Tanganyika Oil Company Ltd.
TSX VENTURE : TYK
OMX : TYKS

Tanganyika Oil Company Ltd.

October 24, 2007 02:00 ET

Tanganyika Revises Forecast Year End Exit Rates and Announces Operations and Corporate Update

CALGARY, ALBERTA--(Marketwire - Oct. 24, 2007) - Tanganyika Oil Company Ltd. ("Tanganyika" or the "Company") (TSX VENTURE:TYK)(OMX:TYKS) reports revised forecast 2007 production exit rates and an operations and corporate update.

The Company is developing a major heavy oil project in Syria. Year-end 2006 Syrian proved plus probable oil reserves were reported at 428.7 million barrels net to Tanganyika (764.8 million barrels gross) and work carried out during 2007 indicates potential for extensions of existing fields, new development areas and also additional productive reservoirs that can be developed within field boundaries.

Operational challenges on this world-class oil deposit have hampered the Company's aggressive development efforts. The Company has enjoyed great technical success with its enhanced oil recovery program, proving the viability of steam injection on these fields in Syria, however, challenges including equipment procurement and facility limitations, have delayed its operational objectives. As a result, timing of achieving its first phase production goals has been affected and the Company has revised its 2007 forecast exit rates as follows:



REVISED FORECAST 2007 PRODUCTION EXIT RATES - SYRIA

-------------------------------------
Original Forecast Revised Forecast
Range: Range:
-------------------------------------
From To From To
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Gross field production - bopd 23,000 26,000 10,500 14,500
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Company net production - bopd 10,000 12,000 2,550 4,870
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OVERVIEW

2007 oil production rates remained below expectation during the third quarter of 2007 due to Tishrine surface facility constraints, a delay in the arrival of additional drilling rigs and lower average oil production rates per well.

- Commissioning of interim facilities with the capacity to handle increased fluid production is ongoing. Interim facilities are expected to be complete before year end.

- Three new built, fit-for-purpose rigs have been contracted and expected to be drilling in Syria during the first quarter of 2008.

- Water issues lowering average rates per well are being addressed.

- Additional steam generating capacity has been acquired to enhance heavy oil recovery.

- Appraisal drilling adding new production and reserve areas.

SYRIA OPERATIONS UPDATE

Tanganyika is pleased to announce that Donald Miller has joined the Company, assuming the role of General Manager - Syria. Don brings over 20 years of experience in a variety of international oil and gas senior management positions with Apache Corporation and Atlantic Richfield Company (ARCO). For the last 10 years, Don was with Apache where his most recent assignment was as General Manager of the Zhao Dong field development in the Bohai Bay, China.

Oudeh Field (refer to attached map)

Average gross field production during the third quarter of 2007 was 2,440 barrels of oil per day (bopd) (Company net: 1,081 bopd). Year to date gross field production averaged 2,461 bopd (Company net: 1,081 bopd). Six wells were drilled or spud during the third quarter of 2007. Four of the third quarter wells were drilled as Shiranish oil producers to expand the steam pilot project at the OD-146H area. Drilling for infill down-spacing Shiranish oil production started in the main pool around the OD-149H area with the OD-167H well. Steam injection resumed during the third quarter with two Oudeh wells steamed in the highly viscous western area of the field.

All of the new wells on the western flank of the Oudeh field have confirmed higher viscosity than observed in the eastern areas of the field. This higher oil viscosity is limiting the cold production rates and it is anticipated that these wells will be highly responsive to thermal stimulation.

An update of the three key appraisal wells at Oudeh includes:

- OD-155H: drilled to appraise the Shiranish oil potential in the southwest area of the Oudeh field. Production results remain strong with a stabilized average cold production rate of 120 bopd.

- OD-153: drilled as a deep test targeting the Butmah and Kurrachine Dolomite formations. After testing water in the Kurrachine Dolomite formation, we continue to production test the Butmah formation.

