VANCOUVER, May 18 /CNW/ - TAG Oil Ltd. (TSX-V: TAO) and (OTCQX: TAOIF) reports that an independent assessment of reserves has been completed
as of March 31, 2011 on TAG Oil's 100%-owned Cheal Mining Permit (PMP
38156) and Sidewinder Exploration Permit (PEP 38748), located in the
Taranaki Basin, New Zealand. Sproule International Limited, one of
Canada's largest petroleum engineering consulting companies prepared
the report in accordance with definitions, standards and procedures
contained in the Canadian Oil and Gas Evaluation Handbook (COGE
Handbook) and National Instrument 51-101, Standards of Disclosure for
Oil and Gas Activities.
The reserves reported for the 2011 fiscal year relate primarily to the
Cheal oil and gas field due to fiscal year-end 2011 cut-offs required
under NI-51-101. Due to the timing of operations occurring after March
31, 2011, the Sidewinder reserve assessment was completed with
information related only to the Sidewinder-1 well and does not include
the now-completed Sidewinder-2, Sidewinder-3 and Sidewinder-4 wells.
The assessment of reserves has assigned net proved and probable reserves
("2P") remaining of 1,360,000 barrels of oil (2010 = 651,000 bbls) and
1,864 million cubic feet ("mmcf") of associated gas (2010 = 258 mmcf).
This reserves report, on a 2P basis, amounts to 1,677,000 barrels of
oil equivalent ("BOE") assessed within a reserves area covering just
475 acres of the 7,487-acre Cheal permit and just 107 acres of the
7,910-acre Sidewinder permit.
After considering production during the 2011 fiscal year, the 1,677,000
BOE in proved and probable reserves represents a 221% increase over the
March 31, 2010 year-end independent reserve assessment. The key factors
for the increase in reserves for fiscal 2011 are as follows:
One new well drilled and completed
Establishment of commercial production from a bypassed discovery
Increased recovery factors
Upward revision to projected future well performance
During the 2011 fiscal year, TAG focused primarily on optimizing the
production from the producing Cheal wells. This resulted in an increase
in the recovery factors being assigned to the Mt. Messenger Formation.
In addition, TAG was successful in establishing the first-ever
commercial production from the bypassed Urenui Formation oil discovery,
using two historical wells drilled at Cheal by the previous operator.
Having successfully completed these operations, Cheal now produces from
both the Urenui and Mt. Messenger Formations at approximate depths of
1400m (~4600 feet) and 1800m (~5900 feet), respectively.
TAG Oil's Chief Executive Officer, Garth Johnson, commented, "We are
very pleased to follow fiscal 2010's reserve increase with another
large increase in fiscal 2011, even after having produced ~160,000
barrels of oil during the year. This report has established initial
reserves within the Sidewinder discovery area, where the majority of
our operations occurred after year-end and could not be considered for
fiscal 2011 reserves. The commercialization of the Urenui oil discovery
has also allowed us to book initial reserves and is another low-risk
opportunity to build reserves in Taranaki from this widespread
formation identified at Cheal."
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 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
2,712 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 significant
unconventional resource potential estimated in the fractured shale
source-rock formations that are widespread over the Company's acreage.
These naturally fractured and thermally mature source-rock formations
have many similarities to North America's Bakken Shale source-rock
formation in the successful Williston Basin.
"BOE"s 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 Oil. These statements are
based on certain factors and assumptions including those related to the
exploration, development and reserves of TAG Oil's Cheal and Sidewinder
oil and gas fields and the Company's drilling plans going forward in
the Taranaki Basin of New Zealand. Actual results may vary materially
from the information provided in this release and there is no
representation by TAG Oil that actual results realized in the future
would be the same in whole or in part as those presented herein.
Factors that could cause actual results to differ from those contained
in the forward-looking statements are set forth in, but are not limited
to, filings that the Company and its independent evaluator have made,
including the Company's most recent reports in Canada under National
Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
SOURCE TAG Oil Ltd.
For further information:
Dan Brown or Garth Johnson, TAG Oil Ltd. 1-604-682-6496