TAG Oil Provides Second Quarter Results
Company achieves 62% increase in production revenue
New infrastructure build on track plus four new wells drilled with
VANCOUVER, Nov. 15, 2012 /PRNewswire/ – TAG Oil Ltd. (TSX: TAO) and (OTCQX:
TAOIF), today announced its financial results for the quarter ended
Q2-2013 and Recent Operating Highlights
-- Production revenue increased 62% to $21.44 million for the six months ended September 30, 2012, compared to $13.23 million in the comparable period last year; -- Production revenue increased to $9.62 million during Q2-2013 compared to $7.38 million for Q2-2012; -- Net operating cash inflow increased to $5.81 million (six months: $14.98 million) for the quarter compared to $5.34 million (six months: $7.11) for Q2-2012; -- TAG sold 68,178 (six months: 170,058) barrels of oil during quarter at an average price of $109.97 per barrel (six months: $108.41 per barrel); -- TAG sold 80,592 boe (six months: 112,728 boe) of gas during the quarter at an average price of $4.38 per mcf (six months: $4.44 per mcf); -- Infrastructure build ontrack to allow production of 3000 boe p/d of behind pipe production to come online; -- Successfully drilled Cheal-A12, bringing the total to 19 straight successful wells in Taranaki; -- Currently drilling Cheal-B8 with 26 meters of net pay being identified on electric logs to date; -- Acquired three high-impact frontier exploration permits located in the East Coast and Canterbury Basins of New Zealand; -- All work carried out to the highest health and safety and environmental standards.
Liquidity and Financial Summary
At the date of this report, TAG is debt free with approximately $86
million in cash on the balance sheet. Production revenue for the
quarter was $9.62 million (six months: $21.44 million) compared to
$7.38 million (six months: $13.23 million) for the comparable quarter
last year and the Company generated a net profit for the quarter of
$1.20 million (six months: $6.76 million) before deducting $1,499,954
(six months: $2,340,675) for non-cash share-based compensation.
TAG currently has 59,773,923 common shares outstanding and 63,481,186
common shares outstanding on a fully diluted basis.
Taranaki Basin Operations
TAG finished Q2-2013 with excellent drilling results, and an ongoing
Taranaki program underway with electric logs indicating economic
oil-and-gas pay in recent drilling as follows:
-- Cheal-C4 recorded a total of 17.5 meters of pay -- Cheal-A11 recorded a total of 30 meters of pay -- Cheal-A12 recorded a total of 23 meters of pay -- Cheal-B8 recorded a total of 26 meters of pay to date with drilling continuing at the reporting date
Summary of TAG well status
______________________________________________________ |Site |Producing |Behind pipe | |__________|__________________|________________________| |Cheal A |A10, A11 |A1, A3, A7, A8, A9, A12 | |__________|__________________|________________________| |Cheal B |BH-1, B3, B5 |B1, B2, B4ST, B6, B7, B8| |__________|__________________|________________________| |Cheal C | |C1, C2, C3, C4* | |__________|__________________|________________________| |Sidewinder|SW1, SW2, SW3, SW4| | |__________|__________________|________________________|
* Drilled and awaiting/undergoing production test
TAG has drilled 19 consecutive successful wells in Taranaki, which have
necessitated the infrastructure upgrades now underway, and expected to
be complete on schedule by March 31, 2013.
TAG’s infrastructure project will allow the Company to become completely
self-sufficient in producing, processing and marketing all oil and gas.
Once completed, TAG can initiate production on all oil and gas wells
that have been drilled but are not yet producing (behind pipe) and any
additional production arising from further successful wells drilled.
Cheal Oil and Gas Field – 100% Interest
Successful drilling throughout 2011/2012 and now Q2-2013 within the
Cheal field has resulted in a material increase to the Company’s
forecasts. TAG expects continued growth through the following activity:
1. Continued exploration and development drilling: pre-emptive right on the Nova-1 drilling rig ensures access to services; 2. Infrastructure enhancement project underway at Cheal ensures maximum value is achieved from behind-pipe production and new discoveries making TAG completely self-sufficient for oil and gas production, processing and marketing; 3. Cheal's new planned pipeline now has all landowner agreements signed and consent has been received with construction now underway; 4. Drilling the liquids-rich deep gas target such as Cardiff and Hellfire; Cardiff has an independent resource potential estimated by Sproule International of 214.5 Bcf and 12.8 million barrels of associated condensate and the Company anticipates drilling Cardiff in Q2 of fiscal 2014; 5. Completion of Cheal's secondary recovery scheme, which is forecast to cost-effectively increase recovery factors within the Cheal A pool's proved and probable oil reserves.
