Tamarack Valley Energy Ltd. Exceeds 2013 Production Guidance,
Provides Cardium Update and 2014 Capital Program
CALGARY, ALBERTA--(Marketwired - Jan 28, 2014) - Tamarack Valley
Energy Ltd. (TSX-VENTURE:TVE) ("Tamarack" or the "Company") is
pleased to announce that it has surpassed its 2013 average
production and 2013 exit production guidance as a result of our
continued success in the Cardium and Viking. Based on field
production estimates for December 2013, the Company averaged 4,718
boe/d (approximately 62% liquids), exceeding its exit production
guidance rate of 4,200 to 4,300 boe/d. Based on these field
estimates, the Company's average production for 2013 was 3,276
boe/d, exceeding the original 2013 production guidance of 2,900 to
3,000 boe/d, (which was later increased to 3,150 to 3,250 boe/d due
to the Sure Energy Ltd. acquisition on August 20, 2013).
During the first
three weeks of January 2014, permanent facilities were being
installed on 4 gross (2.38 net) Cardium wells. Two of the 4 wells
are on production, with the remaining wells expected to commence
production over the next week. Based on field estimates, Tamarack
averaged 4,757 boe/d during the last 3 days.
Cardium Drilling
Update
In August 2013,
Tamarack entered into a farm-in agreement with an industry major
whereby it gained access to 113,280 gross (72,320 net) acres of
farm-in lands. Tamarack has an obligation under the terms of the
farm-in agreement to drill a total of 20 net earning wells over a
three year period, with 3.5 net earning wells drilled by the end of
March 2014 and 8.5 net earning wells by the end of 2014. Under the
agreement, long reach horizontal wells greater than 1.5 miles in
length count as 2 earning wells. To date, Tamarack has drilled 6
(3.2 net) wells on the farm-in lands which includes a combination
of 1-mile and 1.5-mile wells. Based on our capital program,
Tamarack expects to have drilled the equivalent of 7.4 net earning
wells towards the farm-in commitment by March 31, 2014, well ahead
of the farm-in drilling obligation.
Of the 6 (3.2 net)
wells drilled to date, 3 (1.6 net) are producing through permanent
facilities, with another 2 (0.98 net) wells expected to commence
production over the next week. The production contribution from the
farm-in lands to the 2013 fourth quarter average was 286 bbls/d of
oil. Based on field estimates, current production from the first
three wells averaged 876 boe/d over the past 3 days. The early
results of recent drilling on the farm-in lands has met or exceeded
internal expectations.
Tamarack is planning
to drill up to 6 (2.1 net) Cardium wells on the farm-in lands and
in the Garrington area during the first quarter of 2014.
2-Mile Cardium Buck
Lake Well
On December 18,
2013, Tamarack announced the first 30 days of production of its
first 2-mile well. Based on field estimates, this well averaged 367
boe/d (275 net), consisting of 296 bbls/d (222 net) of oil and
natural gas liquids and 423 mcf/d (317 net) natural gas. Initially
constrained by its lifting equipment during its first 40 days on
production, the well was re-equipped with an optimized bottom hole
pumping assembly to handle a lower gas/oil ratio.
The well has
continued to outperform offsetting wells. Based on field estimates
during its first 70 days on production, the well averaged 288 boe/d
(217 net), consisting of 229 bbls/d (172 net) of oil and natural
gas liquids and 358 mcf/d (268 net) natural gas. The third month
oil production rate is currently 70% higher in the 2-mile well than
compared to the 2 offsetting 1-mile wells that Tamarack drilled in
late 2011 and early 2012.
Cardium Drilling
Inventory Expansion
Through two
additional farm-in agreements in the greater Pembina area, Tamarack
has increased its Cardium land position by 7 (3.6 net) sections,
bringing the total Cardium land position to over 116 net sections.
These agreements increase Tamarack's drilling inventory of Cardium
locations by 14 net low risk development locations. Tamarack will
continue to expand its Cardium position in core areas by
consolidating working interest on our lands or through acquiring
interests adjacent to our lands. Management estimates a total
inventory of 174 net Cardium locations.
2014 Capital
Budget
In December 2013,
Tamarack's Board of Directors approved a capital budget of up to
$68 million for 2014, focused on drilling Cardium horizontal
development and Viking oil development wells. The 2014 capital
budget will allow the Company to drill approximately 5.0 net
Cardium 1-mile horizontals, 4.3 net Cardium long reach (1.5 to
2-miles) horizontals and 18.3 net Viking oil wells. Tamarack's
management estimates it has over 360 net Cardium and Viking
locations. By executing this drilling program, Tamarack expects to
achieve a production average of 4,950 to 5,050 boe/d, while earning
over 13 net sections of Cardium lands in the greater Pembina area,
achieving approximately 65% of its total farm-in drilling
commitment by the end of 2014. The 2014 capital program will be
fully funded with forecasted cash flow from operations and
available lines of credit. The Company currently has available
credit facilities of $103 million comprised of an $85 million
operating line of credit and an $18 million development line. The
2014 capital program and $51 to $52 million cash flow estimate is
based on average commodity pricing assumptions of:
- a WTI price of $90/bbl Canadian less a $9 Edmonton Par / WTI
differential, and
- an AECO price of $3.25/GJ
Tamarack's summary of guidance for 2014 as previously announced
on August 20, 2013:
- 2014 estimate average production rate of 4,950 to 5,050 boe/d
(60% liquids)
- 2014 estimate exit production rate of 5,300 to 5,400 boe/d (60%
liquids)
- Anticipated cash flow of $51 to $52 million, based on the above
commodity price assumptions
- Estimated 2014 year end debt to annualized Q4/14 cash flow from
operation of 1.6 times
About Tamarack Valley Energy Ltd.
