Tanganyika Oil Company Ltd. provided an update on its Syrian operations. The steam pilot equipment arrived in Syria in late August. The steam generators have been assembled and are currently being commissioned in both the Oudeh and Tishrine contract areas. First injection is expected at both Oudeh and Tishrine during the next few days. Enhanced oil recovery ("EOR") modeling of steam injection suggests the pilots will enhance both production rates and oil recovery at Oudeh and Tishrine. Results of the pilot tests will be communicated in the coming months.
Success continues with both drilling and workovers at Tishrine. Field production has increased month over month and the west and east Tishrine fields set a combined daily production record on August 4, 2006 of 8,694 bopd. Of note, shareable production (i.e. production above the base crude production level determined pursuant to the Production Sharing Agreement) from Tishrine has increased dramatically as both drilling success and facilities improvements continue. July shareable production is approximately 503 bopd and for the month of August, it averaged approximately 1,602 bopd.
Tanganyika's share of the production for July and August is estimated to be approximately 292 bopd and approximately 929 bopd, respectively. A crude oil pricing formula similar to the Oudeh field is being discussed with the Petroleum Marketing Department of the Presidency of the Council of Ministers. Expansion of gathering, processing and shipping facilities to handle increasing production rates and the winterization program to minimize the effects of colder winter temperatures continues.
Acquisition of the 3D seismic program over the Tishrine and Sheikh Mansour contract areas is approximately 60% complete. The seismic program completed to date covers the west Tishrine field where the Company is actively drilling. This data will be processed over the next four to six weeks for immediate use. The acquisition program is on schedule to be completed in October.
Similar production success has been seen at Oudeh with current field production at 2,100-2,300 gross bopd. Workovers and drilling have been successful, and coupled with declining base case production levels, shareable production is increasing steadily. However, due to mechanical problems with SPC's power generation facilities in the area, multiple wells have been shut-in for several weeks to avoid flaring and to conserve natural gas. This has resulted in 100-150 gross barrels of light oil and condensate per day being deferred.
The Company has executed a long term contract for the MB-21 drilling rig. This rig is capable of drilling wells in the Oudeh, Tishrine and Sheikh Mansour contract areas. The rig is currently being mobilized from Oman and will be arriving in Syria in late September. The Company expects to spud the first well with the new drilling rig during the first half of October 2006.
