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."  FY2014 TAG OIL HIGHLIGHTS        --  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     ------------------------------------------------          -----------          -----------          -----------     Note:                   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.  FINANCIAL RESULTS SUMMARY                                                 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 $191,693,597  OIL AND NATURAL GAS PRODUCTION PRICING AND REVENUE     Fiscal year                                  2014          2013   Year ended March 31     -----------                                  ----          ----   -------------------                                       Q4              Q3             Q4                          2014           2013                                       ---             ---           ---                          ----           ----     Daily production volumes(1)     Oil (bbls/d)                                1,072         1,069                      1,013     1,107            959     Natural gas (BOE/d)                           414           458                        678       761            797     -------------------                           ---           ---                        ---       ---            ---     Combined (BOE/d)                            1,486         1,527                      1,691     1,868          1,756     Daily sales volumes(1)     Oil (bbls/d)                                1,081         1,061                      1,007     1,107            957     Natural gas (BOE/d)                           279           351                        436       632            548     -------------------                           ---           ---                        ---       ---            ---     Combined (BOE/d)                            1,360         1,412                      1,443     1,739          1,505     Natural Gas (Mmcf/d)                        1,674         2,106                      2,618     3,792          3,287     Product pricing     Oil ($/bbl)                                122.76        112.74                     116.59    113.43         110.87     Natural gas ($/Mcf)                          6.34          5.43                       4.94      5.49           4.63     -------------------                          ----          ----                       ----      ----           ----     Sales   Total revenue - gross                 $14,024,675   $12,939,442                $12,297,777    $57,546,899     $44,591,201  Less other revenue - gross(3)         (1,128,773)    (881,134)                 (304,634)   (3,992,429)       (304,634)  ----------------------------           ----------      --------                   --------    ----------       ----- ---  Oil and natural gas revenue -   gross                                $12,895,902   $12,058,308                $11,993,143    $53,554,470     $44,286,201  Oil and natural gas royalties(2)      (1,276,615)  (1,398,536)               (1,376,561)   (5,781,663)     (5,036,005)  -------------------------------        ----------    ----------                 ----------    ----------     ------- ---  Oil and natural gas Revenue - net     $11,619,287   $10,659,772                $10,616,582    $47,772,807     $39,250,562  ---------------------------------     -----------   -----------                -----------    -----------    ------- ----        (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.  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      Canterbury Basin.  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  Zealand.  BOEs:  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.    SOURCE  TAG Oil Ltd.  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:  http://www.newswire.ca/en/releases/archive/June2014/30/c2276.html  CO: TAG Oil Ltd. ST: British Columbia NI: OIL ERN  
Press spacebar to pause and continue. Press esc to stop.