This project consists of 4 suspended oil wells and 1 water injection well. The plan is to re-enter the suspended oil wells sequentially and place them back on production. It is anticipated that the wells may produce 100 barrels of oil per day each. The first well would be re-entered and placed on production by the end of February 2015, and the next two wells in the next 2 months. Tanager has sold a 50% interest in this project for $400,000, which funds will cover the first well. The expected cost to Tanager for the next 2 wells is $1,200,000 and financing for this is expected to be in place by January 31, 2015. This Unit had original oil in place of over 11 million barrels, and has produced to date over 6 million barrels of oil.
The Unit was suspended in late 2006, and with the active water drive that exists, the reservoir pressure has been steadily increasing. A reservoir pressure survey in December 2014 shows that the active water drive has returned the reservoir to with 94% of the original pressure. It is expected that with the increased pressure the reservoir is now capable of producing a significant amount of the 6 million barrels of oil remaining in the reservoir. It should be noted that the Unit produced over 1500 barrels per day for several years when initially discovered and the reservoir was fully pressured. Business of the Corporation The corporation’s activities concentrate on the acquisition, exploration, development and production of petroleum and natural gas reserves in the Western Canadian Basin. Tanager’s goal is to achieve a portfolio of properties with a 75% petroleum and 25% natural gas combination. Initially this goal will be accomplished by acquiring producing properties or properties which were previously producing and which need work overs or recompletions. Enhanced oil recovery will also be investigated.
The working interests in the properties acquired will be commensurate with Tanager’s ability to finance these acquisitions. However, the highest possible interests will be sought. Tanager will be looking to operate its interests but will also look at non-operated properties that are beneficial to the Company. Core areas will be selected in which a concentrated effort can be placed. This should allow for better overall results than would be available if many different areas were pursued. When acquisitions are made, rationalization of the interests will be done to maintain this core area concept.
Financial Goals and Strategies
The basic philosophy of Tanager is to expand the assets of the corporation such that shareholders receive an increase in the value of their investment. To do this, growth is central to Tanager’s business plan. In order to grow efficiently and profitably, the continuous application of defined financial goals and strategies is needed. To this end, the following goals and strategies have been established.
Goals
- Add reserves at costs under $20.00 per barrel of oil equivalent (BOE)
- Maintain operating costs below $15.00 per BOE
- Maintain general and administrative costs under $10.00 per BOE
- Obtain before tax return in real terms of 15% on all invested capital
- Maintain an average annual before tax return on equity in real terms of 15% These goals consider that Tanager’s initial operations may be small, and therefore expenses relative to production will be higher than desired.
With continued growth through acquisition, exploration, development, and production optimization, these goals should improve measurably over the next two to three years. Strategies Utilize equity financing when warranted Limit long term debt to less than 2.5 times annual cash flow initially, reducing to less than 1.5 times longer term Keep a close watch on rates of return to ensure proper allocation of the capital available. Business Plan Tanager currently holds interests in mining claims in the Burchell Lake Area of the Thunder Bay Mining Division of Ontario These claims are in the Shebandowan Gold Trend.
Tanager’s current plan is to either sell these interests for cash, or for the commitment of a work plan to earn a percentage interest, the percentage dependent on the extent of the work plan. If sufficient funds become available, Tanager will look at further exploration on this property itself. The corporation’s main efforts will be focused on the petroleum and natural gas sector. In this regard, its growth will be the identification and signing of letters of intent for the acquisition of producing oil and gas properties valued at up to $25,000,000. This is likely to be a series of properties, rather than on single property, unless such a purchase is warranted. These purchases will be made utilizing a combination of debt and equity financing to best suit the Corporation’s objectives. It is conceivable that this will take some time, given today’s difficult market for junior oil and gas companies. The Corporation will use consultants and in-house board members to provide the geological and geophysical expertise needed to minimize overhead and maximize areal expertise.
Once these projects are acquired and development drilling completed on the lands, the next phase in Tanager’s development will be to include exploration projects developed from geological studies on lands acquired at Alberta and Saskatchewan Crown Land Sales. The desired end result for Tanager will be carefully and considered but steady growth both by exploration and acquisition. By following this plan the Corporation should be a significant resource company within the next 3 to 5 years, with a production base of at least 500 barrels per day in 12 months, and 3000 barrel per day in the next 3 years.
Tanager Energy Inc. December 2014 Tanager Energy Inc. is a Canadian-based corporation whose common shares are traded on the TSX Venture Exchange (TSX-V) under the symbol “TAN”.
Current Program Tanager holds a 50% working interest in the former Joffre D-3 Oil Unit No 1 and is the operator.