TUSK Energy Corporation
TSX : TSK

TUSK Energy Corporation

June 06, 2006 09:15 ET

TUSK on Track to Produce 1,200 BOEPD

CALGARY, ALBERTA--(CCNMatthews - June 6, 2006) -

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TUSK Energy Corporation ("TUSK") today announced that drilling success, acquired production and the completion of a new battery and pipelines put the company on track to exit July 2006 producing 1,200 barrels of oil equivalent per day ("boepd"). This compares with average production during the three months ended December 31, 2005 of 665 boepd.

TUSK added 240 boepd of production effective April 1, 2006 and expects to add more production during June and July when facilities are completed and wells drilled during the winter are tied-in and as recent wells drilled on the Peace River Arch ("PRA") come on-stream.

Successful wells on the PRA drilled and/or completed since the end of the 2006 fiscal year on March 31st include:

- Wabamun oil well (TUSK 26%) capable of producing 500 boepd gross;

- Debolt gas discovery (TUSK 20%) capable of producing 300 boepd gross;

- Undisclosed zone gas discovery (TUSK 20%) with gross flow rates of greater than 400 boepd;

- Triassic gas discovery (TUSK 47.5%) drill-stem tested at a gross rate of 165 boepd.

Norman Holton, Chairman and CEO of TUSK said that the company is encouraged by the success of its PRA drilling activity. "The exploration opportunities we acquired in April are already producing results" Holton said. "These successes complement our extensive inventory of long-term high-potential plays in the Mega-Venus area."

TUSK is targeting a mid-June start date for production for its Venus pipeline and a July production commencement date for the Mega battery facility.

Acquisition of Production, Infrastructure and Exploration Potential

On April 21st TUSK announced that it had entered into a series of agreements that provided it with access to high-impact exploration opportunities and an extensive land base in the general Puskwa area of the Peace River Arch in Alberta (132 square miles gross, 43 square miles net) and in the Cutbank area of northeast British Columbia (172 square miles gross, 9 square miles net).

The transaction also included the purchase of approximately 240 boepd of net production, interests in a number of shut-in wells awaiting completion, numerous drilling locations and a 44% working interest in the Peoria gas plant.

Under the Cutbank portion of the transaction, TUSK will earn a 5% working interest in the Triassic rights underlying a large land block by participating for a 50% working interest in the shooting of a large 3D seismic program covering all of the earned lands. TUSK will have the opportunity to increase its interest to 25% in prospective portions of the Cutbank lands by drilling farm-in wells. Triassic targets include the Doig, Halfway, Artex and Montney.

Some highlights of the current drilling and completions program include:

Wabamun Oil Well (Eaglesham, Alberta)

TUSK has a 26% working interest in a new oil well drilled in April on lands acquired as a part of the acquisition. The well, located in the Eaglesham area approximately 7 miles (11 kilometres) to the southeast of the Peoria gas plant, has been recently completed in the Wabamun zone and is capable of producing over 500 boepd gross of light oil and natural gas. This well is expected to be produced at a rate between 150 to 200 boepd (net 39-52 boepd).

Debolt Gas Well (Eaglesham, Alberta)

TUSK participated for a 20% working interest in the drilling and completion of a well which was drilled in May on lands acquired as a part of the acquisition. The well, located in the Eaglesham area approximately 11 miles (18 kilometres) to the east of the Peoria gas plant, is capable of producing at a gross rate of 1.8 million cubic feet ("MMcf") of natural gas per day (300 boepd) (60 boepd net) from the Debolt zone.

Undisclosed Zone Gas Well (Eaglesham, Alberta)

A well (TUSK 20%), drilled in 2005 on lands acquired by TUSK effective April 1st, was completed in April. The well, located in the Eaglesham area to the east of the Peoria gas plant, was tested at a gross rate of 2.5 MMcf of natural gas per day (416 boepd) (83 boepd net) from an undisclosed zone.

Triassic Gas Discovery (Boundary Lake, Alberta)

TUSK has a 47.5% working interest post-completion in a Triassic gas discovery at Boundary Lake, Alberta. The well was drilled, drill-stem tested at 1 MMcf per day (166 boepd) (79 boepd) and cased in May on lands acquired by TUSK in 2004 and is expected to be completed within the next 60 days.

Recent additions to infrastructure are as follows:

Mega Battery Facility

Construction of a modular battery facility to handle increased production capability from the Mega-Gutah area is underway. Modules are being assembled in the field at the southern terminus of the Mega pipeline and the facility is expected to be operational in July. The facility has been initially designed to handle about 1,500 barrels of fluid per day and has been designed to facilitate rapid and cost-effective expansion.

Venus Pipeline

Permits have been issued for the operation of the Venus pipeline, a 14 mile long 6" pipeline constructed by TUSK during last winter. Regular production through the line is expected by mid-June.

TUSK is an exploration-focused oil and natural gas producer based in Calgary, Alberta. The company has an experienced geological and technical team focused on adding shareholder value through drilling, acquisition and infrastructure optimization.

Forward-Looking Statements Certain information regarding TUSK Energy Corporation and the events or operations contemplated in the news release including management's assessment of future plans and operations, may constitute forward-looking statements under applicable securities law and necessarily involve risks, including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect TUSK Energy Corporation's operations or financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) or at TUSK's website (www.tusk-energy.com). Furthermore, any forward-looking statements contained in this news release are made as of the date of this news release and TUSK does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities law.

Barrels of Oil Equivalent Where reserves or production are stated on a barrel of oil equivalent ("boe") basis, natural gas volumes have been converted to a barrel on oil equivalent at a ratio of six, thousand cubic feet of natural gas to one barrel of oil. This conversion ratio is based upon an energy equivalent conversion method primarily applicable at the burner tip and does not represent value equivalence at the wellhead. Boe's may be misleading, particularly if used in isolation.

The Toronto Stock Exchange ("TSX") has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • TUSK Energy Corporation
    Norman W. Holton
    Chairman and Chief Executive Officer
    (403) 264-8875
    or
    TUSK Energy Corporation
    Earl T. Hickok
    President and Chief Operating Officer
    (403) 264-8875
    (403) 264-8861 (FAX)
    Website: www.tusk-energy.com