TAG Oil Ends Year With Record Production and Revenue
VANCOUVER, June 30, 2014
VANCOUVER, June 30, 2014 /PRNewswire/ -TAG Oil Ltd. (TSX: TAO) and (OTCQX:
TAOIF), reports the Company has filed its audited consolidated financial
statements, management discussion and analysis, annual information form and
information pursuant to the requirements of National Instrument 51-101 –
Standards for Disclosure of Oil and Gas Activities with the Canadian
Securities Administrators relating to reserves data and other oil and gas
information for the Company's March 31, 2014 fiscal year-end. Copies of these
documents can be obtained electronically at http://www.sedar.com. For
additional information, please visit TAG Oil's website at
Garth Johnson, TAG Oil's CEO commented, "We are all proud of our successful
year achieving record cash flow provided from our producing assets and adding
a new oil discovery and development area at Greater Cheal. This coming year's
$60 million capital program is sure to be exciting for us all, which includes
low risk development drilling to maintain and exceed current production,
combined with high-impact exploration drilling, providing near term catalysts
to capture new reserves. Our major infrastructure investment in the previous
year — and maintaining 100% ownership of all these production facilities and
associated pipeline infrastructure in the Taranaki Basin on the TAG-operated
Cheal, Cardiff and Sidewinder oil and gas fields — is paying off, by ensuring
we can commercialize all discoveries and developments expeditiously allowing
TAG to capitalize on the high netback production being achieved."
FY2014 TAG OIL HIGHLIGHTS
oTAG had $55,836,009 in working capital at fiscal year-end with no debt and
64,006,452 common shares outstanding.
oOil and gas revenue increased by 29% to $57.6 million compared with $44.6
million in fiscal year 2013.
oRecord volume of annual production achieved in FY2014 of 681,615 BOE (75%
oil) with average gross daily production increasing by 15% for the fiscal
year to 2,027 BOE/d compared with 1,756 BOE/d in fiscal year 2013. Average
net daily production increased by 6% to 1,868 BOE/d compared with 1,756
BOE/d in 2013.
oNet income before taxes increased by 190% for the fiscal year to $14.7
million compared with $5.1 million in fiscal year 2013, driven primarily
by a 15% increase in oil production.
oRevenue from oil sales increased 18% to $45.8 million compared with $38.7
million due to increased oil production (15%) and pricing (3%). Revenue
from gas sales increased 38% to $7.7 million compared with $5.6 million
due to the ability to process and sell previously flared Cheal gas
volumes. Revenue generated from electricity sales contributed $3.9 million
compared with $0.3 million due to TAG's 49% ownership of Coronado
oOperating Netbacks increased by 24% to $59.63 per BOE compared with $48.11
per BOE in fiscal year 2013. The increase is mainly due to a 22% increase
in revenue per BOE to $84.36 per BOE compared with $69.07 per BOE as a
result of a greater proportion of revenue from increasing oil sales.
oWith an effective date of March 31, 2014, Sproule International Limited, a
qualified reserves evaluator in accordance with NI 51-101 and the COGE
Handbook, assigned 1p, 2p and 3p reserves of 1,973,000 BOE (93% oil),
5,898,000 BOE (94% oil) and 8,105,000 BOE (91% oil), respectively.
oTAG's 2P reserve value is estimated at $2.97 per share based on a net
present value of proved plus probable reserves at March 31, 2014 at a 10%
discount before taxes, divided by issued and outstanding shares at March
31, 2014 (Note 1).
FY2014 YEAR-END RESERVES
The focus of FY2014 was step out drilling into neighboring unproven acreage in
three new Taranaki Permits awarded in the 2012 New Zealand Blocks Offer,
referred to as the Greater Cheal Permits. As a result, TAG did not drill any
development wells within its proved reserve areas at Cheal or Sidewinder this
fiscal year, and therefore did not add new reserves in the Company's
traditional reserve growth area. However, a total of ten step out wells were
drilled in the Greater Cheal permits during the 2014 fiscal year and into the
early part of the 2015 fiscal year. Production resulting from this step out
drilling program began in November of 2013 and the successful wells have
produced approximately 120,000 barrels of oil as well as solution gas from
start-up to June 30, 2014, adding approximately 893,000 BOE of new reserves
(625,000 net to TAG). This new discovery area production has been consistent
and during Q1 of FY2015 has continued at a gross production rate of
approximately 600 bbls of oil per day (420 bbls net) plus solution gas.