- OD-158H: drilled in May to appraise the Shiranish reservoir in the northwest area of the Oudeh field. Well log results from the vertical pilot bore hole indicate the thickest Shiranish B reservoir interval drilled in the Oudeh field with 112 metres of net oil pay. The horizontal well encountered fractures that are connected to a fresh water aquifer system. Plans are currently in place for remedial cementing of the fractures during the fourth quarter.

The winterization program for Oudeh includes a new 11 kilometer export pipeline and heater station. This project is 95% complete and expected to be commissioned during November 2007.

Tishrine Field (refer to attached map)

Average gross field production during the third quarter of 2007 was 6,454 bopd (Company net: 366 bopd). Year to date gross field production averaged 6,456 bopd (Company net: 330 bopd). Ten wells completed drilling or were spud during the third quarter, bringing the total number of wells drilled or spud in 2007 to 25.

Of the ten wells that were drilled or spud during the third quarter of 2007, five were development wells at the Tishrine West field. The results of all of the completed development wells at West Tishrine indicated good Chilou and Jaddala net pay intervals, ranging from 31.6 metres to 96.8 metres (average: 47.5 metres). Production contributions from the Tishrine West field were less than expected due to continuing water handling challenges.

Technical studies on the West Tishrine field conclude that previous water injection practices are having a significant negative impact on current oil production rates and development drilling results. Past water disposal into the Jaddala reservoir, the primary producing horizon at West Tishrine, has resulted in water recycling. The fractured nature of the Jaddala has allowed water to displace oil in many fractures, at different elevations in the reservoir. The negative impact is not permanent however it will take time to reverse the effect. Dewatering of the Jaddala started in August 2007. We anticipate the positive impacts of dewatering in West Tishrine to become apparent over the next 3 - 12 months. Water disposal wells and interim water handling facilities were completed and fully operational in the period from September to October.

The third quarter appraisal drilling program results were very encouraging. Four wells were drilled as appraisal wells all with multiple targets of which three were step-out locations outside of the Tishrine West field. A water disposal well T-235 was also completed during the reporting period.

Highlights of key West Tishrine appraisal wells and recompletions in the Chilou B - Jaddala reservoirs include:

- T-19: recognized in the possible reserves category in the Company's reported reserves estimates at the northern limit of the field. The well is currently producing 15 bopd at 4% watercut establishing proved producing reserves.

- T-34: recognized in the possible reserves category in the Company's reported reserves estimates at the northern limit of the field. The well is currently producing 170 bopd at 20% watercut establishing proved producing reserves.

- T-234, 244, 247: wells located in an area representing a Southwestern extension of the West Tishrine field. All wells indicate good petrophysical indicators in the Chilou A, Chilou B and Jaddala reservoirs. This Southwestern extension was not recognized in the Company's previously reported reserves estimates. T-244 is currently producing over 400 bopd from the Jaddala reservoir with a 10% water-cut. T-247 is currently producing over 450 bopd from the Jaddala reservoir with a 5% water-cut. These wells establish previously unrecognized proved producing reserve areas. T-234 is currently being completed in the Jaddala reservoir.

- T-239: drilled approximately 2 kilometres to the east of the Tishrine West field. The well is located structurally up-dip and petrophysical results indicate net oil pay in the Chilou A, Chilou B and Jaddala formations. No production was obtained while testing the Shiranish by conventional pumping. The well has been suspended until a steam generator is available to test the well.

The Company is focusing on additional appraisal opportunities within the Tishrine field, with multiple locations selected for drilling in Q4 of 2007 and 2008.

By the end of the third quarter, three additional third party workover rigs had arrived in Syria. The addition of these rigs provides the Company with additional capacity to workover existing wells and to complete newly drilled wells. The Company is working closely with the third party workover rig contractor to address operational reliability issues related to one of the workover rigs. In addition to the third party provided workover rigs, the Company continues to utilize workover rigs made available by the Syrian Petroleum Company ("SPC").