Tamarack is an oil and gas exploration and production company
committed to long-term growth and the increased identification,
evaluation and operation of resource plays in the Western Canadian
sedimentary basin. Tamarack's strategic direction is focused on two
key principles - ensuring resource plays provide long-life
reserves, and using a rigorous, proven modeling process to
carefully manage risk and identify opportunities. The Company
recently expanded its inventory of low-risk development oil
locations in the Redwater Viking play through the acquisition of
Sure Energy Inc. Continuing to build on its sustainable growth
platform, Tamarack also increased its low-risk development
locations within the Cardium fairway through a farm-in agreement
with an industry major. These endeavors add to Tamarack's strong
resource portfolio, including Cardium properties at Lochend,
Garrington and Buck Lake and heavy oil properties in Saskatchewan.
With a balanced portfolio, and experienced and committed management
team, Tamarack intends to continue to deliver on its promise to
increase its production and maximize shareholder return.
Abbreviations
bbl |
Barrel |
bbls/d |
barrels per day |
boe/d |
barrels of oil equivalent per day |
mcf |
thousand cubic feet |
mcf/d |
thousand cubic feet per day |
Unit Cost
Calculation
For the purpose of
calculating unit costs, natural gas volumes have been converted to
a barrel of oil equivalent ("boe") using six thousand cubic feet
equal to one barrel unless otherwise stated. A boe conversion ratio
of 6:1 is based upon an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a
value equivalency at the wellhead. This conversion conforms with
Canadian Securities Regulators' National Instrument 51-101
Standards of Disclosure for Oil and Gas Activities. Boe's may be
misleading, particularly if used in isolation.
Forward-Looking
Information
This press release
contains certain forward-looking information (collectively referred
to herein as "forward-looking statements") within the meaning of
applicable Canadian securities laws. Forward-looking statements are
often, but not always, identified by the use of words such as
"anticipate", "believe", "plan", "potential", "intend",
"objective", "continuous", "ongoing", "encouraging", "estimate",
"expect", "may", "will", "project", "should", or similar words
suggesting future outcomes. More particularly, this press release
contains statements concerning Tamarack's capital spending,
expected drilling plans, operational activities, cash flow and
expected production levels, asset mix and year end debt for 2014
and Tamarack's plan to increase its Cardium position in the future.
The forward-looking statements contained in this document are based
on certain key expectations and assumptions made by Tamarack
relating to prevailing commodity prices, the availability of
drilling rigs and other oilfield services, the timing of past
operations and activities in the planned areas of focus, the
drilling, completion and tie-in of wells being completed as
planned, the production performance of new and existing wells, the
application of existing drilling and fracturing techniques, the
continued availability of capital and skilled personnel, surface
access to leases, the ability to continue to deliver crude oil and
natural gas to market, the ability to maintain or grow the banking
facilities, the accuracy of Tamarack's geological interpretation of
its drilling and land opportunities and Tamarack's ability to
realize the anticipated growth opportunities and operational
synergies. Although management considers these assumptions to be
reasonable based on information currently available to it, undue
reliance should not be placed on the forward-looking statements
because Tamarack can give no assurances that they may prove to be
correct.
By their very
nature, forward-looking statements are subject to certain risks and
uncertainties (both general and specific) that could cause actual
events or outcomes to differ materially from those anticipated or
implied by such forward-looking statements. These risks and
uncertainties include, but are not limited to: risks associated
with the oil and gas industry (e.g. operational risks in
development, exploration and production; delays or changes in plans
with respect to exploration or development projects or capital
expenditures and declines in initial production rates); commodity
prices; the uncertainty of estimates and projections relating to
production, cash generation, costs and expenses; health, safety,
litigation and environmental risks; and access to capital. Due to
the nature of the oil and natural gas industry, drilling plans and
operational activities may be delayed or modified to react to
market conditions, results of past operations, regulatory approvals
or availability of services causing results to be delayed. Please
refer to Tamarack's revised Annual Information Form ("AIF") dated
March 27, 2013 for additional risk factors relating to Tamarack.
The AIF is available for viewing under the Company's profile on
www.sedar.com.
The forward-looking
statements contained in this press release are made as of the date
hereof and the Company does not undertake any obligation to update
publicly or to revise any of the included forward-looking
statements, except as required by applicable law. The
forward-looking statements contained herein are expressly qualified
by this cautionary statement.
Neither TSX Venture
Exchange nor its Regulation Services Provider (as that term is
defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Tamarack Valley Energy Ltd.Brian SchmidtPresident &
CEO403.263.4440Tamarack Valley Energy Ltd.Ron HozjanVP Finance
& CFO403.263.4440www.tamarackvalley.ca