Importantly, this drilling success has translated into several new, highly
promising, development drilling locations on TAG's 100%-controlled acreage.
3 Year 2p Reserve Reconciliation(1) FY2012 FY2013 FY2014
Opening Reserves 1,912,000 6,624,000 6,112,000
Annual Production (489,878) (641,142) (681,615)
Net Additional Reserves From Drilling 5,201,878 129,142 467,615
Closing 2P Reserves 6,624,000 6,112,000 5,898,000
Year End Valuation (NPV10%) $207,867,000 $205,521,000 $190,535,000
Future Capital Expenditure Included in $45,651,000 $37,211,000 $48,598,000
Estimates of reserves were prepared by Sproule, a qualified reserves
(1) evaluator in accordance with NI 51-101 and the COGE Handbook, with
effective dates of March 31, 2012, March 31, 2013, and March 31, 2014.
Going forward into FY2015, TAG will return to its focus of development
drilling within the proved Cheal (TAG-100%) field as well as the newly
discovered Greater Cheal area, with the goal of building additional oil
reserves and further exploiting the oil discovery potential in this lightly
explored acreage. At the Sidewinder field, two new step-out wells will target
the oil potential identified in this lightly explored acreage. This oil
discovery potential is supported by 3D seismic data coverage, consistent oil
shows in multiple zones intercepted in the Sidewinder gas wells drilled and
placed onto production in 2011/12, and the significant oil that has been
discovered in the neighboring successful Ngatoro field, which has been
producing high netback oil for more than 25 years.
Other new resources targeted during the coming year, which could significantly
impact proved reserves, includes establishing production from the
gas/condensate zones intercepted in the deep Cardiff-3 well (TAG-100%) and at
least two East Coast Basin unconventional exploration wells, Waitangi Valley-1
and Boar Hill-1 (TAG-100%). Both the Waitangi Valley-1 and Boar Hill-1 wells
are identified to have major discovery potential and are the top priority
drilling locations identified in the joint venture work conducted by Apache
Corporation and TAG Oil.
FINANCIAL RESULTS SUMMARY
Production revenue $ 57,546,899 $44,591,201
Net income prior to stock-based compensation 16,779,473 10,694,371
Net income before taxes 14,731,055 5,073,359
Net income for the year after taxes 7,682,708 5,073,359
Comprehensive income for the year 28,912,667 9,596,351
Earnings per share 0.13 0.09
Working capital 55,836,009 68,073,376
Total assets 278,660,659 215,883,701
Long term debt - -
Shareholder's equity $249,168,299 $ 191,693,597
OIL AND NATURAL GAS PRODUCTION PRICING AND REVENUE
Fiscal year 2014 2013 Year ended March 31
Q4 Q3 Q4 2014 2013
Oil (bbls/d) 1,072 1,069 1,013 1,107 959
Natural gas 414 458 678 761 797
Combined (BOE/d) 1,486 1,527 1,691 1,868 1,756
Oil (bbls/d) 1,081 1,061 1,007 1,107 957
Natural gas 279 351 436 632 548
Combined (BOE/d) 1,360 1,412 1,443 1,739 1,505
Natural Gas 1,674 2,106 2,618 3,792 3,287
Oil ($/bbl) 122.76 112.74 116.59 113.43 110.87
Natural gas 6.34 5.43 4.94 5.49 4.63
Total revenue – $14,024,675 $12,939,442 $12,297,777 $57,546,899 $44,591,201
Less other revenue (1,128,773) (881,134) (304,634) (3,992,429) (304,634)
Oil and natural
gas revenue – $12,895,902 $12,058,308 $11,993,143 $53,554,470 $44,286,201
Oil and natural (1,276,615) (1,398,536) (1,376,561) (5,781,663) (5,036,005)
Oil and natural $11,619,287 $10,659,772 $10,616,582 $47,772,807 $39,250,562
gas Revenue – net
(1) Natural gas production converted at 6 Mcf:1BOE (for BOE figures).