Sidewinder Oil and Gas Field – 100% Interest
On June 6, 2012, TAG received consent to drill four new wells within the
Sidewinder permit, which was subsequently appealed by one opposing
party. Progress has been made and TAG expects the appeal to be
dismissed and drilling operations to resume as planned. A successful
resolution is expected in Q3 of fiscal 2013.
TAG has planned a new multi-well drilling program using its proprietary
3D seismic, combined with new 2D seismic that was acquired during
fiscal 2012. The Sidewinder Permit is lightly explored, where only 2.5%
of TAG’s acreage has been drilled to date. Significant exploration
potential remain in both shallow and deeper targets within the Permit
area. Near-term operations are as follows:
1. Drill a minimum of four new exploration wells; 2. Drill Sidewinder's deeper liquids-rich gas targets such as the Hellfire prospect where TAG's technical team has used 3D seismic to interpret Hellfire as a large high-impact prospect with significant resource potential.
East Coast Basin Operations
The farmout agreement with Apache Corp in Q1 2012 was completed to
explore and potentially develop oil and natural gas resources in the
East Coast Basin of New Zealand. Apache Corp has agreed to spend up to
$100 million 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”).
TAG and Apache Corp have completed their 2D seismic program within the
Permits and the TAG / Apache JV are continuing an extensive
consultation process relating to the upcoming drilling of four vertical
wells targeting the Whangai and Waipawa source rocks. During the
quarter, construction and surface lease access consents were awarded.
Upon receipt of the necessary drilling consents from district and
regional councils being obtained in a timely manner, TAG and Apache
anticipate well-site construction to begin in the first quarter of
calendar 2013 followed shortly by drilling operations.
In addition to East Coast Basin permits noted above that form the
TAG/Apache JV, TAG completed the acquisitions of a 100% interest in two
additional permits during the quarter: PEP 53674 and PEP 52676.
Canterbury Basin Operations
During the quarter, TAG Oil also acquired a new frontier exploration
permit (“PEP 52589″) in the Canterbury Basin, situated both offshore
and onshore in New Zealand. At the date of this report, TAG has
initiated the acquisition of 80 km’s of new 2D seismic over certain
leads identified within the permit. The Canterbury Basin is an
under-explored frontier area with many geological similarities to the
productive Taranaki Basin.
Historical drilling results in Canterbury indicate good exploration
potential with two gas/condensate discoveries drilled in the offshore
portion of the Basin, one of which tested in excess of 10 million cubic
feet of gas and 2,300 barrels of oil per day. Although these
discoveries were uneconomical due to the high cost of offshore
development, more importantly, the gas/condensate accumulations found
in these wells confirm that generation, migration and entrapment of
hydrocarbons occur in the basin, indicating additional accumulations
are likely to be present.
Offshore drilling scheduled by majors such as Anadarko and Origin Energy
in 2013/2014 allow TAG to focus initially onshore while holding
considerable upside related to its control over the onshore and near
shore acreage directly updip of the scheduled deep water offshore
Expenditures on the Company’s oil and gas properties during Q2 of the
2013 fiscal year amounted to approximately $22.1 million, primarily
invested in the Company’s Taranaki operations for drilling, testing,
workovers and infrastructure as follows:
Cheal Field $18.6 million Sidewinder Field $1.5 million East Coast, Taranaki Offshore, Canterbury $2.0 million
The East Coast Joint Venture invested approximately $0.8 million during
TAG Oil has filed its second quarter September 30, 2012, condensed
consolidated unaudited interim financial statements and management
discussion and analysis with the Canadian Securities Administrators.
Copies of these documents can be obtained electronically at http://www.sedar.com, or for additional information please visit TAG Oil’s website at http://www.tagoil.com/.
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 2,953,810 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 Oil. 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.
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.