Tamarack Valley Energy Ltd.

Tamarack Valley Energy Ltd.

June 22, 2011 07:02 ET

Tamarack Valley Energy Reports Material Drilling Results in Lochend and Buck Lake and Announces New Core Area

CALGARY, ALBERTA--(Marketwire - June 22, 2011) - Tamarack Valley Energy Ltd. (TSX VENTURE:TVE) ("Tamarack" or the "Company") is pleased to provide an update to our recent drilling results and strategic growth strategy:

  • Positive drilling results at Lochend 15-32 and 8-29

  • Tamarack's first drilling results at Buck Lake 5-24

  • Addition of a fourth core area – Saskatchewan heavy oil farm-in

  • Closing of land acquisition from a private company in our shallow Alberta Viking oil play

  • Increases to existing bank lines

Lochend Cardium Drilling Results

Tamarack drilled and completed, with multi-stage fractures, two Cardium wells in Lochend at 15-32-26-3 W5M (100% WI) and 8-29-26-3 W5M (100% WI) during the second quarter of 2011. After recovering 100% of its load oil, the 15-32 well averaged 773 boe/d during its first three days of production and the 8-29 well averaged 756 boe/d during its first three days of production. Tamarack was limited to three day test rates as wet conditions hampered the ability to truck volumes off the lease during the load recovery stage. Both wells have exceeded internal production estimates. At this time, neither well is conserving the associated solution gas, however Tamarack is close to finalizing an agreement to tie into a gathering system currently being constructed in the area. The Company is also constructing a multi-well oil battery facility at the site where all three wells are located, which will allow Tamarack to minimize operating costs through the benefits of pad drilling.

Tamarack has now achieved above type curve initial production results on all three of the wells drilled in Lochend to date. The following table summarizes the average production day boe rates post recovery of load fluid. Previously released production results from the first Lochend well at 16-32-26-3 W5M were included for comparative purposes.

3 Day Average

Oil (bopd)
Gas (mcf/d)
15-32-26-3 W5M695464773
8-29-26-3 W5M666640756
16-32-26-3 W5M8489941,006
16-32-26-3 W5M 30 day avg.379714498

Buck Lake Cardium Drilling Results

In February 2011, the Company announced the acquisition of 8.5 (6.4 net) sections of land in the Buck Lake area of Alberta. The first well drilled at 5-24 (75% WI post earning) was completed with a 14 stage nitrified water foam fracture treatment. The production results are as follows:

5-24-46-6 W5M average production rates over indicated period
Oil (bopd)Gas (mcf/d)Boe/d
3 day average122413191
7 day average139293188
30 day average82163109

These production results were slightly less than initial expectations, however, the frac fluids introduced to the reservoir have caused emulsions which are impacting production performance. A fracture expert from Houston was hired and determined that the quality of the sand and conglomerates in the well would provide excellent results had emulsions not been present. Consequently, Tamarack is confident it will achieve expected results on subsequent drills in the area. It was also noted that the well could clean up over time or may require injection of demulsifier to reduce the impact of the emulsions and improve production rates.

The Company embarked on a single rig multi-well drilling program through spring breakup to secure quality services at reasonable costs. Weather related delays have been minimal. The rig has finished drilling the 1-20-35-3 W5M well in Garrington/Harmattan and will move to another location at Buck Lake once its lease has been constructed. Several more Cardium wells have since been licensed to prepare for another multi-well program to commence later in 2011.

Addition of a New Core Area – Saskatchewan Heavy Oil

In keeping with Tamarack's strategy and commitment to deliver growth, the Company has identified and added a fourth core resource play, "Saskatchewan Heavy Oil". This new core area was acquired through a combination of crown land sales, freehold land acquisitions and a farm-in with a First Nation. Tamarack has secured 37.3 net sections of land with a two well drilling commitment over the first two years of a four year lease. The Company also acquired 109 km of 2D seismic data and is planning to shoot a three square mile 3D seismic program in the fall of 2011. An initial review of the area has identified seven different prospects with up to 33 potential un-risked drilling locations. Targeted areas include Colony, McLaren, Waseca, Sparky, Cummings and GP zones.

