TAG Oil Reports 2013 Fiscal Year End Financial Results and 2014 Drilling
VANCOUVER, June 28, 2013
VANCOUVER, June 28, 2013 /PRNewswire/ - TAG Oil Ltd. (TSX: TAO) and (OTCQX:
TAOIF), reports the Company has filed its consolidated, audited financial
statements, management discussion and analysis and annual information form
with the Canadian Securities Administrators for the Company's March 31, 2013
fiscal year-end. Copies of these documents can be obtained electronically at
http://www.sedar.com, or for additional information please visit TAG Oil's
website at http://www.tagoil.com/.
Poised for Many Years of Growth
During FY2012 and 2013, TAG Oil conducted an extensive Taranaki drilling
campaign consisting of wells averaging approximately 2,000 meters depth,
commonly referred to as TAG's shallow drilling program. This program, which
targeted the Urenui and Mt. Messenger formations within the Company's 100%
owned Cheal and Sidewinder fields, now provides TAG with ongoing high netback
production and steady cash flow.
Decline rates from new wells tied in are now stable and in line with other
typical Cheal wells on long term production. Some wells from the drilling
campaign came onstream with record flow rates, however did not maintain these
high rates and declined to production levels in line with other profitable
wells in the field. The resulting long-term cash flow has positioned TAG to
execute the Company's most diverse and active drilling campaign in the
Company's history, including high-impact drilling in the East Coast Basin,
while maintaining a very strong debt free balance sheet. Furthermore, control
of extensive Taranaki production and delivery infrastructure ensures rapid
commerciality of new wells.
FY2013 TAG Oil Highlights
*At March 31, 2013, the Company had cash of $68.9 million, working capital
of $68.1 million and no debt.
*Daily average production increased 23% for the year, from 1,433 BOE to
*Income of $10.69 million was recorded for fiscal 2013 before the deduction
of non-cash share-based compensation, and production revenue increased 4%
to $44.59 million.
*Operations generated $34.21 million in cashflow, compared to $15.56
million in 2012.
*Total production for the year was 641,142 BOE's.
*Sproule International assigned 1p, 2p and 3p reserves of 2,216,000 BOE
(85% oil), 6,112,000 BOE (88% oil) and 8,268,000 BOE (86% oil),
*Successfully drilled, completed and placed on permanent production at the
Cheal field: Cheal-A11, Cheal-A12 and Cheal-B8 wells.
*Successfully drilled, completed and placed on permanent production at the
Sidewinder field: Sidewinder-A5 and Sidewinder-A6, and drilled the
*Successfully drilled and cased the Ngapaeruru-1 well and encountered
excellent mud gas shows indicating the presence of gas zones or soluble
gas in oil between the intervals within a 155m gross hydrocarbon column.
*Infrastructure expansion program completed by March 31, 2013 as planned,
allowing increased production capacity, processing of natural gas
including liquid stripping capabilities, and export of natural gas to the
open-access pipeline infrastructure.
*In May 2012, TAG closed a bought deal financing at $10.45 per share,
issuing 4,435,000 common shares for net proceeds of $43,365,746.
*The Company acquired a 90% interest in a New Zealand electricity
generation and retailing company, Opunake Hydro Limited ("OHL") through
the investment of approximately $5.0 million, with all funds being used to
acquire new gas-fired generation equipment to be located at the Company's
*Acquired 40% in Coronado Resources Ltd. (TSXV: CRD) and will acquire an
additional 10% of Coronado's common shares as a result of selling OHL. The
deal is subject to the terms and conditions of the Share Purchase
Agreement that has been executed by all parties involved.
*Acquired three New Zealand exploration permits in the East Coast and
Canterbury basins: PEP 52589, PEP 52676 and PEP 53674, comprised of
approximately two-million acres in favourable geological areas offering
high-impact exploration opportunities.
*Awarded four new onshore Taranaki exploration blocks in New Zealand's 2012
Block Offer adding at least 10 drilling prospects plus numerous leads
identified on 3D seismic in close proximity to TAG's producing Cheal oil
field. A Joint Venture created with East West Petroleum Ltd. on three of
the new permits carries TAG through $10 million in exploration costs while
Financial and Production Review
Production revenue $ 44,591,201 $ 42,908,655
Net income prior to share-based
compensation 10,694,371 18,924,540
Net income 5,073,359 12,376,019
Earnings per share 0.09 0.24
Working capital 68,073,376 65,371,541
Total assets 210,937,314 148,883,278
Long term debt - -
Shareholder's equity $ 191,190,601 $ 133,368,183
TAG currently has 59,344,052 common shares outstanding and 63,052,386 common
shares outstanding on a fully diluted basis.
Oil and Natural Gas Production, Pricing and Revenue
Three months ended March 31 Year ended March 31
2013 2012 2013 2012
Oil 1,013 1,405 959 918
Natural gas 678 752 797 515
Combined 1,691 2,157 1,756 1,433
Oil 1,007 1,407 957 925
Natural gas 436 496 548 413
Combined 1,443 1,903 1,505 1,338
Natural Gas 2,618 2,977 3,287 2,480
Oil ($/bbl) 116.59 119.54 110.87 115.57
Natural gas 4.94 4.48 4.63 4.16
Oil and natural $11,993,143 $16,701,663 $44,286,567 $42,908,655
gas revenue -
Other revenue - 304,634 - 304,634 -
Total revenue - 12,297,777 16,701,663 44,591,201 42,908,655
Oil and natural (1,376,561) (2,973,964) (5,036,005) (9,706,513)
Revenue - net $10,921,216 $13,727,699 $39,555,196 $33,202,142
(1) Natural gas production converted at 6 Mcf:1BOE (for BOE figures)
(2) Other revenue is electricity revenue related to OHL.
