gross field production during the first quarter of 2007 was 2,509 bbls/d (Company net: 1,099 bbls/d). Four wells were drilled and a fifth spudded during the quarter into the Shiranish reservoir, including OD-153, which indicated oil in three new horizons; the Shiranish reservoir in an area where reserves have previously not been recognized and the deeper Butmah and Kurrachine Dolomite reservoirs. OD-153 testing is ongoing. OD-157 was drilled as a vertical Shiranish oil producer beside OD-153 to establish early production potential from this new area. OD-155H was drilled as a Shiranish horizontal oil producer after a vertical pilot established oil pay in the extreme southwest area of the Oudeh Field. OD-154H and OD-156H were drilled as development appraisal wells in the western area of the Oudeh Field. The results of these Shiranish wells will add to reserves and provide for future development drilling expansion. Currently an appraisal well OD-158 is drilling in the northwest area of the Oudeh Field to test for Shiranish hydrocarbon potential.

Oudeh production has been constrained by insufficient access to workover rigs to perform completions and routine well maintenance. The Company has successfully reached an agreement during the quarter with third party contractors to provide three additional workover rigs. The rigs are expected to be made available to the Company within four weeks. The company will continue to take advantage of the workover rigs made available by the Syrian Petroleum Company ("SPC").

During the second quarter drilling will focus on production growth in two areas. The first development phase will concentrate on the expansion of the cyclic steam pilot with the drilling of multiple new wells in the OD-146H steam pilot area. The second development phase is to down-space development drilling in the main pool area near the processing plant, with the advantage of quick production tie-in of new wells. Up to fifteen new Shiranish wells are planned for this area.

Tishrine Field

Average gross field production during the first quarter of 2007 was 6,083 bbls/d (Company net: 124 bbls/d). Gross field production has increased since the end of the first quarter and is currently in excess of 7,400 bbls/d. Nine wells were drilled during the quarter, including one water disposal well. One well targeted the Chilou A reservoir. The remaining seven oil wells were drilled as vertical and horizontal wells into the Chilou B and Jaddala reservoirs. Drilling has concentrated on in-fill wells within the West field to establish down-spacing potential. Success is moderate with some wells testing 100% water although petrophysical results indicate good oil pay. Other wells drilled in the first quarter such as T-221H, T-223H and T-224H have had initial oil production rates in excess of 150 bbls/d each. A number of step-out appraisal wells are planned for the remainder of 2007 in the Tishrine Block with the first appraisal well T-234 spudding before the end of April.

Tishrine production has also been constrained by insufficient access to workover rigs to perform completions and routine well maintenance. At the end of the quarter, the Company estimates 3,500 - 4,000 bbls/d of gross production shut in due to insufficient workover rigs. As stated above, three exclusive workover rigs have been contracted from a third party to supplement the callout SPC workover rigs. These rigs are scheduled to arrive within four weeks and will eliminate this issue from negatively impacting production in both fields.

Tishrine production continued to be hampered during the first quarter by unreliable supply of electricity. Engineering is nearly completed to modify, expand, and in some cases replace equipment required for continuous operation. In addition, the Company is currently working with a local Syrian utility company to immediately address deficiencies in the existing electric grids at Tishrine.

Thermal Operations

The thermal (steam) EOR pilot program continued during the first quarter at Oudeh and Tishrine with cyclical steam injection operations on one additional well in each field. Production rates continue to show two to three fold increases over cold production rates during the production cycle. The steam pilot is ongoing at Tishrine, while the Oudeh pilot has been temporarily postponed to install fuel gas processing equipment. Corrosion was observed during routine maintenance of the steam generator from water and impurities in the fuel gas supply. The Company will be installing budgeted gas processing equipment prior to the arrival of additional steam generators during Q3.

At Tishrine, the Company successfully used vacuum insulated tubing to deliver high quality steam in a conventionally competed well drilled by SPC a number of years ago. This well will commence production this week. The use of vacuum insulated tubing will allow cyclic steam stimulation of pre-existing wells in both fields. Additional quantities of vacuum insulated tubing are being sourced with deliveries expected in the third quarter concurrent with the arrival of the additional steam generators.


The average oil price recognized for Oudeh production during the first quarter was $36.39/bbl. Tishrine's average recognized oil price was $35.34/bbl. These prices are based on a provisional pricing mechanism agreed upon between the Company and SPC. Provisional pricing will remain in place until a new pricing mechanism is finalized, taking into consideration the quality characteristics of the oil currently produced from Oudeh and Tishrine compared to the Syrian Heavy Export Blend at Tartous. The provisional pricing mechanism uses the existing pricing mechanism which is then subject to a 20 percent hold back for Oudeh sales and 30 percent for Tishrine sales. Oil samples have been forwarded to an independent third party laboratory that will conduct tests that will form the basis of the new pricing differential. Once the new marketing pricing agreements are finalized, the Company's share of revenues will be re-calculated using the new pricing formula and any difference owing to the Company will be refunded from the holdback.


Average gross field production during the first quarter of 2007 was 2,727 bbls/d (Company net: 775 bbls/d). Gross field production has increased since the end of the first quarter and is currently in excess of 3,042 bbls/d. Development drilling continued during the first quarter with two wells drilled in the West Gharib block. Oil field development permits have been submitted for approval for the East Hoshia and East Arta Fields. The Company's remaining seven oil fields in Egypt are all subject to development leases.

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


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