VANCOUVER, Jan. 9, 2014 /PRNewswire/ - TAG Oil Ltd.
(the "Company" or "TAG") (TSX: TAO) and (OTCQX: TAOIF) is pleased
to provide the following exploration and development drilling
update in both the shallow and deeper targets within the Taranaki
Basin. As TAG enters calendar year 2014, the Company will be
maintaining its strategy of deploying capital to high impact
exploration targets while developing shallow reservoirs to provide
sustainable capital for continuous exploration activities.
Deep / Eocene Exploration Taranaki Program (TAG 100%)
TAG is pleased to announce the Cardiff-3 well targeting the Eocene-aged
Kapuni Formation reached Total Depth of 4,863 meters in December,
fully penetrating and evaluating all three deep target zones as
planned; the well took longer to drill than anticipated due to
encountering thick coal sections in the Eocene-aged Mangahewa
Formation.
Condensate-rich gas shows were recorded in all three target
zones within the Kapuni Formation and as a result TAG is casing the
well to total depth and will pursue a completion and testing
program. Evaluation will begin with perforation and, if necessary,
hydraulic stimulation of the deepest targeted prospect, the Kapuni
K3E zone. Following evaluation of the K3E zone, the shallower K1A
and Mckee Sand zones will be
evaluated and a decision will then be made on an overall production
strategy. In total TAG encountered over 230 meters of
potential net pay over the three target zones to be evaluated.
TAG COO Drew Cadenhead commented;
"Significant data collected during the drilling operation is
encouraging, and we will now move on to flow-testing which is the
only definitive way to evaluate commercial success in these
condensate rich tight-gas plays. This next stage of evaluation will
occur throughout the next few months."
Shallow / Miocene Development Taranaki Program
Cheal-E Site (TAG 70%)
TAG successfully completed its initial five well drilling
program at the Cheal-E Site in mid-December. Cheal-E1 has been
naturally flowing through a 17/64" choke, for 44 days and has
produced at an average of 547 BOE/d (88% oil) while Cheal-E4 has
been naturally flowing through a 10/64" choke for 7 days and has
produced an average of 315 boe/d (87% oil). In aggregate Cheal-E1
and Cheal-E4 have produced more than 23,100 barrels of oil (26,400
BOEs) to January 7, 2014. Following
perforation, Cheal-E2 and Cheal-E3 tested oil naturally to surface
and will require artificial lift to maximize production as
expected. This work, as well as the perforation and completion of
Cheal-E5 will be initiated in the second half of January as
equipment becomes available. As required work is completed, Cheal-E
Site wells will be tied in for permanent production at TAG's
recently commissioned Cheal-E Site separation facilities.
Results of the Cheal-E drilling program have significantly
extended the known oil and gas saturated area within TAG's 100%
owned Cheal Mining Permit discovery through to E-Site. Pending
completion of the outstanding activities at E-Site and further
analysis of all results, TAG feels there is potential for 15 – 20
follow-up locations in the newly awarded areas.
Joint venture partner East West Petroleum (30% interest) paid
100% of the first $5 million in
drilling costs of the first two Cheal-E wells and is entitled to
recover the first $5 million in
revenue from Cheal-E Site sales while also paying 100% of the costs
to produce that revenue. Subsequent to the $5 million in revenue, all cash flow and
operations will revert to 70% TAG and 30% East West. At present
production rates, that payout is forecasted to occur in less than
two months.
Cheal-G Site
With the conclusion of the Cheal E-Site drilling program, TAG
moved its Miocene focused drilling rig to the Cheal G-Site where
Cheal-G1 was spudded on January 3,
2014 kicking off a 3 well drilling program. Joint Venture
partner East West Petroleum will fund the first $2.5 million in capital expenditure, and is
entitled to receive the first $2.5
million in revenue sales while also paying 100% of the costs
to produce that revenue, before costs and interest in the wells
will revert to 50% TAG and 50% East West.
2014 Miocene Focus
Throughout 2013, TAG's Miocene strategy was focused on oil
production growth, resulting in the reallocation of drilling
capital towards oil targets versus potentially higher BOE/d rate,
yet moderately less economic, shallow natural gas targets. With TAG
achieving a netback of approximately CDN$83 / barrel for oil production in December,
this strategy will continue into 2014 with the intention to drill a
minimum of 10 gross shallow, Miocene wells within the greater Cheal
area. The program will include at least seven 100% working interest
development oil focused locations. Further details of the 2014
Miocene program as well as TAG's deep Kapuni and East Coast Basin
will follow.
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
Basin, East Coast Basin and Canterbury
Basin that covers more than 2,736,390 net acres of land,
prospective for major discovery in New
Zealand.
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. All estimates and statements that
describe the Company's objectives, goals, production rates, test
rates, optimization, infrastructure capacity timing of operations
and or future plans with respect to the drilling and testing in the
Taranaki Basin 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 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 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.
