VANCOUVER, June 17 /CNW/ - TAG Oil Ltd. (TSX-V: TAO), is pleased to
announce that the Company has executed a binding agreement to acquire the
remaining 69.5% interest in PMP 38156-S ("Cheal") and PEP 38738-01 ("Greater
Cheal") in the Taranaki Basin, New Zealand. TAG's offer to purchase these
assets has been accepted by the Receivers appointed to Austral Pacific Energy
Ltd. Upon completion of this transaction TAG will own 100% interest in the
Cheal Oil and Gas field including the recently completed Cheal Production
At March 31, 2009 an independent reserves evaluation completed for TAG by
Sproule International Limited, has assigned 530,000 remaining proved plus
probable BOE's to the Cheal pool, calculated using a conversion ratio of 6MCF:
1bbl, with an associated NPV-10 amounting to US$9.4 million.
The consideration to be paid by TAG for these assets includes:
- US$2,000,000 in cash;
- an initial 25% overriding royalty on net oil sale revenue per barrel
on PMP 38156-S and PEP 38738-01 for the first 500,000 barrels of
shallow oil produced (reduced to 7.5% for the life of the field after
500,000 barrels of oil have been produced);
- certain permit work commitments that include optimization and
drilling operations to be completed in the next 30 months;
- at completion TAG will grant a first ranking security interest over
all oil produced and the proceeds of all oil produced from PMP 38156-
S and PEP 38738-01 to secure royalty payments and performance of
certain permit work commitments.
The binding offer also contains certain price adjustments that relate to
net operating profits earned and capital expenditures paid at Cheal between
the May 31, 2009 effective date and the completion date of the transaction.
The agreement is subject to certain conditions precedent being satisfied,
including TSX Venture Exchange approval and other such standard conditions for
a transaction of this nature.
About TAG Oil Ltd.
TAG Oil Ltd. is a Canadian based oil and gas producer and explorer with
assets in the onshore Taranaki Basin of New Zealand. TAG is poised to build
significant shareholder value through profitability, acquisition, development
and exploration. TAG remains in a strong financial position, with sufficient
working capital to fund operations and meet all commitments for the
foreseeable future. For further information please visit our website at
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. Actual results may vary materially from the
information provided in this release. As a result 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. Actual results may differ
materially from the results predicted, and reported results should not be
considered as an indication of future performance. 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 Instrument 51-102.
BOE Cautionary Statement
BOEs may be misleading, particularly if used in isolation. A BOE
conversion ratio of 6 Mcf:1bbl is based on an energy equivalency at the burner
tip and does not represent a value equivalency at the wellhead.
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.
For further information:
For further information: Garth Johnson, CEO, (604) 609-3350, Website: