VANCOUVER, Sept. 29, 2016 /CNW/ - Oil and gas exploration and production company, TAG Oil Ltd. (TSX: TAO and OTCQX: TAOIF, "TAG"), is pleased to provide the following update on its operations in the Taranaki Basin of New Zealand.
Sidewinder Production (100% TAG)
As reported in TAG's August 15, 2016 press release, a low-cost recompletion to an existing wellbore at Sidewinder demonstrated the potential of a previously unproduced oil leg following testing. Since August 18, 2016, when equipment was installed allowing for 24-hour oil production, the well has been on stabilized flow at an average of approximately 180 B/d. One additional well at Sidewinder and several gas wells at Cheal are now being reviewed as candidates for recompletions as oil producers. It is anticipated that the Sidewinder-2 well recompletion and perforation operations will add an additional 100 b/d of production.
Cheal Production (100% TAG)
TAG currently has approximately 1,200 BOE/d of production, which excludes potential uplift at Sidewinder-2 of approximately 100 B/d, and Cheal-E5 of approximately 50 BOE/d (net). Both of these wells are expected to be online in the next two weeks. With start-up of water injection into the Cheal 'B' pool through the B3 wellbore, the Company has forfeited approximately 85 BOE/d of production.
Further, due to recently discovered mechanical issues in the B5 well, an additional 85 BOE/d remains offline. Following the E5 rod pump installation, operations will move to B5 to suspend the well and consider options to return it to production. Finally, the gas compressor at the main Cheal production station is offline following a recent issue with the engine. The compressor is expected to be repaired and back online by mid-October. Much of the gas is currently used as fuel for power generation, however a moderate amount is being flared to ensure continued safe operations.
Cheal Waterflood (100% TAG)
TAG's enhanced recovery waterflood project commenced on September 21, 2016, with the start of water injection at the Cheal-B3 well at a rate of 400 BW/d. The water injection rate will be increased and the pressure response in the reservoir will be monitored. TAG estimates that it could take six to nine months to see a production response from water injection.
A small scale water flood at the Cheal-A3X well has already shown potential to enhance the recovery of oil in TAG's Cheal permits. Following the start of water injection, production rates increased over 43 months followed by a slower decline than previously seen on primary production.
The recently recompleted water well at Cheal-A9 is capable of producing approximately 4,500 barrels of water per day which is currently expected to be more than sufficient to meet water injection demands at all three potential injection sites.
Cheal E (70% TAG)
At the Cheal E site, a workover is currently underway to install a rod pump at the Cheal-E5 well which has been shut-in since May 2015. Start-up is forecast for the first week in October and once operational, the well is expected to produce approximately 70 BOE/d (gross). In addition, the Joint Venture expects to submit an application to New Zealand Petroleum and Minerals to convert Cheal 'E' from an exploration license to a mining license by the end of October. This will allow the Joint Venture to commence water injection into the Cheal 'E' pool upon receipt of the mining license.
Annual General Meeting
TAG will hold its Annual General Meeting for shareholders on October 31, 2016 at 14:00 (PST) at: Suite 2600, Three Bentall Centre, 595 Burrard Street, Vancouver, BC, V7X 1L3.
Toby Pierce, CEO of TAG Oil commented, "I am pleased to report the start of full time oil production from Sidewinder, which has demonstrated the potential for additional oil recompletions. Further, the start of water injection at the Cheal 'B' pool marks the first application of enhanced recovery techniques on our assets in the Taranaki Basin. Together, these two milestones demonstrate upside in TAG's core assets and the ability of TAG to grow its production organically at low cost in the current oil price environment. As for the issues with the compressor and the Cheal-B5 well, we expect minimal impact to overall cash-flow given that both predominately impact gas production and only by a moderate amount."
About TAG Oil Ltd.
TAG Oil Ltd. (http://www.tagoil.com/) is a development-stage oil and gas company with extensive operations, including production infrastructure in the Taranaki Basin region of New Zealand. As one of New Zealand's leading operators, TAG is positioned for long-term reserve-based growth with attractive exploration activities in the lightly explored Taranaki-region discovery fairway. As a low cost, high netback oil and gas producer, TAG is debt-free and reinvests its cash flow into development opportunities and step-out drilling along trend with the Company's existing production.
TAG Oil has adopted the standard of six thousand cubic feet of gas to equal one barrel of oil when converting natural gas to "BOEs." BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 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, be 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 relating to operations are forward-looking statements under applicable securities laws and necessarily involve risks and uncertainties. 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: Chris Beltgens, Vice President, Corporate Development, Phone: 1-604-682-6496, Email: [email protected], Website: http://www.tagoil.com/, Blog: www.tagoil.com/media-center/tag-oil-blog/