The reliability of the electrical power supply in Tishrine improved during the third quarter of 2007 with considerable progress made in upgrading the electric infrastructure in the field. The volume and scope of electrical outages were dramatically reduced during the quarter reducing the impact of electrical outages on oil production.

The winterization programs are proceeding well and expected to reduce cold weather related production restrictions this winter. The three major areas can be summarized by:

- Flowline insulation: insulation of key flowlines, accounting for approximately 70% of Tishrine's production is expected to be complete by mid-November;

- Substation winterization: the project is aimed at installing tank heaters and pumps to ship produced fluids in addition to insulating key substation components. The project is expected to be complete by mid-November;

- Main Station Winterization: the project is aimed at insulating and heating oil storage tanks in the main Tishrine facility. The project is currently approximately 60% complete with a mid-November target for final completion.

Thermal Operations

The pace of the steam pilot at both Oudeh and Tishrine accelerated during the third quarter of 2007. Four of the eight new steam generators have been delivered and commissioned in Syria, bringing the total number of steam generators available for use in Syria to six. All six of the generators are currently steaming wells. An additional four steam generators are scheduled for delivery in Syria before the end of 2007. Plans are in place for a gas sweetening plant to be installed at Oudeh by June 2008 to ensure the quality of the gas supply to the steam generators. The engineering for the plant is complete and the procurement process is ongoing.

Thermal results during the third quarter of 2007 include:

- The steam pilot in Oudeh was resumed and now includes 7 wells.

- Incremental production of 1.4 to 2.6 times over the primary cold production has been achieved in Oudeh.

- The steam pilot in Tishrine was expanded and now includes 8 wells.

- Incremental production of 2 to 6 times over the primary cold production has been achieved in Tishrine.

- Successfully steamed multiple SPC drilled wells using VIT (Vacuum Insulated Tubing) in the Tishrine field. The results were extremely successful. Following the first injection cycle, the wells are currently producing approximately 700 bbl/d of oil.

Marketing

An independent third party industry expert has completed and issued their report analyzing the quality characteristics between the oil produced and saved from Oudeh and Tishrine in comparison to Syrian Heavy crude. The analysis was based on refining value differentials. Based on the price differential formula included in the report, Oudeh and Tishrine crude is expected to be priced in the range of 85-93% of Syrian Heavy value.

CORPORATE

As previously announced the Company has sold its interest in the West Gharib Concession in Egypt. The transaction closed on September 25, 2007. The $70 million of net proceeds realized on the transaction will be used to fund ongoing operations and infrastructure investments in Syria.

Tanganyika Oil Company Ltd. is a Canadian oil and gas company with production and exploration assets in Egypt and Syria. Its shares are traded on the TSX Venture Exchange under the symbol TYK and its Swedish Depository Receipts trade on Stockholmsborsen (Stockholm Stock Exchange) under the symbol "TYKS".

Forward-looking statements: This press release contains statements about expected or anticipated future events and financial results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, the regulatory process and actions, technical issues, new legislation, competitive and general economic factors and conditions, the uncertainties resulting from potential delays or changes in plans, the occurrence of unexpected events and management's capability to execute and implement its future plans. Actual results may differ materially from those projected by management.

To view accompanying map please click on the following link: http://www.ccnmatthews.com/docs/TYKS_Map.jpg

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Tanganyika Oil Company Ltd.
    Gary Guidry
    President and Chief Executive Officer
    (403) 716-4051
    (403) 261-1007 (FAX)
    Email: gary.guidry@tykoil.com
    or
    Tanganyika Oil Company Ltd.
    Ian Gibbs
    Chief Financial Officer
    (604) 689-7842
    (604) 689-4250 (FAX)
    Email: ian.gibbs@tykoil.com
    or
    Tanganyika Oil Company Ltd.
    Sophia Shane
    Corporate Development
    (604) 689-7842
    (604) 689-4250 (FAX)
    Email: sophias@namdo.com
    Website: www.tanganyikaoil.com