TUSK Energy participates in gas discovery
TUSK Energy Inc
TKE
Shares issued 10,466,584
1999-03-12 close $0.74
Monday Mar 15 1999
Mr. Norman Holton reports
The company has participated in a gas discovery in central Alberta. The well, drilled in January/February
1999, flowed gas from two separate zones at a total rate of 4.7 million cubic feet per day at low
drawdown (20 per cent). The gas from each zone contains recoverable natural gas liquids estimated at 16
barrels per million cubic feet. The well has been dually completed and preparations are under way to
tie-in the well to a plant approximately one-quarter mile away. Initial production rates are expected to be
limited by plant capacity to four million cubic feet per day, of which the company's net would be 1.26
mmcf sales gas and 20 barrels of NGL per day. The company has a working interest of 33.33 per cent
in the well and in one additional undrilled section of land near the discovery.
At Meekwap, the company has received approval for an expansion of the waterflood area and the
Meekwap 4-21 discovery well, drilled last April, has now been included in the approval area. Up to
Nov. 6, 1998 the well averaged 1,409 barrels of oil equivalent per day with no water production. The
4-21 resumed production on Feb. 7, 1999 after being shut-in for three months pending approval of the
waterflood expansion. The average rate since that date has been 1,900 barrels of oil a day, two mmcfd
(2,100 gross, 370 net boe/d) with no water production and cumulative production has now exceeded
300,000 barrels of oil equivalent.
Also at Meekwap, a six square mile seismic program has been shot in an area from one to four miles to
the east of the 04-21 discovery. The survey is currently being processed. The survey covered 3.5
sections of land in which the company has an average 62 per cent working interest (2,240 gross, 1,390
net acres).
At Strachan, the 2-22 discovery well (10 per cent plus 15 per cent overriding royalty on 40 per cent
before payout, 30 per cent after payout) is expected to commence production of gas from the Swan Hills
zone during the second quarter. Initial gross production rate is expected to be in the order of five mmcfc.
The company's net production from the well, including volumes attributable to overriding royalty before
payout, will be approximately 650 thousand cubic feet per day of sales gas. Delays in the tie-in of this
well were caused by negotiations with the plant operator regarding pipeline construction. A twin well at
Strachan, in which the company will have a 10 per cent working interest and a 15 per cent
non-convertible overriding royalty on 40 per cent will be drilled in the next few months. The new well,
which will access the uphole Mannville reserves indicated during the drilling of the 2-22 well is expected
to add five mmcfd of raw wet gas production (net 650 mcfd sales gas and 12 b/d NGLs including
royalty volumes).
The company's production in February 1999 averaged 820 barrels of oil equivalent a day (85 per cent
oil, 15 per cent gas). During the second quarter, both the company's commodity mix and production
will improve significantly when the dual zone gas discovery, the Strachan Swan Hills gas and the
Strachan Mannville gas are on stream.
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