TAG Awarded Taranaki Exploration Acreage & Provides a Production and
VANCOUVER, Dec. 11, 2012
VANCOUVER, Dec. 11, 2012 /PRNewswire/ - TAG Oil Ltd. (TSX: TAO and OTCQX:
TAOIF), announces that New Zealand Petroleum and Minerals has awarded TAG Oil
Ltd. four onshore exploration blocks offered in New Zealand's 2012 Block
Offer. The permits awarded have been assigned the Petroleum Exploration Permit
(PEP) numbers 54873, 54876, 54877, 54879 and are all located in the Taranaki
Basin, New Zealand.
Key attributes to these awards are:
*37,253 additional gross acres in the main Taranaki oil and gas discovery
*Extensive TAG controlled proprietary 3D seismic coverage over three of the
four new permits;
*PEP's 54876, 54877, and 54879 initially add at least 10 shallow, low-risk
drilling prospects plus numerous leads identified on 3D seismic in close
proximity to the producing Cheal oil field;
*Joint venture created with East West Petroleum Ltd.; TAG will operate the
permits and East West will fund four wells within PEP 54876, 54877 and
54879 in 2013 earning East West a 50% interest in PEP 54876 and PEP 54879
and a 30% interest in PEP 54877.
*PEP 54873 (100% TAG) provides several shallow drilling leads along with
significant exploration upside via a drill-ready deep gas and condensate
prospect that has similar geological features to the adjacent 1.3 TCF
Kapuni gas/condensate field;
*Economically robust commercial potential: any new discoveries arising from
drilling in these new blocks will be cost-effectively tied into to TAG's
expanded Cheal Production Station without delay.
TAG CEO Garth Johnson commented, "We are very pleased that New Zealand
Petroleum & Minerals has awarded TAG this additional acreage that is
complimentary to our current Taranaki operations. Our new oil and gas
production facility expansion and associated pipelines in this area unencumber
all production, transportation and marketing of TAG's oil and gas, including
any new discoveries from these newly awarded lands. We are also pleased to
have established a joint venture with East West Petroleum according to a
joint-bidding agreement entered into by our companies prior to making
application in the 2012 Block Offer."
TAG's Infrastructure Expansion On Track
TAG's $30 million infrastructure expansion investment continues to proceed on
schedule to meet the March 31, 2013 anticipated completion date. At that time,
the Company expects all current shut in discovery wells can be tied into TAG's
100% controlled facility, and daily production will exceed 5,000 barrels of
oil equivalent per day as forecasted.
TAG has amended its production timeline for the next two fiscal quarters after
making a decision to conserve natural gas and minimize flaring during the
Cheal infrastructure upgrade. In this regard, TAG will maintain its production
at approximately 2,000 BOE per day until the infrastructure expansion is
"We initially anticipated phasing in shut-in production over the next few
fiscal periods; however, after considering a number of factors, the long term
benefits of conserving in situ reservoir energy until our gas infrastructure
is complete far outweigh the optics of short term production increases," Mr.
Johnson commented."Our shut-in wells have all been production tested and we
remain confident of meeting or exceeding our production guidance of 5,000 BOE
per day. We also look forward to investing the associated cash flow into more
exciting high-impact exploration and development drilling opportunities in
2013 across a significant prospect portfolio."
An Update on Cheal-B8 Drilling
The Cheal-B8 well has reached a total depth of 3,600 meters encountering 26
meters of high quality oil-and-gas pay within the initial 2,000 meters of the
well. TAG will mobilize a service rig to Cheal-B8 in the next two weeks to
perforate and production test the well.
Following the logging and casing of the up-hole oil discovery, the Cheal-B8
well was deepened a further 1600 meters to test a wildcat target in the
Tikorangi Formation, however electric logging did not indicate sufficient pay
present at this depth. This result does in no way effect the potential in the
deeper Kapuni Formation targets TAG will be drilling, which is a well
established, commercially proven play level with numerous major fields
discovered in the Taranaki Basin.
The Cheal-B8 well is TAG's 20^th straight successful oil and gas well drilled
in the Taranaki Basin.
