Tamarack Valley Energy Ltd. (“Tamarack” or the “Company”) is pleased to provide the following operational and drilling update from its 2013 spring drilling program.
Cardium Drilling Results
On March 9, 2013 Tamarack commenced a three well Cardium drilling program. The first two 100% owned wells in Lochend, Alberta were located at 14-32-26-3 W5M and at 3-29-26-3 W5M. The 3-29 well was stimulated using an 18 stage slick water fracture treatment and the 14-32 well was stimulated with a 21 stage slick water fracture treatment. Permanent facilities were installed for both wells during the second week of June 2013. Based on field estimates, the Lochend 3-29 well averaged 521 bbls/d of oil and 732 mcf/d of natural gas or 643 boe/d (81% oil weighted) over a 21 day period and the Lochend 14-32 well averaged 510 bbls/d of oil and 714 mcf/d of natural gas or 629 boe/d (81% oil) over a 15 day period. Both wells offset the prolific Lochend 2-29 well which was brought on production in mid-May 2012 and averaged 645 boe/d over it first 30 days of production and 474 boe/d over the first 60 days. The Lochend 2-29 well reached payout (when net operating income surpassed total capital expenditures) in only 10 months. Tamarack believes that based on current commodity prices and the assumption that the wells will continue to mirror the production profile of the 2-29 well, both the 3-29 and 14-32 wells should reach their payouts in less than 12 months.
The third 100% owned well of the spring Cardium drilling program was fracture stimulated in mid-June 2013 in the Garrington area of Alberta. Tamarack will install permanent facilities and tie-in the associated solution gas in July 2013. The Company expects to provide updated production rates in late August or early September 2013.
During the third quarter of 2012, Tamarack participated in the drilling of two (1.0 net) Cardium oil wells in the Lochend area. Both wells were temporarily brought on production during the third week of September 2012 and then shut-in until February 2013, when permanent production facilities were installed by the operator. Both wells produced at restricted rates until the expansion of the oil handling facility was completed in late-April 2013. Actual production to the end of April 2013, as reported by the operator based on producing day rates, are as follows: the Lochend 13-36-27-4 W5M (50% working interest) well averaged 353 bbls/d of oil (177 net) and 142 mcf/d of natural gas or 377 boe/d (188 net) (93% oil weighted) over a 67 day period and the Lochend 15-36-27-4 W5M (50% working interest) wellaveraged 319 bbls/d (160 net) of oil and 126 mcf/d of natural gas or 340 boe/d (170 net) (93% oil) over an 57 day period. On a combined basis the two have produced over 42,000 (21,000 net) barrels of oil. Based on field estimates in June 2013, both wells continue to produce over 200 boe/d (100 net) each.
Redwater Drilling Results
Tamarack commenced its 2013 spring drilling program on February 23, 2013 in the Redwater area of Alberta. The Company drilled, completed and equipped five (4.7 net) Viking oil wells. All five wells commenced production in early-April 2013. Tamarack has continued to focus on reducing capital costs associated with development drilling in Redwater to reduce payout periods to 12 months or less. As a cost reduction measure, Tamarack installed smaller pumping equipment on the most recent five well program, which caused the wells to initially produce at restricted rates.. This program also successfully experimented with a new completion technique that will further reduce well costs and improve the overall quality of fracing.
On June 6, 2013, the Company also began a four well Viking oil program in the Redwater area. These four wells will all be completed with the new frac design and smaller pumping equipment which is expected to bring the total cost to drill, complete and equip each well under $1 million. These four wells are expected to commence production near the end of July 2013.
Tamarack has drilled 16 wells in the Redwater area since acquiring the property in April 2012; four were drilled in the summer of 2012; seven in the fall of 2012 and five in the spring of 2013. The 90-day average production rate for the first 11 wells was 69 bopd. Redwater production rates continue to outperform the Company’s expectations. The five wells brought on production in April 2013, averaged 52 bopd over its first 60 days, but were restricted by smaller pumping equipment during that period. The Company anticipates these wells will not decline as quickly as the offsets, due to the equipment restrictions.
With the Company’s 2013 spring drilling program now completed, Tamarack expects to meet its second quarter 2013 production target of 2,800 to 2,900 boe/d. The Company remains on target of achieving its 2013 average production guidance of 2,900 to 3,000 boe/d.