VANCOUVER, Feb. 15, 2012 /CNW/ - TAG Oil Ltd. (TSX: TAO and OTCQX: TAOIF), a Canadian-based production and exploration company with focused
operations in New Zealand, reports the Company has filed its December
31, 2011 condensed consolidated unaudited financial statements and
management discussion and analysis with the Canadian Securities
Administrators for the third quarter of the Company's 2012 fiscal year.
Copies of these documents can be obtained electronically at www.sedar.com, or for additional information please visit TAG Oil's website at http://www.tagoil.com/.
December 31, 2011 Results (Q3 - 2012 fiscal year)
Production revenue increased to $12,976,714 (nine months: $26,206,992)
compared to $3,851,621 (nine months: $8,078,684) in Q3 of the 2011
Net income of $5,915,997 (nine months: $10,899,739) was recorded before
deducting non-cash stock-based compensation expenses.
Per barrel production, storage and transportation costs of $6.94 per boe
(nine months: $10.73) for the quarter compared to $16.57 (nine months:
$18.15) for the comparable period last year.
Net operating cash inflow of $4.84 million for the nine months ended
December 31, 2011 compared to an outflow of $464,000 for the comparable
period last year.
TAG produced 89,227 barrels (nine months: 206,905) of light oil in the
quarter and sold 94,545 barrels (nine months: 209,130) of oil at an
average price of $113.11 per barrel.
TAG produced 97,709 boe (nine months: 119,104 boe) of gas in the quarter
and sold 92,112 boe (nine months: 105,659 boe) of gas at an average
price of $4.02 per mcf.
Initiated a seismic program and has continued its consultation process
in the East Coast Basin in preparation for a multi-well drilling
Four more successful wells drilled in the Taranaki Basin for the quarter
for a total of 12 straight successful wells.
Taranaki Basin Operations:
TAG finished the December 31, 2011 quarter with excellent flow test
results announced for Cheal-A8, Cheal-B5, Cheal-C1 and Cheal-C2. The
Cheal-A8 and Cheal-C2 wells are now shut-in pending infrastructure
upgrades required at Cheal to process high-volumes of gas. Cheal-B5
continues to flow at rates ranging between 1000 bbls/day to 1600
bbls/day depending on the production configuration; optimization work
continues to maximize the value of this anomolously high rate oil well.
TAG also drilled the Cheal-B6 and Cheal-B7 wells during the quarter and
these wells are now cased and completed for upcoming testing
Cheal-B6 encountered a total of 14 meters of pay and Cheal-B7
encountered a total of 18 meters of pay within the Urenui and Mt.
Messenger Formations. Both wells encountered oil and gas shows while
drilling and electric logs indicated high-quality oil and gas pay.
Completion and testing operations are now being conducted on Cheal-B6
and B7 while new drilling has shifted back to the Cheal-A Site with the
recent spud of Cheal-A9, followed immediately by the A10 well; each
well is expected to take approximately 15 days to reach total depth.
With 12 successful Taranaki wells now drilled in succession, TAG Oil has
initiated planning, engineering and procurement of new and additional
infrastructure to add to TAG's existing Cheal and Sidewinder
facilities. These infrastructure expansion projects will become a key
focus for TAG in the upcoming year. The anomalous recent high rate
results, in particular from Cheal-C2 (gas well) and Cheal-B5 (oil
well), have surpassed the Company's forecasted production rates
materially, and necessitated the immediate expansion of oil lifting
capacity, enhanced compression, LPG and liquid hydrocarbon stripping
facilities, and pipelines linking all TAG production together to be
completed by mid to late-2012. This plan will also allow for drilling
success at TAG's high-impact deep prospects such as Cardiff and
Hellfire to accelerate commercialization in the event of a discovery.
Summary of TAG well status at December 31, 2011:
Behind pipe awaiting infrastructure expansion
A1, A7, A8
BH1, B3, B4ST, B5
B1, B2, B6, B7
SW1, SW2, SW3, SW4
TAG Oil CEO, Garth Johnson commented "TAG is experiencing rapid growth,
with a number of successful high-performance wells such as our Cheal-B5
well, achieving initial production of 1700 barrels of oil per day and
the Cheal-A8 and Cheal-C2 wells, which also have high deliverability
potential. Our focus continues to be unlocking value from our
properties through ongoing drilling and new infrastructure projects
this year to ensure timely monetization of our excellent drilling
success. TAG is continuing an active Taranaki drilling program as we
approach our first four unconventional wells soon to be drilled in the
East Coast Basin, together with our partner Apache Corp. I look forward
to 2012 being another busy year for TAG in New Zealand."
