TAG Oil Begins 2013 with a 13-Well Taranaki Basin Drilling Campaign
VANCOUVER, Jan. 23, 2013 /PRNewswire/ – TAG Oil Ltd. (TSX: TAO and OTCQX: TAOIF), is pleased to announce the Company’s anticipated 2013 Taranaki Basin
drilling program within the Cheal and Sidewinder fields, and within
TAG’s newly awarded acreage. This drilling campaign is expected to
consist of a minimum 13 wells, and will continue to target the Mt.
Messenger/Urenui Formation targets, as well as deeper high-impact
targets in the Kapuni Formation.
TAG’s CEO, Garth Johnson, stated “Building on our string of success in
2011 and 2012 and driving revenue as a result, we expect calendar 2013
to be another exciting and transformational year for TAG. With a record
number of wells to drill in Taranaki as well as plans for the upcoming
drilling in the East Coast Basin, I’m confident our plans will continue
to become our reality.”
TAG has enjoyed significant growth in the last two years, drilling 21
consecutive successful wells in Taranaki. Given this success, and the
correlative increase in operating cash flows, TAG will now begin to
include a higher risk, higher impact deep drilling component to its
Taranaki Basin exploration efforts.
The deeper wells will target the Kapuni Formation, which is a proven
prolific play in Taranaki and where most of New Zealand’s landmark
onshore and offshore fields have been discovered, including the large
Maui, Kapuni and Mangahewa fields. TAG holds a number of attractive
Kapuni prospect opportunities within its portfolio, including the
Cardiff prospect where gas-rich condensates were discovered and tested
within a 600m interval in the Kapuni Formation in 1992. TAG will
contract Ensign Drilling’s Deep Rig #31 to drill one or more deep
prospects including Cardiff, which are tentatively scheduled to
commence in May 2013.
Details of Anticipated 2013 Taranaki Basin Drilling Activity:
_________________________________________________________________ |Permit Number|Permit Name |# of Wells(1)|Target | |_____________|_____________________|_____________|_______________| |PMP 53803 |Sidewinder (TAG 100%)| 2 |Miocene < 2500m| |_____________|_____________________|_____________|_______________| |PEP 54877 |East Cheal (TAG 70%) | 5 |Miocene < 2500m| |_____________|_____________________|_____________|_______________| |PEP 54879 |South Cheal (TAG 50%)| 3 |Miocene < 2500m| |_____________|_____________________|_____________|_______________| |PEP 54876 |North Cheal (TAG 50%)| 1 |Miocene < 2500m| |_____________|_____________________|_____________|_______________| |PEP 54873 |Heatseeker (TAG 100%)| 1 |Eocene > 4000m | |_____________|_____________________|_____________|_______________| |PMP 38156 |Cardiff (TAG 100%) | 1 |Eocene > 4000m | |_____________|_____________________|_____________|_______________|
(1) Contingent on success of SW5 and SW6 TAG may drill an additional two
The capital expenditure to drill, complete and test the 13 wells is
estimated at US$36 million and will be funded primarily by operating
cash flow generated from current production of approximately 2,000
boepd, plus production that is currently behind pipe, which is
anticipated to be on stream in late March 2013.
In addition to the anticipated new wells, consenting operations are
underway seeking approvals for an additional 10 new surface drilling
pads within TAG’s Taranaki Basin permits. Each drill pad is intended to
host up to 12 wells per pad, providing potential for TAG to drill up to
120 new wells in the coming years.
Late March 2013 Completion of TAG’s Infrastructure Expansion on Schedule
TAG’s $30 million infrastructure expansion investment continues to
proceed on schedule to meet the expected March 31, 2013 completion
date. At that time, the Company expects wells already drilled and
tested but currently shut-in to be placed into full time production.
With this infrastructure expansion TAG’s two main goals will be
-- To maximize the commercial potential of existing and future wells at Cheal and Sidewinder, and -- To become a completely independent processor, transporter and marketer of the natural gas TAG Oil discovers, extracts and produces.
This latter point allows TAG to secure contracts directly with the end
user rather than through third-party infrastructure, moving TAG up the
“value chain” and creating attractive new profit centers to build upon.
Despite the oversupply of natural gas in North America, the Taranaki
region of New Zealand is undersupplied. More importantly, a further imbalance between supply and demand is forecasted in the long term.
“Over the last few years, we’ve successfully followed our strategy of
increasing cash flow by targeting our lower-risk drilling opportunities
– allowing us to minimize shareholder dilution,” continued Mr. Johnson.
“Now we’re in a position to self-fund additional low-risk drilling,
while also including higher impact drilling opportunities from a
position of strength. Our financial position remains very strong with
no debt, approximately $65 million in working capital and estimated
fiscal 2014 (FYMarch 31) operating revenue of more than $100 million.
Furthermore, success on our 2013 drilling campaign, particularly from
the deeper plays, could have an additional significant impact on
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 extensive 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 is pursuing 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
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, operating revenue, production rates, infrastructure capacity and
or future plans relating to the seismic, testing, workover and drilling
programs in the Taranaki and East Coast Basins and the expected results
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, changes in the regulatory and
taxation environment and available funding. 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.