TAG Oil and Apache Corporation Conclude East Coast Basin Farmout Agreement
VANCOUVER, Jan. 31, 2013
VANCOUVER, Jan. 31, 2013 /PRNewswire/ - TAG Oil Ltd. (TSX: TAO and OTCQX:
TAOIF) announced today that the Company's 100% owned New Zealand subsidiaries
have concluded an agreement with Apache New Zealand Corporation LDC, which
results in an early termination of the Farmout Agreement dated September 1,
2011. This agreement relates to exploration in Petroleum Exploration Permits
38348, 38349 and 50940 located in the East Coast Basin of New Zealand.
Main Highlights of the Agreement:
*Apache has paid TAG Oil a lump sum payment to satisfy its obligations
related to funding Phase 1 operations under the Farmout Agreement.
*TAG Oil will retain all assets developed under the Agreement, including
all seismic and technical work completed by the Joint Venture.
*TAG retains its 100% interest in the subject East Coast Basin permits,
including the Waitangi Hill shallow oil discovery.
TAG Oil CEO Garth Johnson commented, "Although we are disappointed that
Apache's shift in corporate strategy resulted in a refocusing of their
international holdings, we do understand that tough decisions sometimes need
to be made. TAG remains highly enthusiastic about the future of these
prospects: All the work completed to date as a result of our JV Phase 1
activities strengthens our beliefs in the potential of TAG Oil's East Coast
Basin holdings. We're also pleased to have full control back over the project
with funding in place."
TAG intends to utilize the lump sum payment received by Apache to fund the
drilling of up to four East Coast Basin wells as planned in the Apache-agreed
Phase 1 work program. These wells will test several high-impact play
objectives including the Waipawa and Whangai source rocks that have
independently been confirmed to be generating 50 degree API oil. Additionally,
these naturally fractured, high-quality source rocks are believed to be
widespread across TAG's acreage. Independent assessments have concluded that
there are approximately 14 billion barrels of undiscovered original oil in
place potential, within less than a fifth of TAG's total land holdings on the
Drilling of the first East Coast wells is expected to commence in late
March/April 2013, subject to receipt of the necessary consents from regional
government. TAG will utilize conventional vertical drilling techniques similar
to those used by TAG Oil over many years in its successful Taranaki Basin
Mr. Johnson concluded: "It was a pleasure to have had the opportunity to work
closely with Apache. Our work together provided important geotechnical and
operational related work, which has confirmed our belief in the major
potential of this project, and advanced it to drill-ready status. Furthermore,
TAG's cash flow and assets have grown dramatically since we first signed the
agreement with Apache. So the Company can now fund further drilling operations
and exploration activities from a place of strength and greater flexibility."
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 extensive 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 2,953,810 net acres of land in New Zealand.
In the East Coast Basin, TAG is pursuing 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.
It is equally likely that the actual remaining quantities recovered will be
greater or less than the best estimate. Undiscovered Oil Initially-In-Place
(equivalent to undiscovered resources) is that quantity of petroleum that is
estimated, on a given date, to be contained in accumulations yet to be
discovered. There is no certainty that any portion of the undiscovered
resources will be discovered or that, if discovered, it will be economically
viable or technically feasible to produce.
Exploration for hydrocarbons is a speculative venture necessarily involving
substantial risk. TAG's future success in exploiting and increasing its
current reserve base will depend on its ability to develop its current
properties and on its ability to discover and acquire properties or prospects
that are capable of commercial production. However, there is no assurance that
TAG's future exploration and development efforts will result in the discovery
or development of additional commercial accumulations of oil and natural gas.
In addition, even if further hydrocarbons are discovered, the costs of
extracting and delivering the hydrocarbons to market and variations in the
market price may render uneconomic any discovered deposit. Geological
conditions are variable and unpredictable. Even if production is commenced
from a well, the quantity of hydrocarbons produced inevitably will decline
over time, and production may be adversely affected or may have to be
terminated altogether if TAG encounters unforeseen geological conditions. TAG
is subject to uncertainties related to the proximity of any reserves that it
may discover to pipelines and processing facilities. It expects that its
operational costs will increase proportionally to the remoteness of, and any
restrictions on access to, the properties on which any such reserves may be
found. Adverse climatic conditions at such properties may also hinder TAG's
ability to carry on exploration or production activities continuously
throughout any given year.
The significant positive factors that are relevant to the resource estimate
*proven production in close proximity;
*proven commercial quality reservoirs in close proximity; and
*oil and gas shows while drilling wells nearby.
The significant negative factors that are relevant to the resource estimate
*tectonically complex geology could compromise seal potential; and
*seismic attribute mapping in the two deep liquids-rich gas plays can be
indicative but not certain in identifying proven resource.
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 be 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.
All estimates and statements that describe the Company's objectives, goals or
future plans 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, undiscovered original oil in place,
availability of adequate funding, volatility of commodity prices, imprecision
of reserve estimates, environmental risks, competition from other producers,
and changes in the regulatory and taxation environment. Actual results may
vary materially from the information provided in this release, and there is no
representation by TAG that the actual results realized in the future will be
the same in whole or in part as those presented herein.
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
SOURCE TAG Oil Ltd.
Dan Brown or Garth Johnson
TAG Oil Ltd., 1-604-682-6496
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