CALGARY, March 23 /CNW/ - Tango Energy Inc. ("Tango": TSX Venture: TEI)
is pleased to report on its financial and operating results for the year ended
December 31, 2005.
During 2005, Tango successfully executed the fourth year of it's'
strategy of pursuing liquid rich gas reserves located west of the 5th meridian
in Alberta. During the year Tango participated in a total of 8 new wells, 3 of
which were re-entries and 5 new drills. Operations were conducted in Cecilia,
Hanlan, Ansell, Brazeau, and Blackstone which have resulted in additional land
acquisitions and new opportunities which will be further delineated during
2006. The Company has been successful in raising $17 million in additional
capital by issuing equity to investors over the last 12 months. Current
production exceeds 400 boepd, with additional volumes behind pipe awaiting tie
in over the next 6 months. Reserve additions have replaced production by 1300%
during 2005, at an all in finding and development cost of $16.63 per boe (on a
proven and probable basis, including future capital). The Company estimates
that net asset value, based upon independent engineering estimates of reserve
value discounted at 10% before tax, independent estimates of undeveloped land
value, and working capital as at December 31, 2005 is approximately $0.90 per
fully diluted share.
Exploration and development continues to focus on multi-zone Cretaceous
and Triassic gas targets in Tango's increasing inventory of opportunities in
the deeper parts of the Western Canadian Sedimentary Basin. Under Tango's
current plans, shareholders will also be exposed to at least two deeper
Devonian gas targets during the year which have large reserve and production
upside on currently owned lands.
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Financial Results
2005 2004
-------- -------
Gross revenues (m$) .................................. 4,027 1,258
Net income (loss) (m$) ............................... 366 (9)
Basic earnings per share ($) ......................... 0.01 0.00
Total assets (m$) .................................... 37,495 15,544
Working capital (m$) ................................. 7,234 (36)
For a more detailed discussion of Tango's financial results for the years
ended December 31, 2005 and 2004, see the Financial Statements and Management
Discussion and Analysis which has been filed on SEDAR.
Operating Results
Tango's operations in 2005 were conducted in West Pembina, Hanlan,
Ansell, and Cecilia. The Company participated in 8 wells which consisted of
3 re-entries and 5 new drills. New pool discoveries are in various stages of
evaluation and development, with additional drilling, land acquisitions, and
tie-in activity planned during 2006. Production has increased from an average
of 189 boepd during 2005, to in excess of 400 boepd as of April 2006.
Average
Production
-----------------
2005 2004
-------- -------
Natural gas volumes - mcf/day ........................ 1,020 437
Liquids volumes - barrels per day .................... 19 4
Equivalent Production boepd ((at)6:1) ................ 189 77
Note:
(1) Boe's may be misleading, particularly if used in isolation. In
accordance with NI 51-101, a boe conversion ratio of 6 mcf: 1 bbl is
based on an energy equivalency conversion method primarily applicable
at the burner tip and does not represent a value equivalency at the
wellhead.
Oil and Gas Reserves
Tango's proved plus probable natural gas reserves (net before royalty)
increased 120%, after production, to 1,723 mboes as at December 31, 2005. This
resulted in net reserve additions, after production, of 943 mboe. These net
reserve additions replaced in excess of 1300% of Tango's production volumes
during 2005. Finding and development costs, on a proven and probable basis,
including future capital were $16.63 per boe.
Tango's reserves for the year ended December 31, 2005 were evaluated by
Paddock Lindstrom & Associates Ltd. ("Paddock Lindstrom"), and were calculated
in accordance with National Instrument 51-101 ("NI 51-101").
The following tables provide information on Tango's oil and gas reserves
and the present value of the estimated future net cash flow associated with
such reserves as at December 31, 2005. 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 NI 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.
SUMMARY OF OIL AND GAS RESERVES
AND NET PRESENT VALUES OF FUTURE NET REVENUE
as of December 31, 2005
FORECAST PRICES AND COSTS
---------------------------------------------------------
RESERVES
---------------------------------------------------------
LIGHT AND NATURAL GAS
MEDIUM OIL NATURAL GAS LIQUIDS
------------------ ------------------- ------------------
RESERVES Gross Net Gross Net Gross Net
CATEGORY (Mbbl) (Mbbl) (MMcf) (MMcf) (Mbbl) (Mbbl)
-------------- -------- -------- -------- -------- -------- --------
PROVED
Developed
Producing - - 1,367 1,123 17 11
Developed
Non-Producing - - 3,124 2,611 57 41
Undeveloped - - - - - -
-------- --------- --------- --------- --------- --------
TOTAL PROVED - - 4,491 3,734 74 52
-------- --------- --------- --------- --------- --------
-------- --------- --------- --------- --------- --------
PROBABLE - - 4,906 3,981 81 56
-------- --------- --------- --------- --------- --------
TOTAL PROVED
PLUS PROBABLE - - 9,397 7,715 155 108
-------- --------- --------- --------- --------- --------
-------- --------- --------- --------- --------- --------
NET PRESENT VALUES OF FUTURE NET REVENUE
BEFORE INCOME TAXES DISCOUNTED AT
(%/year)
------------------------------------------------
0 5 10 15 20
RESERVES CATEGORY (M$) (M$) (M$) (M$) (M$)
--------- --------- --------- --------- --------
PROVED
Developed Producing 9,093 6,997 5,876 5,164 4,661
Developed
Non-Producing 17,373 12,762 9,965 8,081 6,722
Undeveloped - - - - -
--------- --------- --------- --------- --------
TOTAL PROVED 26,466 19,759 15,841 13,244 11,383
--------- --------- --------- --------- --------
--------- --------- --------- --------- --------
PROBABLE 25,560 15,102 10,259 7,439 5,589
--------- --------- --------- --------- --------
TOTAL PROVED PLUS
PROBABLE 52,026 34,861 26,100 20,683 16,972
--------- --------- --------- --------- --------
--------- --------- --------- --------- --------
AFTER INCOME TAXES DISCOUNTED AT
(%/year)
------------------------------------------------
0 5 10 15 20
RESERVES CATEGORY (M$) (M$) (M$) (M$) (M$)
--------- --------- --------- --------- --------
PROVED
Developed Producing 9,093 6,996 5,876 5,164 4,661
Developed
Non-Producing 12,223 9,067 7,075 5,704 4,702
Undeveloped - - - - -
--------- --------- --------- --------- --------
TOTAL PROVED 21,316 16,063 12,951 10,868 9,363
--------- --------- --------- --------- --------
--------- --------- --------- --------- --------
PROBABLE 17,269 10,035 6,637 4,641 3,326
--------- --------- --------- --------- --------
TOTAL PROVED PLUS
PROBABLE 38,585 26,098 19,588 15,509 12,689
--------- --------- --------- --------- --------
--------- --------- --------- --------- --------
The net present values of future net revenue presented above include the
Alberta Royalty Tax Credit.
