Current TVE:CA Stock Info

Tamarack Valley Energy drills two 2-mile Cardium laterals

Calgary-based Tamarack Valley Energy (ticker: TVE) announced today that the company drilled its first 2-mile lateral Cardium oil wells at Wilson Creek in the second quarter, with on-budget capital costs and timing, according to a company press release. The two wells came on production late in the second quarter and are expected to positively impact production volumes in the last half of 2016.

The company believes that it will now be able to implement longer horizontal wells across more of its Wilson Creek area, and potentially across other parts of its asset base as well. Along with the 200 sections of Wilson Creek acreage the company held as of December 2015, according to its investor presentation, the company also announced the closing of the second of two acquisitions in the area, which added an additional 60 net locations to the company’s position. Production on the new acreage is 850 BOEPD (71% light oil and NGLs) with a decline rate of approximately 20-22%.

The acquisition also included an 82% ownership in a central oil battery at Redwater which has capacity to handle 8 MBOPD of oil and 1.5 MMcf/d of natural gas.

 Tamarack Valley position in Wilson Creek as of year-end 2015

Daily production increases 36% over Q2 of 2015

Tamarack Valley announced that its average daily production through the second quarter of 2016 was roughly 9.5 MBOEPD (52% oil and NGLs), representing a 36% increase in production from the same period in 2015. First half 2016 production was approximately 9.6 MBOEPD (54% oil and NGLs), hitting the upper end of Tamarack’s guidance range of 9.1 to 9.6 MBOEPD and 27% higher than the first half of 2015.

Tamarack Valley credit facility revised but 2016 guidance remains the same

In its second quarter release, Tamarack announced that the company’s revolving credit facility was reduced 27% to $120 million from $165 million. Tamarack Valley said the new credit facility reflects “an appropriate amount of liquidity for the company given the current commodity price environment,” and allows it to save on G&A costs. TVE currently has $59 million drawn on its facility, representing roughly half of its new facility.

The facility covenants did not change and Tamarack continues to be compliant, the company added.

Despite the smaller credit facility, Tamarack Valley reaffirmed its increased 2016 guidance, saying that the acquisition closed today would allow it to improve returns through cost-cutting. TVE “anticipates a reduction in corporate operating costs of approximately $0.40-0.60/BOE by the end of 2016 due to the integration of the acquired infrastructure and ongoing cost-reduction initiatives.”

The increased capital program includes:

  • Capital expenditure budget of between $45-$53 million (excluding acquisitions) which enables Tamarack to continue investing within cash flow;
  • Average estimated 2016 annual production guidance of between 9.7-10 MBOEPD (approximately 53-57% oil and NGLs);
  • 2016 exit production rate of approximately 11 MBOEPD (approximately 53-57% oil and NGLs);
  • 2016 exit debt to annualized fourth quarter of 2016 funds from operations ratio of less than 0.8 times; and
  • Assumes: 2016 WTI average $44 – $47 per barrel, 2016 Edmonton par price average C$52 – C$56 per barrel, 2016 AECO average $1.80/GJ to $2.00/GJ, Canadian/US dollar exchange rate range of $0.77 to $0.78.

Tamarack Valley Energy will be presenting at EnerCom’s The Oil & Gas Conference® 21 in Denver on Tuesday, August 16, 2016. To learn more about the conference and its presenters, click here.

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