Tamarack targeted adding heavy oil prospective acreage as its fourth core area, to complement its strategy of assembling oil plays that possess potential drilling repeatability and has the potential to generate superior rates of return. These heavy oil prospects also allow assembly of multi-well drilling programs that require different services than the Cardium plays creating flexibility to add production. Tamarack's personnel have a history of finding reserves in this area and when combined with the Cardium plays, strengthen the portfolio of drilling inventory.

Viking Oil Land Acquisition

On June 7, 2011, the Company closed a land acquisition with a private company that complements Tamarack's current shallow Alberta Viking oil lands. The Company added 1.3 net sections of land by issuing 1,107,953 common shares in exchange for the lands. The private company valued the Tamarack shares at $0.52/share. The shares will be subject to a four month hold period.

Tamarack has assembled 22 net sections of land on its shallow Alberta Viking oil play.

Subsequent to the acquisition, the Company has 186,402,359 common shares, 20,256,993 preferred shares and 850,000 options outstanding as of June 22, 2011.

Second Quarter Production Update

The Company averaged 753 boe/d in April and based on field estimates has averaged 805 boe/d from May 1st to June 19th. In May and June, the Company experienced production downtime associated with gas plant shut downs in the non-operated areas of Hanlan and Quaich of 6 and 4 days, respectively, impacting the production average by approximately 52 boe/d during that period.

During the last week, the Company has averaged approximately 1,335 boe/d based on field estimates, with the two new wells contributing 47% of current production. Although the two recently drilled Lochend wells look to be as good as the first one, Tamarack may restrict production in the next couple of months to maximize the economic return associated with conserving the associated solution gas once the gas gathering system has been constructed.

Tamarack expects the two new Lochend wells to follow the typical Cardium production curve and decline hyperbolically over the next few months, yet make an impact to production, reserves and economic return for shareholders.

Bank Line Increase

During the second quarter, Tamarack had its credit facilities reviewed and as a result, the revolving operating demand loan was increased to $6.5 million and the development loan was increased to $2.0 million. The next scheduled facility review is scheduled for later this summer to coincide with additional drilling results in Garrington/Harmattan and Buck Lake.

Tamarack's Annual General Meeting is being held today at 3:00 pm (MST) in the Viking Room of the Calgary Petroleum Club, 319 Fifth Avenue SW, Calgary, Alberta. A new corporate presentation is accessible on Tamarack's website at www.tamarackvalley.ca.

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 ("NI 51–101"). Boe's may be misleading, particularly if used in isolation.

About Tamarack Valley Energy Ltd.

Tamarack is an oil and gas company involved in the identification, evaluation and operation of resource plays in the western Canadian sedimentary basin. The Company uses a rigorous, proven modeling process to carefully manage risk and identify growth opportunities and has assets at Lochend, Garrington/Harmattan, Buck Lake and Quaich areas in Alberta, southeast of Lloydminster in Saskatchewan and at Wilder in northeast British Columbia.

Forward Looking Information

This press release contains certain forward-looking statements within the meaning of applicable securities laws, including statements relating to expected drilling plans and operational activities and results. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "should", "believe", "intends", forecast", "plans", "guidance" and similar expressions are intended to identify forward-looking statements or information. The intended drilling plans and operational activities and results are based on assumptions relating to the timing of past operations and activities in the planned areas of drilling as well as information from consultants on drilling and fracturing techniques. The statement regarding the impact of the two new Lochend wells are forward looking statements based on the assumption that current results continue and that infrastructure additions provide the benefits expected.

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 involve inherent risks and uncertainties (both general and specific) and risks that forward-looking statements will not be achieved. 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; the uncertainty of estimates and projections relating to production, 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 or availability of services causing results to be delayed.

The forward-looking statements contained in this news 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. The TSX has neither approved nor disapproved the contents of this press release.

Contact Information

  • Tamarack Valley Energy Ltd.
    Brian Schmidt
    President & CEO

    Tamarack Valley Energy Ltd.
    Ron Hozjan
    VP Finance & CFO