VANCOUVER, Sept. 29, 2011 /CNW/ - TAG Oil Ltd. (TSX: TAO) and (OTCQX: TAOIF) advises that the Company has filed its June 30, 2011 unaudited
financial statements and Management Discussion and Analysis with the
Canadian Securities Administrators for the first quarter of the March
31, 2012 fiscal year. Copies of these documents can be obtained
electronically at www.sedar.com. For additional information, please visit TAG Oil's website at http://www.tagoil.com/.
June 30, 2011 Corporate and Financial Highlights (Q1 Fiscal 2012):
Production revenue increased to $5,853,101 compared to $1,813,730 in Q1
TAG produced 56,509 and sold 50,952 barrels of light oil at an average
price of C$113 per barrel.
Per barrel production costs were further reduced to $15 per barrel,
compared to a production cost per barrel of $20 for fiscal 2011.
A net profit of $2,178,499 was recorded before deducting $1.91 million
for stock-based compensation.
TAG announces farmout agreement with Apache on New Zealand Acreage in
the East Coast Basin. TAG Oil has established a production capability
in Taranaki of more than 5000 barrels of oil equivalent ("Boe") per
The oil discovery at Cheal-C1 significantly extends the known Mt.
Messenger and Urenui oil field oil-saturation area.
TAG graduates to Canada's senior stock exchange.
Taranaki Basin Operations
TAG Oil has commenced a ten-well development drilling program following
six straight successful wells achieved at TAG's Sidewinder and Cheal
oil and gas fields, which established more than 5000 barrels of oil
equivalent per day of production capability from the initial drilling
program. This drilling campaign, now underway at Cheal, will continue
to target the main producing Mt. Messenger (~1800m) and the shallower
Urenui (~1400m) Formations. Once drilling is completed at Cheal, the
drilling rig will be moved to the Sidewinder field to target the
primary Sidewinder gas zone and the lower zone oil discovery also in
the Mt. Messenger Formation.
Cheal Oil and Gas Field - 100% Interest
The Cheal field continues to perform strongly with low decline rates and
is presently producing approximately 850 to 900 barrels of oil
equivalent per day, with approximately 300 to 400 barrels of oil per
day ("bopd") of production remaining behind pipe, awaiting enhancements
to Cheal's hot-water artificial lifting system. This upgrade is
expected to be fully operational in the next 90 days.
In addition, testing of the Cheal-C1 well has confirmed an oil discovery
in the Cheal "C" block area. This exploration success significantly
extends the known Mt. Messenger and Urenui field boundary. Cheal-C1
intercepted oil-and-gas-bearing sands that produced substantial volumes
of light oil during swab testing. A secondary Mt. Messenger zone also
flowed gas at rates between 1.5 million to 3 million cubic feet per
The Cheal-C1 well also encountered strong oil shows within a
73-meter-thick section of sandstone within the deeper Moki Formation.
The Moki zone was tested but commercial flow rates were not achieved.
TAG's technical interpretation indicates that Cheal-C1 penetrated a
"transitional zone" where oil migrated through the contacted zone into
a large structural closure, updip from the Cheal-C1 penetration. Given
the extensive oil shows recorded while drilling, coupled with the
excellent reservoir quality interpreted from electric logs, TAG will
plan a new well that directly targets the Moki Formation prospect,
drilled from a more optimal location on the structure.
In addition to the new round of drilling activity at Cheal, TAG is also
conducting a number of optimization operations on certain historical
Cheal wells. Included in these optimization operations is the
deployment of Cheal's first water flood to the "A" pool, a program
forecast to cost-effectively increase recovery factors within the Cheal
A site's oil reserves.
Sidewinder Oil and Gas Field - 100% Interest
After the successful drilling and testing of the Sidewinder-1 through 4
wells and the construction of the Sidewinder Production Facility and
pipeline, TAG is now planning a multi-well drilling program within this
lightly explored permit, following the Cheal drilling program currently
East Coast Basin Operations
TAG recently entered into a farmout agreement with Apache Corporation to
explore and potentially develop oil and natural gas resources in the
East Coast Basin of New Zealand.
Apache has agreed 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").
Apache will be the Operator for all activities undertaken pursuant to
the Agreement, excluding the initial four vertical wells of the work
program that TAG will operate with Apache's assistance. Apache will
spend up to $100 million upon completion of Phase 3 to earn a 50%
interest in the Permits. At the end of Phase 3 operations TAG will
remain as operator of the Permits. If Apache commits to Phase 4
operations, all costs will then be shared equally between Apache and
TAG going forward.
Liquidity and Financial Summary
TAG ended the first quarter of fiscal 2012 in a very strong financial
position: the Company remains debt free with net working capital as at
June 30, 2011 of $60.51 million.
Production revenue was $5.85 million and the Company generated a net
profit for the three-month period of $2,178,499 before deducting $1.91
million for stock-based compensation. TAG produced 56,509 and sold
50,952 barrels of light oil at an average price of C$113 per barrel. Per barrel production cost was further reduced to $15 per barrel
compared to a production cost per barrel of $20 for fiscal 2011.
Expenditures on the Company's oil and gas properties during the quarter
totaled $10.36 million primarily invested in the Company's Taranaki
operations. TAG's near-term focus is to develop the shallow formations
at Cheal and Sidewinder with a view to build near-term reserves and
At June 30, 2011 the Company had 50,001,062 common shares outstanding
and 57,166,060 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 its light oil and gas discoveries. TAG is also
actively drilling high-impact exploration prospects identified across
more than 2,600 sections of land in the onshore Taranaki and East Coast
Basins of New Zealand's North Island.
In the East Coast Basin, TAG, together with Apache Corporation is
pursuing the significant unconventional resource potential estimated in
the fractured shale source-rock formations. 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. These statements are
based on certain factors and assumptions including:
A. All estimates and statements that describe the Company's objectives,
goals, or future plans relating to the seismic and drilling program
related to the Agreement with Apache Corporation 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 individual phase of the Agreement, Apache's electing to
commit to each phase of the Agreement, and the costs necessary to
complete the various phases of the Agreement, and the Company's ability
to share in any cost over-runs relating to each phase of the Agreement.
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 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 could cause actual results to differ from those contained
in the forward-looking statements related to upcoming operations,
production forecast modeling and other items that are set forth in, but
are not limited to, filings that TAG Oil and its independent evaluator
have made, including the TAG Oil's most recent reports in Canada under
National Instrument 51-101.
SOURCE TAG Oil Ltd.
For further information:
Dan Brown or Garth Johnson
TAG Oil Ltd., 1-604-682-6496