(2) Includes a 7.5% royalty related to the acquisition of a 69.5% interest
in the Cheal field.
(3) Other revenue is electricity revenue related to OHL.
OUTLOOK FOR FISCAL YEAR 2015
As announced in May 2014, TAG's capital budget for fiscal year 2015 is CDN$60
million; fully funded by forecasted cash flow and working capital on hand.
TAG's goal for the coming fiscal year capital program is to create value and
upside from five play areas:
1.Maintain and grow baseline reserves, production, and cashflow in Taranaki
via low-risk development drilling;
2.Unlock the major resource potential by confirming the commerciality of the
East Coast Basin's unconventional fractured source rocks;
3.Establish production and reserves from the Cardiff-3 well within the deep
Kapuni Formation in Taranaki;
4.Prepare to drill a shallow water offshore Kaheru Prospect (TAG-40%) in
Taranaki in mid-2015; and
5.Define a new frontier shallow onshore oil exploration play in the
GUIDANCE FOR FISCAL YEAR 2015
As previously announced on May 7, 2014, TAG continues to hold estimates for
fiscal year 2015 cash flow from operations to be approximately $40 million,
with production averaging approximately 2,000 barrels of oil equivalent per
day (80% oil). This guidance is based only on TAG's shallow development
drilling in proven areas and existing production. This guidance assumes
initial production rates from the development wells of 150 bbls of oil + 50
BOE/d of gas in seven new shallow Taranaki wells to be drilled in FY 2015.
This guidance also estimates commodity prices of US$106.00 per bbl based on
Brent pricing and US$5.40 per mcf for natural gas. An exchange rate of
CDN$1.10 to US$1.00 and CDN$0.935 to NZ$1.00 is also assumed.
TAG's current average daily gross production is approximately 1,970 BOE/d per
day (1,750 BOE/d net to TAG) with 75% of the production being oil. It is
expected that current production levels can be maintained during the year,
based on established decline rates offset by the Company's intended 2015
shallow Taranaki development drilling program. At the present time, TAG has
identified 50 shallow step-out and development drilling locations on the
Company's Taranaki acreage, which is a five year inventory based on the
current pace of drilling.
About 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 significant organic value creation
through exploration success and ongoing development and appraisal drilling of
several light oil and gas discoveries. As New Zealand's leading explorer, TAG
actively drills high-impact conventional and unconventional exploration
prospects identified in the Taranaki, East Coast and Canterbury Basins that
covers 2.8 million net acres of land, prospective for major discovery in New
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.
Certain information in this release may constitute "analogous information" as
defined in NI 51-101, including, but not limited to, information relating to
the areas in geographical proximity to the lands held by TAG. Such information
is derived from a variety of publicly available information from government
sources, regulatory agencies, public databases or other industry participants
(as at the date stated therein) that TAG believes are predominantly
independent in nature. TAG believes this information is relevant as it helps
to define the reservoir characteristics in which TAG may hold an interest. TAG
is unable to confirm that the analogous information was prepared by a
qualified reserves evaluator or auditor or in accordance with the COGE
Handbook. Such information is not an estimate of the reserves or resources
attributable to lands held or to be held by TAG and there is no certainty that
the reservoir data and economics information for the lands held by TAG will be
similar to the information presented therein. The reader is cautioned that the
data relied upon by TAG may be in error and/or may not be analogous to TAG's
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 growth in baseline reserves, future guidance on production and
cashflow, expected results of development drilling, resource potential, new
production and discoveries and other objectives, goals, production rates, test
rates, hydraulic fracture operations, optimization, infrastructure capacity,
timing of operations, work-over results, and or future plans with respect to
the drilling at TAG's various permits 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 and
production, geological risks, marketing and transportation, availability of
adequate funding, volatility of commodity prices, 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 would be the same in whole or in part as those
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 NI 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.
Contact: Dan Brown or Garth Johnson, Phone: 1-604-682-6496, Email:
firstname.lastname@example.org, Website: http://www.tagoil.com/, Blog:
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