VANCOUVER, Jan. 31, 2013 /CNW/ - TAG Oil Ltd. (TSX: TAO and OTCQX:
TAOIF) announced today that the Company's 100% owned New Zealand
subsidiaries have concluded an agreement with Apache New Zealand
Corporation LDC, which results in an early termination of the Farmout
Agreement dated September 1, 2011. This agreement relates to
exploration in Petroleum Exploration Permits 38348, 38349 and 50940
located in the East Coast Basin of New Zealand.
Main Highlights of the Agreement:
Apache has paid TAG Oil a lump sum payment to satisfy its obligations
related to funding Phase 1 operations under the Farmout Agreement.
TAG Oil will retain all assets developed under the Agreement, including
all seismic and technical work completed by the Joint Venture.
TAG retains its 100% interest in the subject East Coast Basin permits,
including the Waitangi Hill shallow oil discovery.
TAG Oil CEO Garth Johnson commented, "Although we are disappointed that
Apache's shift in corporate strategy resulted in a refocusing of their
international holdings, we do understand that tough decisions sometimes
need to be made. TAG remains highly enthusiastic about the future of
these prospects: All the work completed to date as a result of our JV
Phase 1 activities strengthens our beliefs in the potential of TAG
Oil's East Coast Basin holdings. We're also pleased to have full
control back over the project with funding in place."
TAG intends to utilize the lump sum payment received by Apache to fund
the drilling of up to four East Coast Basin wells as planned in the
Apache-agreed Phase 1 work program. These wells will test several
high-impact play objectives including the Waipawa and Whangai source
rocks that have independently been confirmed to be generating 50 degree
API oil. Additionally, these naturally fractured, high-quality source
rocks are believed to be widespread across TAG's acreage. Independent
assessments have concluded that there are approximately 14 billion
barrels of undiscovered original oil in place potential, within less
than a fifth of TAG's total land holdings on the East Coast.
Drilling of the first East Coast wells is expected to commence in late
March/April 2013, subject to receipt of the necessary consents from
regional government. TAG will utilize conventional vertical drilling
techniques similar to those used by TAG Oil over many years in its
successful Taranaki Basin operations.
Mr. Johnson concluded: "It was a pleasure to have had the opportunity to
work closely with Apache. Our work together provided important
geotechnical and operational related work, which has confirmed our
belief in the major potential of this project, and advanced it to
drill-ready status. Furthermore, TAG's cash flow and assets have grown
dramatically since we first signed the agreement with Apache. So the
Company can now fund further drilling operations and exploration
activities from a place of strength and greater flexibility."
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 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 2,953,810 net acres of land in New Zealand.
In the East Coast Basin, TAG is pursuing the major unconventional
resource potential believed to exist in the tight oil 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 source-rock formation in the successful
It is equally likely that the actual remaining quantities recovered will
be greater or less than the best estimate. Undiscovered Oil
Initially-In-Place (equivalent to undiscovered resources) is that
quantity of petroleum that is estimated, on a given date, to be
contained in accumulations yet to be discovered. There is no certainty
that any portion of the undiscovered resources will be discovered or
that, if discovered, it will be economically viable or technically
feasible to produce.
Exploration for hydrocarbons is a speculative venture necessarily
involving substantial risk. TAG's future success in exploiting and
increasing its current reserve base will depend on its ability to
develop its current properties and on its ability to discover and
acquire properties or prospects that are capable of commercial
production. However, there is no assurance that TAG's future
exploration and development efforts will result in the discovery or
development of additional commercial accumulations of oil and natural
gas. In addition, even if further hydrocarbons are discovered, the
costs of extracting and delivering the hydrocarbons to market and
variations in the market price may render uneconomic any discovered
deposit. Geological conditions are variable and unpredictable. Even if
production is commenced from a well, the quantity of hydrocarbons
produced inevitably will decline over time, and production may be
adversely affected or may have to be terminated altogether if TAG
encounters unforeseen geological conditions. TAG is subject to
uncertainties related to the proximity of any reserves that it may
discover to pipelines and processing facilities. It expects that its
operational costs will increase proportionally to the remoteness of,
and any restrictions on access to, the properties on which any such
reserves may be found. Adverse climatic conditions at such properties
may also hinder TAG's ability to carry on exploration or production
activities continuously throughout any given year.
The significant positive factors that are relevant to the resource
proven production in close proximity;
proven commercial quality reservoirs in close proximity; and
oil and gas shows while drilling wells nearby.
The significant negative factors that are relevant to the resource
tectonically complex geology could compromise seal potential; and
seismic attribute mapping in the two deep liquids-rich gas plays can be
indicative but not certain in identifying proven resource.
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 or future plans 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, undiscovered original oil in place, availability of
adequate funding, volatility of commodity prices, imprecision of
reserve estimates, 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 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 National Instrument
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.
For further information:
Dan Brown or Garth Johnson
TAG Oil Ltd., 1-604-682-6496