Tanganyika Announces 2005/2006 Capital Program

Tanganyika Oil Company Ltd. reports that the Board of Directors have approved the 2005/2006 capital and operating budget for the Company.
2005 GUIDANCE                    Syria     Egypt       Total (Range)
Capital program (US$MM) (1)       27.2       2.6        29.8 (29-31)
OPEX (US$MM)                       7.1       1.0       8.1 (7.5-8.5)

Year End Exit Production (BOPD)
 - Gross (2)                    12,705     3,500     16,205 (15,500-

Average Production (BOPD)
 - Gross (2)                    10,925     3,152     14,077 (13,800-
 - Net (3)                       2,288       788      3,076  (2,800-

2006 GUIDANCE                    Syria     Egypt       Total (Range)
Capital program (US$MM)           52.3       3.3        55.6 (55-57)
OPEX (US$MM)                      11.6       2.0    13.6 (13.0-14.2)

Year End Exit Production (BOPD)
 - Gross (2)                    19,431     4,500     23,931 (22,000-

Average Production (BOPD)
 - Gross (2)                    15,904     3,902     19,806 (19,000-
 - Net (3)                       5,825       953       6,778 (6,300-

1. Capital for 2005 is for the remaining 7 months of the year
2. Gross is actual field production: before royalty and before
   deductions for base production in Syria and before royalty and
   working interest deductions in Egypt.
3. Net is working interest after royalty and all deductions, due to
   Tanganyika for sales in the final 7 months of 2005 (June-December)
   and all of 2006.

Tanganyika's overall strategy over the next 3 to 5 years is to focus on growth of cash flow per share and net asset value. The basis of the Company's long range plan is to increase shareholder value through systematic, scaled production increases and paced capital expenditures to minimize exposure to outside capital requirements. The company portfolio has ample value creation potential to see significant growth in cash flow and net asset value and within 5 years the Company expects to achieve gross production levels approaching 34,000 barrels of oil per day ("bopd") from the Oudeh Field and Egypt alone. There could be further production growth from the Tishrin and Sheikh Mansour fields. Current gross production levels are in the order of 4,050-4,250 bopd which do not include Tishrin and Sheikh Mansour in Syria. The Company anticipates assuming operatorship of Tishrin/Sheikh Manour in mid-July. Towards meeting its objectives, the Company has budgeted 42 wells over the course !
of 2005/2006 for a total capital program of US $85 million, anticipating US $55-60 million will be funded from operating cash flow. With successful drilling and execution of its development plans, the Company expects to exit 2006 with 23,931 bopd gross, a six fold increase from current levels. A summary of Tanganyika's 2005/2006 execution programs for Egypt and Syria follows:


A four well exploration program was carried out earlier in the year on the West Gharib Block with success in 3 of the structures targeted - Hoshia, West Hoshia and Fadl. The Naiem-1 well was dry. The Hoshia-1 well is currently stabilized on a long term production test at 620 bopd, 17 degrees API oil with no water. West Hoshia-1 and Fadl-1 have been initially tested, and are currently suspended waiting for equipment to long term test these wells. Initial rates from West Hoshia-1 were 300 bopd with a 40% watercut and 10 degrees API. Fadl-1 was initially tested at 250 bopd, no water and 14 degrees API. In addition, the Company will be appraising a previously existing discovery on the West Gharib Block at South Rahmi. Development applications have been submitted to the Government for Hoshia, West Hoshia, Fadl and South Rahmi.

Operations in Egypt provide sufficient positive cash flow to fund the budgeted 12 month, 12 well exploration and development drilling program on the West Gharib Block without need for additional funding. A drill rig has been contracted for a continuous 12 well program, and drilling of an appraisal well at Hoshia commenced in June. The anticipated year end exit (gross) production from the West Gharib Block is 3,500 bopd in 2005 and 4,500 bopd in 2006.

The Company has a standard production sharing agreement with attractive terms and holds a working interest of 70% in the Hana Field and 45% in all other fields and acreage in the West Gharib Block.


At the Oudeh Field, current production is 2,100 bopd gross, before royalties or deductions for Government base production. Technical studies, well workovers and the production performance of the 3 horizontal wells drilled by Tanganyika over the last 2 years have been encouraging indicators that enhanced oil recovery ("EOR") in this several billion barrels of oil initially in place is feasible with conventional technology. The company has formally advised the Government of Syria of intentions to proceed with the next phase of the contract, a 3 year field trials work program. The field trials period will be used to drill additional wells to increase production, appraise the highly prospective flanks of the Oudeh field and pilot test thermal and microbial enhanced recovery. A drilling rig has been contracted and will commence a continuous drilling program in early July. The 2005/2006 budget has scheduled 27 Shiranish wells. The anticipated yearend exit (gross) production from t!
he Oudeh Field is 4,500 bopd in 2005 and 10,000-11,600 bopd in 2006.

Highlights of the Oudeh project include:

- A significant resource with 2-3 billion barrels of stock tank oil initially in place, with only a small fraction of the recoverable reserves produced to date. Sproule International Limited (May, 2004) estimated 2.3 billion barrels initially in place (proved, probable and possible) and another 1.3 billion barrels initially in place resource on the flanks of the structure.

- Low geologic risk from extensive well penetrations, wireline logs and well tests.

- Robust contract terms to encourage field development and the use of techniques to enhance recovery of the oil. A material amount of natural gas is available for the company to use at no cost in efforts to enhance recovery for heavy oils with techniques such as steam injection.

- Friendly operating environment with Government cooperation and encouragement to enhance both production rates and recovery efficiency.

Both primary development (wells on maximum 40 acre spacing) and EOR processes have the potential to drive the production rates, reserves recovery, cash flow per share and ultimate net asset value to much higher levels.

At Tishrin and Sheikh Mansour, the company expects to conclude the base production measurement, auditing of operating costs and assume operations for the fields during July, 2005. The current base production capacity at Tishrin is 6,000-7,000 bopd. The Tishrin Field is similar to Oudeh providing potential for enhanced oil recovery techniques such as downspacing with additional development wells and thermal recovery (steam injection) using no-cost natural gas produced in this contract area. The Sheikh Mansour Field is near enough to Tishrin that it would potentially be a satellite development. As with the Company's contract at Oudeh, base production will be operated on behalf of the Government of Syria on a cost reimbursement basis.

Production above the base production will be shared according to the contract. Three horizontal wells (2 at Tishrin and 1 at Sheikh Mansour) and a steam injection pilot test at Tishrin have been included in the 2005/2006 budget.

The Company has a 100% working interest in the Oudeh, Tishrin and Sheikh Mansour projects in Syria.