VANCOUVER, Dec. 11, 2012 /CNW/ - TAG Oil Ltd. (TSX: TAO and OTCQX: TAOIF), announces that New Zealand Petroleum and Minerals has awarded TAG Oil
Ltd. four onshore exploration blocks offered in New Zealand's 2012
Block Offer. The permits awarded have been assigned the Petroleum
Exploration Permit (PEP) numbers 54873, 54876, 54877, 54879 and are all
located in the Taranaki Basin, New Zealand.
Key attributes to these awards are:
37,253 additional gross acres in the main Taranaki oil and gas discovery
Extensive TAG controlled proprietary 3D seismic coverage over three of
the four new permits;
PEP's 54876, 54877, and 54879 initially add at least 10 shallow,
low-risk drilling prospects plus numerous leads identified on 3D
seismic in close proximity to the producing Cheal oil field;
Joint venture created with East West Petroleum Ltd.; TAG will operate
the permits and East West will fund four wells within PEP 54876, 54877
and 54879 in 2013 earning East West a 50% interest in PEP 54876 and PEP
54879 and a 30% interest in PEP 54877.
PEP 54873 (100% TAG) provides several shallow drilling leads along with
significant exploration upside via a drill-ready deep gas and
condensate prospect that has similar geological features to the
adjacent 1.3 TCF Kapuni gas/condensate field;
Economically robust commercial potential: any new discoveries arising
from drilling in these new blocks will be cost-effectively tied into to
TAG's expanded Cheal Production Station without delay.
TAG CEO Garth Johnson commented, "We are very pleased that New Zealand
Petroleum & Minerals has awarded TAG this additional acreage that is
complimentary to our current Taranaki operations. Our new oil and gas
production facility expansion and associated pipelines in this area
unencumber all production, transportation and marketing of TAG's oil
and gas, including any new discoveries from these newly awarded lands.
We are also pleased to have established a joint venture with East West
Petroleum according to a joint-bidding agreement entered into by our
companies prior to making application in the 2012 Block Offer."
TAG's Infrastructure Expansion On Track
TAG's $30 million infrastructure expansion investment continues to
proceed on schedule to meet the March 31, 2013 anticipated completion
date. At that time, the Company expects all current shut in discovery
wells can be tied into TAG's 100% controlled facility, and daily
production will exceed 5,000 barrels of oil equivalent per day as
TAG has amended its production timeline for the next two fiscal quarters
after making a decision to conserve natural gas and minimize flaring
during the Cheal infrastructure upgrade. In this regard, TAG will
maintain its production at approximately 2,000 BOE per day until the
infrastructure expansion is complete.
"We initially anticipated phasing in shut-in production over the next
few fiscal periods; however, after considering a number of factors, the
long term benefits of conserving in situ reservoir energy until our gas infrastructure is complete far outweigh
the optics of short term production increases," Mr. Johnson
commented."Our shut-in wells have all been production tested and we
remain confident of meeting or exceeding our production guidance of
5,000 BOE per day. We also look forward to investing the associated
cash flow into more exciting high-impact exploration and development
drilling opportunities in 2013 across a significant prospect
An Update on Cheal-B8 Drilling
The Cheal-B8 well has reached a total depth of 3,600 meters encountering
26 meters of high quality oil-and-gas pay within the initial 2,000
meters of the well. TAG will mobilize a service rig to Cheal-B8 in the
next two weeks to perforate and production test the well.
Following the logging and casing of the up-hole oil discovery, the
Cheal-B8 well was deepened a further 1600 meters to test a wildcat
target in the Tikorangi Formation, however electric logging did not
indicate sufficient pay present at this depth. This result does in no
way effect the potential in the deeper Kapuni Formation targets TAG
will be drilling, which is a well established, commercially proven play
level with numerous major fields discovered in the Taranaki Basin.
The Cheal-B8 well is TAG's 20th straight successful oil and gas well drilled in the Taranaki Basin.
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 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 2,991,063 net acres of land in New Zealand.
In the East Coast Basin, TAG has entered into a farm-out agreement with
Apache Corporation to explore and potentially develop 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 Williston Basin.
TAG Oil has adopted the standard of six thousand cubic feet of gas to
equal one barrel of oil when converting natural gas to "BOE's". 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
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.
These statements are based on certain factors and assumptions
A. All estimates and statements that describe the Company's objectives,
goals, production rates, infrastructure capacity and or future plans
relating to the seismic, testing, work over 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, well performance, the success of any operations, completing
infrastructure and the costs necessary to complete the operations; and
B. Those relating to TAG Oil's 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, well
performance, drilling the completion of new infrastructure at Cheal and
Sidewinder, the increase of cash flow from new production, expected
growth, results of operations, performance, prospects, evaluations and
opportunities. 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 herein.
TAG Oil is involved in the exploration for and production of
hydrocarbons, and its property holdings with the exception of the Cheal
and Sidewinder project areas 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. 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 gas.
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