TAG Oil Ends Year With Record Production and Revenue

VANCOUVER, June 30, 2014 /CNW/ - 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 http://www.tagoil.com/. 
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." 

    --  TAG had $55,836,009 in working capital at fiscal year-end with
        no debt and 64,006,452 common shares outstanding.
    --  Oil and gas revenue increased by 29% to $57.6 million compared
        with $44.6 million in fiscal year 2013.
    --  Record 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.
    --  Net 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.
    --  Revenue 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 Resources Ltd.
    --  Operating 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.
    --  With 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.
    --  TAG'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 Valuation          $45,651,000          $37,211,000          $48,598,000
    ------------------------------------------------          -----------          -----------          -----------
                  Estimates of reserves
                   were prepared by
                   Sproule, a qualified
                   reserves evaluator in
                   accordance with NI
                   51-101 and the COGE
                   Handbook, with
                   effective dates of
                   March 31, 2012, March
                   31, 2013, and March
    (1)            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.

                                                2014              2013
                                                ----              ----
    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

    Fiscal year                                  2014          2013   Year ended March 31
    -----------                                  ----          ----   -------------------
                                      Q4              Q3             Q4                          2014           2013
                                      ---             ---           ---                          ----           ----
    Daily production volumes(1)
    Oil (bbls/d)                                1,072         1,069                      1,013     1,107            959
    Natural gas (BOE/d)                           414           458                        678       761            797
    -------------------                           ---           ---                        ---       ---            ---
    Combined (BOE/d)                            1,486         1,527                      1,691     1,868          1,756
    Daily sales volumes(1)
    Oil (bbls/d)                                1,081         1,061                      1,007     1,107            957
    Natural gas (BOE/d)                           279           351                        436       632            548
    -------------------                           ---           ---                        ---       ---            ---
    Combined (BOE/d)                            1,360         1,412                      1,443     1,739          1,505
    Natural Gas (Mmcf/d)                        1,674         2,106                      2,618     3,792          3,287
    Product pricing
    Oil ($/bbl)                                122.76        112.74                     116.59    113.43         110.87
    Natural gas ($/Mcf)                          6.34          5.43                       4.94      5.49           4.63
    -------------------                          ----          ----                       ----      ----           ----

Total revenue - gross                 $14,024,675   $12,939,442                $12,297,777    $57,546,899    
Less other revenue - gross(3)         (1,128,773)    (881,134)                 (304,634)   (3,992,429)      
----------------------------           ----------      --------                   --------    ----------       -----
Oil and natural gas revenue - 
 gross                                $12,895,902   $12,058,308                $11,993,143    $53,554,470    
Oil and natural gas royalties(2)      (1,276,615)  (1,398,536)               (1,376,561)   (5,781,663)    
-------------------------------        ----------    ----------                 ----------    ----------     -------
Oil and natural gas Revenue - net     $11,619,287   $10,659,772                $10,616,582    $47,772,807    
---------------------------------     -----------   -----------                -----------    -----------    -------

    (1)             Natural gas
                    production converted
                    at 6 Mcf:1BOE (for
                    BOE figures).
                   Includes a 7.5%
                    royalty related to
                    the acquisition of a
                    69.5% interest in
    (2)             the Cheal field.
    (3)             Other revenue is
                    electricity revenue
                    related to OHL.


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
     Canterbury Basin.


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.

Analogous Information:

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 
land holdings.

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 
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 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.

Dan Brown or Garth Johnson, Phone: 1-604-682-6496, Email: info@tagoil.com, 
Website: http://www.tagoil.com/, Blog: http://blog.tagoil.com/ 
To view this news release in HTML formatting, please use the following URL: 
CO: TAG Oil Ltd.
ST: British Columbia
-0- Jun/30/2014 23:08 GMT
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