Tanganyika's Board Okays 2007 Capital Budget
Tanganyika Oil Company Ltd. said that the Board of Directors has approved a $185 million capital budget for 2007. An associated $45 million operating budget was approved which is equivalent to an average $6.50/barrel of oil ("$/bbl") for Syria and $2.20/bbl in Egypt.
2007 CAPITAL BUDGET PROGRAM
The 2007 capital program is focused on development as follows:
--Acceleration of drilling in Syria, increasing the rig count to six --Expansion of the steam injection programs in Syria --Modification and expansion of facilities in Syria including oil, gas and water handling and electric power reliability --Appraisal and development of the new fields in Egypt
A total of 111 wells are planned for 2007, including 18 in Egypt and 93 in Syria. Although most new wells will be focused on appraisal and development, multiple exploration wells are planned in Syria. In addition, the Company will be pursuing downstream alternatives to potentially upgrade the quality of the produced crude oil stream in Syria as well.
The Company forecasts gross production exit rates for 2007 for Syria in the range of 23,000 to 26,000 barrels of oil per day ("bopd") gross production (16,000 to 19,000 bopd, shareable production, net of base crude production levels and 10,000 to 12,000 bopd company share) and 4,000 to 6,000 bopd (1,110 to 1,570 bopd, company share) in Egypt.
We are encouraged by the results of the work completed in 2006 in both Syria and Egypt. The gross production rates exiting 2006 for Syria is 9,700 bopd (2,600 bopd, shareable production, net of base crude production levels and 1,600 bopd company share) and 3,200 bopd for Egypt (880 bopd, company share). Although current production capacity is lower than anticipated, much was achieved during 2006 which prompted the more aggressive 2007 capital program:
--Field appraisal work in Syria using 3D seismic, drilling and workovers has provided encouraging evidence for further growth --The steam pilot results in Syria have confirmed the Company's enhanced oil recovery ("EOR") expectations --Capital costs - drove well costs to target levels in Syria --Four new discoveries in Egypt, giving the Company a total of eight fields under development leases
During 2006 the Company successfully drilled 12 wells in the Oudeh Block and 15 wells within the Tishrine and Sheikh-Mansour Blocks. In Egypt, the Company drilled 20 appraisal and exploration wells.
The use of 3D seismic and appraisal drilling at Oudeh provided evidence of reservoir continuity between the three proven Shiranish producing areas. In addition, the 3D seismic provided encouragement of reservoir continuity at the Butmah and Kurrachine Dolomite, both of which are important for natural gas and light oil potential.
The Company accelerated 3D seismic acquisition plans and completed the program in 2006. Although the 483 KM2 of data is still being interpreted, preliminary results have give the company some insight and encouragement for extensions of existing fields, and further exploration in both blocks.
In addition, the Company spent considerable effort drilling infill wells and conducting workovers of existing wells in the West Tishrine field. The purpose was to test the EOR capacity with more dense spacing, new stimulation techniques and the expanded use of horizontal drilling in each of the reservoirs.
The steam injection pilot programs have provided results that meet and exceed modeled expectations at both Oudeh and Tishrine. Increased production rate capacity from wells stimulated with steam on the order of two to three times cold production rates was achieved. More importantly, the ability to deliver steam at high injection rates will enable multiple future approaches to EOR techniques.
The Company has agreed with the Syrian Petroleum Company ("SPC") on the allocation process for base crude production costs. The Company has received the first payment for BCP costs and further payments are expected to be received routinely.
Tanganyika Oil Company Ltd. is a Canadian oil and gas company with production and exploration assets in Egypt and Syria.
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