Tango Energy reserves increase to 2,511 mboe in 2006
2007-03-22 05:17 MT - News Release
Mr. John Gunn reports
TANGO RELEASES YEAR-END RESERVES AND OPERATIONS UPDATE
Oil and gas reserves
Tango Energy Inc.'s proved plus probable petroleum and natural gas reserves (net before royalty) increased 44 per cent, after production, to 2,511 thousand barrels of oil equivalents as at Dec. 31, 2006. Net reserve additions, after production, were 770 thousand barrels of oil equivalent, which replaced approximately 735 per cent of Tango's production volumes during 2006. Finding and development costs, on a proven only basis, including future capital and net of revisions, were $29.57 per barrel of oil equivalent. Finding and development costs, on a proven and probable basis, including future capital and net of revisions, were $19.51 per barrel of oil equivalent.
Tango's reserves for the year ended Dec. 31, 2006, were evaluated by Paddock Lindstrom & Associates Ltd., and were calculated in accordance with National Instrument 51-101 (NI 51-101).
The following tables provide information on Tango's petroleum oil and gas reserves and the present value of the estimated future net cash flow associated with such reserves as at Dec. 31, 2006. The information set forth below is derived from the Paddock Lindstrom report, which has been prepared in accordance with the standards contained in the COGE Handbook and the reserves definitions contained in National Instrument 51-101 and the COGE Handbook. It should not be assumed that the estimated future net cash flow shown below is representative of the fair market value of the Corporation's properties. There is no assurance that such price and cost assumptions will be attained and variances could be material. "Gross" reserve quantities include the company's share of reserves before royalty plus royalty income volumes. "Net" reserve quantities include the Company's share of reserves after royalty plus royalty income volumes.
SUMMARY OF OIL AND GAS RESERVES
AND NET PRESENT VALUES OF FUTURE NET REVENUE
AS OF DEC. 31, 2006, FORECAST PRICES AND COSTS
RESERVES
Light and Natural Natural gas
medium oil gas liquids
Reserves category gross net gross net gross net
(mbbl) (mbbl) (mmcf) (mmcf) (mbbl) (mbbl)
Proved
Developed producing - - 3,970 3,215 47 32
Developed non-producing - - 3,609 2,367 25 16
Undeveloped - - - - - -
Total proved - - 7,579 5,582 72 48
Probable - - 6,510 4,965 88 59
Total proved plus probable - - 14,089 10,547 160 107
NET PRESENT VALUES OF FUTURE NET REVENUE
BEFORE INCOME TAXES DISCOUNTED AT
(%/year)
0 5 10 15 20
Reserves category (mm$) (mm$) (mm$) (mm$) (mm$)
Proved
Developed producing 24,904 18,817 15,331 13,082 11,507
Developed non-producing 13,537 11,369 9,841 8,687 7,776
Undeveloped - - - - -
Total proved 38,441 30,186 25,172 21,769 19,283
Probable 33,629 20,553 14,220 10,460 7,975
Total proved plus probable 72,070 50,739 39,392 32,229 27,258
NET PRESENT VALUES OF FUTURE NET REVENUE
AFTER INCOME TAXES DISCOUNTED AT
(%/year)
0 5 10 15 20
Reserves category (mm$) (mm$) (mm$) (mm$) (mm$)
Proved
Developed producing 23,326 18,019 14,887 12,817 11,341
Developed non-producing 9,461 7,895 6,794 5,964 5,308
Undeveloped - - - - -
Total proved 32,787 25,914 21,681 18,781 16,649
Probable 23,831 14,380 9,775 7,033 5,218
Total proved plus probable 56,618 40,294 31,456 25,814 21,867
Forecast product prices and operating costs were escalated at a rate of 2.0 per cent per year beyond 2011. The exchange rate used for the United States/Canadian dollar was 0.87. The forecast prices presented above utilize Paddock Lindstrom's price forecast as at Dec. 31, 2006.
Additional reserve information as required under National Instrument 51-101 will be included in Tango's 51-101F1, 51-101F2 and 51-101F3 which will be filed on SEDAR (see Stockwatch SEDAR files).
Operations update
Tango is pleased to announce that current production levels have increased by more than 50 per cent from previously announced exit rates of 500 barrels of oil equivalent per day to current levels which are in excess of 750 barrels of oil equivalent per day. Additional production volumes are expected from the tie in of the Ricinus 6-9 well prior to the end of March, 2007, as well as from optimization initiatives which are currently under way.
At Hanlan, the 14-35 well has been placed on production and is currently producing in excess of 10 million cubic feet per day of raw gas. Tango has a 28-per-cent working interest in this well, subject to a 12.5-per-cent non-convertible overriding royalty.
At Kakwa, the 13-1 Swan Hills well has been drilled to total depth. The well was acidized during the first week of March, and testing operations were not completed due to wildlife constraints which required all of the equipment to be removed from the lease prior to March 15. As a result, the well has been suspended pending further evaluation of the pressure data. Tango has a 30-per-cent working interest in this well.
At Ricinus, the 6-9 well has been tied in and is expected to come on production prior to the end of March, 2007. Tango has a 67.5-per-cent working interest in this well. Additionally, Tango acquired an additional six sections offsetting this discovery at the March 7 land sale at an average 67.5-per-cent working interest.
At Quaich, the 3-3 well has been successfully tested and evaluated. The operator is in the process of constructing a new pipeline into the area during 2007, which is expected to result in additional opportunities on company-owned lands.
Outlook
Tango continues its strategy of pursuing re-entry candidates in west-central Alberta where it has identified gas potential in previously drilled wellbores. As well, it will follow up on previous discoveries with additional drilling, tie-in and land acquisition activities. Crown land sales will continue to be an integral part of Tango's strategy in the future. Access to quality services and field personnel and reasonable prices will likely continue to be a challenge for Tango, as well the oil and gas industry in general.
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