VANCOUVER, Jan. 6 /CNW/ - Canadian listed, New Zealand oil and gas
producer TAG Oil Ltd. (TSX-V: TAO) reported today that ongoing
production testing of the 100%-controlled Cheal-BH-1 horizontal well in
the Taranaki Basin of New Zealand continues with positive results. To
date, a conservative range of low draw-down configurations has been
tested, with associated production rates ranging from 400 to 500
barrels of oil equivalent (BOE) per day (predominantly oil) with no
In coming months, TAG will further test the full production capabilities
of the Cheal-BH-1 well, with the goal of optimizing daily flow rates
while maximizing long term reserve recovery. The continued positive
results being demonstrated at Cheal further support TAG's upcoming
Cheal "step-out" drilling campaign commencing this February, 2011,
targeting Mt. Messenger and Urenui Formation prospects which are
defined on 3-D seismic, situated within the oil discovery fairway of
the lightly explored Cheal acreage.
TAG Oil's Chief Executive Officer, Garth Johnson commented, "With
hundreds of meters of high quality oil and gas pay across the
horizontal section in the Cheal-BH-1 well, and the strong flowing
pressures we've measured during testing, we can anticipate rapid
capital recovery and long term profitability from this well. With
further potential to increase the flow rate, this promising result —
from the first-ever horizontal well drilled into the Mt. Messenger
Formation — will allow us to capture more reserves, providing a
positive impact in our approach to the future development of Cheal."
The current production output capabilities at the Cheal field from the
wells that are permanently or temporarily tied into the Cheal
Production Facility, now exceed 1,000 BOE per day. More information on
the Cheal Oil Field discoveries in the Taranaki Basin can be found on
TAG's website at http://tagoil.com/cheal-oil-field.asp.
Sidewinder Oil and Gas Discovery
TAG Oil also announced that significant progress is being made towards
fast-tracking the commercialization of the Sidewinder-1 oil and gas
discovery. Development of the new Sidewinder Production Station,
including a 3-km pipeline link into New Zealand's main gas transmission
grid, is being designed to accommodate oil and gas production from all
future Sidewinder wells.
"The high deliverability test results from the Sidewinder-1 well
combined with strong gas prices in New Zealand, provide compelling
economics, with drilling and development costs potentially recoverable
in under six months." Mr. Johnson commented. "With this new facility in
place, we can commercialize additional Sidewinder wells quickly and
TAG's present timeline forecasts facility commissioning, with estimated
initial production rates from the Sidewinder-1 well of 8 to10 million
cubic feet of gas per day (1300 to 1600 barrels of oil equivalent per
day), by mid-2011. "Together with Sidewinder and production from Cheal,
TAG's daily production will increase substantially by the end of fiscal
Q2, 2011." Mr. Johnson noted. "Also, successes arising from our current
and planned 2011 Taranaki Basin drilling campaign would drive
additional production and reserve growth in 2011."
More information on TAG Oil's Sidewinder discovery can be found online
TAG Oil Ltd.
TAG Oil Ltd. is a Canadian-listed company (TSX-V: TAO) with operations
in New Zealand. With 100% control over all its core assets, including
oil and gas production infrastructure, TAG is anticipating production
growth through development of multiple oil and gas discoveries in the
Taranaki Basin. TAG is also targeting high-impact drilling
opportunities on numerous exploration prospects identified over 3,500
sections of land onshore.
In the East Coast Basin, TAG is pursuing the major unconventional
resource potential that has been demonstrated in the Waipawa Black
Shale and Whangai Shale source-rock formations. These oil-rich,
naturally fractured formations compare favorably to fractured shale
formations such as the Bakken Shale in the 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 daily production rates of TAG Oil's Cheal
oil field and Sidewinder discovery 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