TAG Oil Ltd.
TAG Oil Ltd. (http://www.tagoil.com/) is a Canadian-based production and
exploration company with operations focused exclusively in New Zealand. With
100% ownership over all its core assets, including oil and gas production
infrastructure, TAG is enjoying substantial oil and gas production and reserve
growth through development of several light oil and gas discoveries. TAG is
also actively drilling high-impact exploration prospects identified across
more than 2,991,063 net acres of land in New Zealand.
In the East Coast Basin, TAG has entered into a farm-out agreement with Apache
Corporation to explore and potentially develop the major unconventional
resource potential believed to exist in the tight oil source-rock formations
that are widespread over the Company's acreage. These oil-rich and naturally
fractured formations have many similarities to North America's Bakken
source-rock formation in the successful Williston Basin.
TAG Oil has adopted the standard of six thousand cubic feet of gas to equal
one barrel of oil when converting natural gas to "BOE's". BOEs may be
misleading, particularly if used in isolation. A BOE conversion ratio of 6Mcf:
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.
Cautionary Note Regarding Forward-Looking Statements:
Statements contained in this news release that are not historical facts are
forward-looking statements that involve various risks and uncertainty
affecting the business of TAG. Such statements can generally, but not always,
identified by words such as "expects", "plans", "anticipates", "intends",
"estimates", "forecasts", "schedules", "prepares", "potential" and similar
expressions, or that events or conditions "will", "would", "may", "could" or
"should" occur. These statements are based on certain factors and assumptions
A. All estimates and statements that describe the Company's objectives, goals,
production rates, infrastructure capacity and or future plans relating to the
seismic, testing, work over and drilling programs in Taranaki are
forward-looking statements under applicable securities laws and necessarily
involve risks and uncertainties including, without limitation: risks
associated with oil and gas exploration, development, exploitation,
production, marketing and transportation, volatility of commodity prices,
imprecision of reserve estimates, environmental risks, competition from other
producers, and changes in the regulatory and taxation environment. These
forward-looking statements are based on certain factors and assumptions,
including factors and assumptions regarding the management's views on the oil
and gas potential in the Permits, well performance, the success of any
operations, completing infrastructure and the costs necessary to complete the
B. Those relating to TAG Oil's exploration and development of its oil and gas
properties within the Cheal and Sidewinder project areas, the production and
establishment of additional production of oil and gas in accordance with TAG
Oil's expectations at Cheal and Sidewinder, well performance, drilling the
completion of new infrastructure at Cheal and Sidewinder, the increase of cash
flow from new production, expected growth, results of operations, performance,
prospects, evaluations and opportunities. While TAG Oil considers these
factors and assumptions to be reasonable based on information currently
available, they may prove to be incorrect. Actual results may vary materially
from the information provided in this release, and there is no representation
by TAG Oil that the actual results realized in the future will be the same in
whole or in part as those presented herein.
TAG Oil is involved in the exploration for and production of hydrocarbons, and
its property holdings with the exception of the Cheal and Sidewinder project
areas are in the grass roots or primary exploration stage. Exploration for
hydrocarbons is a speculative venture necessarily involving substantial risk.
There is no certainty that the expenditures incurred on TAG Oil's exploration
properties will result in discoveries of commercial quantities of
hydrocarbons. TAG Oil's future success in exploiting and increasing its
current reserve base will depend on TAG Oil's ability to develop its current
properties and on its ability to discover and acquire properties or prospects
that are producing. There is no assurance that TAG Oil's future exploration
and development efforts will result in the discovery or development of
additional commercial accumulations of oil and natural gas.
Other factors that could cause actual results to differ from those contained
in the forward-looking statements are also set forth in filings that TAG and
its independent evaluator have made, including TAG's most recently filed
reports in Canada under National Instrument 51-101, which can be found under
TAG's SEDAR profile at www.sedar.com.
TAG undertakes no obligation, except as otherwise required by law, to update
these forward-looking statements in the event that management's beliefs,
estimates or opinions, or other factors change.
SOURCE TAG Oil Ltd.
Dan Brown or Garth Johnson
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