TAG Oil Targets Unconventional Discoveries with First Oil and Gas Exploration
Well in New Zealand's East Coast Basin
VANCOUVER, April 22, 2013
VANCOUVER, April 22, 2013 /PRNewswire/ - TAG Oil Ltd. (TSX: TAO) and (OTCQX:
TAOIF), is pleased to announce that drilling of the Ngapaeruru-1 exploration
well is now underway in TAG's 100% controlled Petroleum Exploration Permit
38349, located in the East Coast Basin of New Zealand. The Ngapaeruru-1
exploration well, spudded at 4:30am on April 22^nd, 2013 is targeting the
Waipawa Black Shale and Whangai source rock formations at an anticipated depth
of 1,800 meters, and will test the unconventional discovery potential in this
portion of the Basin.
The Waipawa Black Shale and Whangai formations are high-quality source rock
formations present throughout most of TAG's million-acre East Coast Basin land
holdings. These oil-and gas-rich source rocks are comparable in total organic
carbon content and oil and gas maturity levels to successful tight oil and gas
plays such as North Dakota's Bakken shale in the prolific Williston Basin.
Garth Johnson, TAG Oil's CEO commented, "Our strategy has always been to build
reserves, production infrastructure, and cash flow from our lower risk
conventional assets, leveraging these successes to intelligently pursue
high-impact opportunities such as the East Coast Basin. With TAG's continued
success in the Taranaki Basin - and our successful commercialization of these
discoveries - we continue to deliver on the first part of this plan. Drilling
Ngapaeruru-1 is another step in delivering on our business plan: pursuing
these higher risk, higher impact exploration wells from a very strong
Live oil recovered from shallow wells drilled by TAG in 2011, as well as oil
sampled from seeps in the East Coast Basin, confirm that the source of the
high-quality oil was generated from the Waipawa Black Shale and Whangai
formations. Extensive geotechnical work on TAG's East Coast acreage, including
proprietary 2D and 3D seismic, have confirmed that the source rock parameters
in TAG's East Coast Basin play compare favorably to commercial unconventional
plays throughout the world.
In addition, TAG's East Coast Basin play has particular features that provide
encouragement in regard to prospectivity of this unconventional exploration
1.The source rocks are up to 600 meters thick in some areas;
2.The source rocks are naturally fractured;
3.The oil confirmed as coming from the source rocks, is 50 degree API;
4.The East Coast Basin is over-pressured at depth, confirming a competent
seal situated above the source rocks.
These parameters were also considered in an independent report that estimated
potential undiscovered oil initially-in-place amounting to 14 billion barrels,
calculated on just 20% of TAG's East Coast Basin acreage that is believed to
be prospective for unconventional discovery. TAG Oil was the first company to
identify the unconventional play in the East Coast Basin, and therefore
selected the acreage where the Company believed it to be the most prospective
for unconventional exploration. TAG's acreage is where both the Waipawa Black
Shale and Whangai source rocks are the most widespread, thickly developed, and
reachable at depths that offer the best chance for commercial feasibility.
Mr. Johnson continued: "Given this very significant potential, we're pleased
to have 100% control over the project, with a substantial portion of
exploration costs to date funded by our previous joint venture partner. While
their shift in corporate strategy resulted in a refocusing of their
international holdings, our work together validated and confirmed the major
exploration potential of these lands. As a result, Ngapaeruru-1 is the first
of several exploration wells directly testing these unconventional targets."
For further information on TAG's unconventional source rock targets please
TAG Oil COO Drew Cadenhead commented, "Since this is the first well directly
targeting the Waipawa Black Shale and Whangai source rocks in the East Coast
Basin, the Company has planned operations to obtain the maximum amount of data
to guide future exploration activities. This includes specialized electric log
data and other unconventional source rock analysis data. TAG has been working
up to this for about six years, and we're excited to finally be here. While we
know drilling conditions can be tricky in this over-pressured Basin, our
drilling department is well prepared to complete these operations safely and
with minimal impact to the environment."
TAG is using Webster Drilling's Nova #1 Drilling Rig, which was mobilized from
the Company's Sidewinder gas and oil field in the Taranaki Basin, after
drilling another successful step-out well, Sidewinder-A7, which will soon be
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 2,984,171 net acres of land in New Zealand.
In the East Coast Basin, TAG will 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.
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, production rates, optimization, infrastructure
capacity and or future plans with respect to the drilling in the East Coast
Basin 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 and
production, geological risks, marketing and transportation, the risk
associated with estimating undiscovered original initially-in-place described
above, 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 Oil 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 change.
SOURCE TAG Oil Ltd.
Dan Brown or Garth Johnson
TAG Oil Ltd., 1-604-682-6496
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