SUMMARY OF PRICING AND INFLATION RATE ASSUMPTIONS
as of December 31, 2005
FORECAST PRICES AND COSTS
-------------------------------------------------------------------------
OIL
Cromer
Edmonton Hardisty Medium
WTI Par Price Heavy 29.0
Cushing 40 degrees 12 degrees degrees
Oklahoma API API API
Year ($US/bbl) ($Cdn/bbl) ($Cdn/bbl) ($Cdn/bbl)
------------------------- ----------- ----------- ----------- -----------
Forecast
2006 60.00 69.57 36.57 64.70
2007 57.50 66.61 38.61 61.94
2008 55.00 63.64 42.64 59.19
2009 52.50 60.68 39.68 56.43
2010 50.00 57.72 36.46 53.68
2011 47.50 54.76 33.23 50.92
2012 48.45 55.85 34.06 51.94
2013 49.42 56.97 34.90 52.98
2014 50.41 58.11 35.75 54.04
2015 51.42 59.27 36.63 55.12
2016 52.44 60.46 37.52 56.22
2017 53.49 61.66 38.43 57.35
2018 54.56 62.90 39.36 58.49
2019 55.65 64.16 40.31 59.66
2020 56.77 65.44 41.27 60.86
2021 57.90 66.75 42.26 62.08
2022 59.06 68.08 43.27 63.32
2023 60.24 69.44 44.29 64.58
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NATURAL Edmonton
GAS(1) Cond. & INFLATION EXCHANGE
AECO Gas Natural RATES RATE
Price Gasolines
Year ($Cdn/MMBTU) ($Cdn/bbl) %/Year ($US/Cdn)
------------------------- ----------- ----------- ----------- -----------
Forecast
2006 10.54 69.57 2.0 0.85
2007 9.52 66.61 2.0 0.85
2008 8.32 63.64 2.0 0.85
2009 7.71 60.68 2.0 0.85
2010 7.10 57.72 2.0 0.85
2011 7.24 54.76 2.0 0.85
2012 7.39 55.85 2.0 0.85
2013 7.53 56.97 2.0 0.85
2014 7.68 58.11 2.0 0.85
2015 7.84 59.27 2.0 0.85
2016 7.99 60.46 2.0 0.85
2017 8.15 61.66 2.0 0.85
2018 8.32 62.90 2.0 0.85
2019 8.48 64.16 2.0 0.85
2020 8.65 65.44 2.0 0.85
2021 8.83 66.75 2.0 0.85
2022 9.00 68.08 2.0 0.85
2023 9.18 69.44 2.0 0.85
Operating costs were escalated at a rate of 2.0% per year. The exchange
rate used for the US/Canadian dollar for 2005 was 0.85, for 2006 was 0.85, for
2007 was 0.85, and for 2008 and beyond was 0.85. The forecast prices presented
above utilize Paddock Lindstrom's price forecast as at December 31, 2005.
Additional reserve information as required under NI 51-101 will be
included in Tango's 51-101F1, 51-101F2 and 51-101F3 which will be filed on
SEDAR.
Outlook
Tango continues to pursue 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 growth 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, as record levels of activity are expected during 2006.
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release. This release
contains forward-looking information. By their nature, forward-looking
statements involve assumptions and known and unknown risks and uncertainties
that may cause actual future results to differ materially from those
contemplated. These risks include such things as volatility of oil and gas
prices, commodity supply and demand, fluctuations in currency and interest
rates, ultimate recoverability of reserves, timing and costs of drilling
activities and pipeline construction, new regulations and legislation and
availability of capital. Tango does not undertake to update any of such
forward-looking statements. Please refer to Tango's Annual Report for more
detail as to the nature of these risks and uncertainties. Although Tango
believes that the expectations represented by these forward looking statements
are reasonable, there can be no assurance that such expectations will prove to
be correct.
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