Cheal Oil and Gas Field - 100% Interest
Recent successful drilling within the Cheal field has resulted in a
material increase to the Company's production forecasts. Infrastructure
enhancement projects are already underway to insure maximization of
value from these new discoveries; these projects have now become an
important focus for the Company's 2012 operational plans.
TAG also expects to complete Cheal's secondary recovery scheme in 2012,
which is forecast to cost-effectively increase recovery factors
significantly within the Cheal-A pool's proved and probable oil
Sidewinder Oil and Gas Field - 100% Interest
Permanent tie-in of the Sidewinder-2 through four wells has been
completed and the Sidewinder's compression unit acquired from North
America is anticipated to be installed and operational by March 31,
2012. TAG is currently acquiring 60 square kilometers of new 2D seismic
data that will be followed by a multi-well drilling program within this
lightly explored permit.
East Coast Basin Operations
The farmout agreement with Apache Corporation in Q1 2012 was completed
to explore and potentially develop oil and natural gas resources in the
East Coast Basin of New Zealand. Apache has agreed to spend up to $100
million to conduct a multi-phased exploration, appraisal and potential
development program within TAG's East Coast Basin Petroleum Exploration
Permits PEP 38348, PEP 38349 and PEP 50940 ("the Permits").
TAG and Apache have recently completed its 2D seismic program within PEP
38349 and the 2D seismic acquisition program within PEP 38348 is
underway and scheduled to be completed in February. In addition, the
TAG and Apache JV are continuing an extensive consultation process with
various parties related to East Coast Basin exploration activities
planned that include four vertical wells targeting the Whangai and
Waipawa source rocks.
Liquidity and Financial Summary
TAG ended the third quarter of fiscal 2012 in a strong financial
position: the Company remains debt free with net working capital at
December 31, 2011 of $67 million which includes 3.85 million warrants
that were exercised during the quarter, providing $13.9 million.
Production revenue was $12.98 million for Q3 and $26.21 million for the
nine months ended December 31, 2011 compared to $3.85 million and $8.08
million for the same periods last year. The Company generated a net
profit for the quarter of $5.9 million before deducting $1.6 million
for non-cash stock-based compensation and a net profit of $10.9 million
for the nine months ended December 31, 2011 before deducting $5.4
million in non-cash stock-based compensation.
During the third quarter TAG produced 89,227 (nine months: 206,905)
barrels and sold 94,545 (nine months: 209,130) barrels of light oil
with a selling price averaging $113.11 per barrel.
During the third quarter TAG also produced 97,709 boe (nine months:
119,104 boe) and sold 92,112 boe (nine months: 105,659 boe) of gas with
a selling price averaging $4.02 per mcf.
Production cost for the quarter was $6.94 per boe (nine months: $10.73
per boe) which compares to $16.57 per boe (nine months: $18.15 per boe)
when compared with the same period last year.
Expenditures on the Company's oil and gas properties during the third
quarter totaled $12.16 million (nine months: $31.93 million) primarily
invested in the Company's Taranaki operations. TAG will continue to
focus on developing the shallow formations through vertical drilling
operations at Cheal and Sidewinder while also planning to focus on
deeper Taranaki targets such as Cardiff and Hellfire to build near-term
reserves and production revenue.
As of today's date the Company had 54,443,234 common shares outstanding
and 57,773,020 common shares outstanding on a fully diluted basis.
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% control over all its core
assets, including oil and gas production infrastructure, TAG is
anticipating 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 1,300 sections of land in the onshore Taranaki and
East Coast Basins of New Zealand's North Island.
In the East Coast Basin, TAG Oil is pursuing the major unconventional
resource potential estimated in the fractured shale 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 Shale source-rock formation in the successful
"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 Anticipated Results and Forward-Looking
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 Oil. Such statements can
generally, but not always, be 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 assumptions
A. all estimates and statements that describe the Company's objectives,
goals, or future plans relating to the seismic, testing and drilling
programs in Taranaki 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 the Permits, the
success of any operations, and the costs necessary to complete the
B. those relating to TAG Oil's successful 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, the completion of new infrastructure at Cheal and
Sidewinder, the increase of cash flow from new production, oil and gas
price assumptions and fluctuations, foreign exchange rates, expected
growth, results of operations, performance, prospects, evaluations and
opportunities and effective income tax rates. 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
TAG Oil is involved in the exploration for and production of
hydrocarbons, and its property holdings with the exception of the Cheal
Oil Field and Sidewinder project area 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. But, 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
Other factors that could cause actual results to differ from those
contained in the forward-looking statements related to upcoming
operations, production forecast modeling and other items, are also set
forth in, filings that TAG Oil and its independent evaluator have made,
including TAG Oil's most recent reports in Canada under National
SOURCE TAG Oil Ltd.
For further information:
Dan Brown or Garth Johnson
TAG Oil Ltd., 1-604-682-6496