(3) Includes a 25% royalty related to the acquisition of a 69.5% interest in
the Cheal field that was reduced to 7.5% during the fourth quarter of
A summary of TAG's drilling program over the next 12 months:
Permit Number Well Name TAG # of Wells Target Depth
PEP 54877 Cheal D & E-Sites 70% 5 Miocene <2,500m
PEP 54876 Southern Cross 50% 1 Miocene <2,500m
PEP 54879 Cheal F & G-Sites 50% 3 Miocene <2,500m
PMP 38156 Cardiff 100% 1 Eocene > 4,000m
PEP 54873 Heatseeker 100% 1 Eocene > 4,000m
PEP 38348 Waitangi 100% 1 Unconventional
The program will consist of nine shallow Taranaki wells with permit interests
between 50% to 70%. The Company will apply what it has learned from the
extensive new drilling data acquired in the last three years to target the
low-risk step out prospects, and build the Company's net proved and probable
reserves of 6,112,000 BOE's (88% oil) estimated by Sproule as of March 31,
2013. The intention of this drilling program is to continue to exploit the
shallow play potential and further maximize the value of the Cheal and
Sidewinder fields which remain lightly explored.
Deep Gas and Condensate Program
TAG will step up its efforts in the Taranaki Basin to drill larger,
seismically defined, prospects which have the potential to materially bolster
the Company's long-term production and reserve growth profiles.
The Company will drill at least two of its 100% owned deep Kapuni
gas/condensate prospects in FY2014.
Cardiff and Heatseeker are scheduled to commence in the third quarter of
calendar 2013. A third prospect, the Hellfire deep prospect, may be drilled
contingent on the results of Cardiff and Heatseeker. These deep Eocene-aged
targets are materially larger in reserve size and deliverability potential
than what TAG has been targeting in the shallow Miocene formations. Drilling
of TAG's Kapuni prospects will use a large seismic database to target prospect
depths of approximately 3,500 to 4,000 meters. TAG's Kapuni targets are on
trend and similar to the large deep gas/condensate plays in Taranaki such as
the Kapuni Field that has produced 1.5 TCF and 65 mmbls of condensate to date
and 800 BCF Mangahewa field operated by Shell and Todd Petroleum.
In a report dated February 28, 2011, Sproule International Limited estimates
the gross undiscovered resource potential associated with TAG's Cardiff
Prospect as follows:
Resources Low Estimate Best Estimate High Estimate Mean
Category (p90) (p50) (p10)
Undiscovered Gas 137.3 214.5 341.4 230.7
Undiscovered 8 12.8 21.5 14
East Coast Basin Tight Oil
In April of 2013, the Company drilled and cased its first unconventional test
well, Ngapaeruru-1. The Ngapaeruru-1 well reached a total depth of 1,417
meters after successfully drilling through the Waipawa and Whangai source rock
formations, the main objective of the well. Initial results are very
encouraging with 155 meters of potential tight oil and gas pay. TAG cut and
recovered sidewall cores over 14 separate intervals within the 155 meters of
potential tight pay, sampled total organic content (TOC) and acquired in-situ
gas analysis at depth. Detailed petrophysical evaluation is now underway with
a full suite of unconventional logs to ascertain source rock quality, fracture
identification, geochemistry, and rock moduli data. This data will be used to
determine the most suitable completion method for production testing the
TAG plans to drill at least three more exploration wells in the East Coast
Basin over the next 18 months, to achieve the Company's goal of converting a
potentially major undiscovered unconventional resource into proven reserves.
After some encouraging early stage results, further resource potential is
being assessed after processing and interpreting 80km's of recently acquired
seismic data. TAG's new 2D seismic, acquired over leads initially identified
using geochemical surface data, has resulted in a clearly imaged subsurface,
resulting in four newly mapped features within the permit. TAG intends to
acquire additional seismic over these specific leads to confirm aerial extent
of the anomalies as well as closure prior to making a commitment to drill.
The Canterbury Basin is an underexplored oil and gas frontier that is
recognized to have major discovery potential. Large energy companies such as
US-based Anadarko Petroleum and Australian-based Origin Energy are exploring
the offshore region in the immediate vicinity to TAG's 1.17 million acres
Conference Call Information
TAG Oil will host a discussion of its 2014 forward program as well as fourth
quarter 2013 results conference call on Friday June 28, 2013 at 1:00 pm
Pacific Time. Please call in ten minutes before the conference call starts and
stay on the line (an operator will be available to assist you should you have
questions of management during the call). In addition, questions can be
forwarded by e-mail in advance to firstname.lastname@example.org.
Interested parties may access the conference call using the information below:
Date June 28^th, 2013
Time 1:00pm Pacific Time
Toll-Free Dial-in # 1-866-318-8614
Secondary Dial-in # 1-617-399-5133
Conference Passcode 51004241
E-mail questions to: email@example.com
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 is exploring the major unconventional resource
potential believed to exist in the 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 "BOEs". 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 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. These statements are based on certain factors and
A. All estimates and statements that describe the Company's objectives, goals,
production rates, optimization, infrastructure capacity and or future plans
relating to the seismic, testing, work over and drilling programs in the
Taranaki, Canterbury and East Coast Basins 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
TAG's permits, well performance, the success of any operations, completing
infrastructure and the costs necessary to complete the operations; and
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, optimization, 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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