Sales volumes averaged 425 barrels of oil equivalent per day (boepd) for the year-end 2008, down 41% over the 716 boepd in the previous year. This decrease in production was attributable to a combination of the sale of the Cecilia property, natural declines from accessible production at Hanlan, in addition to delays getting new production at Quaich on stream. Tango Energy’s production is at present about 600 boepd.
For the fourth quarter of 2008 Tango Energy focused on optimizing operated production. The building of the pipeline at Quaich to tie in the 3-3 discovery well in which the comapny has a 60% working interest was delayed until late October 2008 and the well was placed on production in late December 2008. Tango Energy took part in three exploratory wells in the Worsley, Beaton and Ferrier areas earlier to year end. All three plays were assessed using 3D and/or 2D seismic data and the main targets being the Leduc, Bluesky/Gething and Ellerslie formations correspondingly. All three wells were cased before year end. Consequent to year end, the Worsley well was assessed, tied into a third party facility and placed on production by the operator. The Beaton well was tied in and is producing from one of the two targeted zones, and the Ferrier well was tested and suspended until natural gas prices raise.
Tango Energy has 46,402 gross (26,750 net) acres of land situated west of the fifth and sixth meridian within the foothills and deep basin portion of the Western Canadian Sedimentary basin. Of this amount 15,833 net acres of land were undeveloped at year end, and consequent to year end the company obtained an additional 3,840 gross and net acres of land.
During 2009, Tango Energy will prudently deploy available capital towards recompletion and tie-in operations where immediate increases in production, cash flow, and reserves are achievable and economic. Additionally, Tango Energy at present plans to take part in the drilling of a second well in Quaich during the second half of the year. Tango Energy’s share of the second well at Quaich is anticipated to cost about $1.5 million including drilling, completion, equipping and tie-in. Drilling of this well is dependant on economic conditions at that time.
Equity markets and gas prices are anticipated to remain weak throughout the year. Capital spending will be financed by cash flow and draws upon Tango Energy’s existing line of credit. The company at present has no debt and available bank lines in excess of $4 million. Tango Energy bank lines are reviewed quarterly.
