Conference Call to Discuss Third-Quarter Results and Operations
Update
VANCOUVER, Feb. 15, 2013 /PRNewswire/ - TAG Oil Ltd. (TSX:
TAO) and (OTCQX:
TAOIF), today announced its financial results for the quarter
ended
December 2012, as well as access
instructions for a telephone
conference call to discuss Q3 results and operations.
Please call in ten minutes before the conference call starts and
stay on
the line (an operator will be available to assist you should you
have
questions of management during the call). In addition questions can
be
forwarded by e-mail in advance in the e-mail address provided
below.
Date
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Tuesday, February 19, 2013
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Time
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11:00 a.m. Pacific Time
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Toll-Free Dial-in #
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1-800-706-7749
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Regular Dial-in #
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1-617-614-3474
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Conference Passcode
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70081822
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E-mail questions to:
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info@tagoil.com
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Q3-2013 and Recent Operating Highlights
TAG Oil's production revenue increased 23% to $32.29 million for the
nine months ended December 31, 2012,
compared to $26.21 million in the
comparable period last year;
During Q3-2013 TAG produced an average of 1,727 BOE per day with
a
production revenue increase by 13% to $10.85
million compared to $9.62
million in Q2-2013;
The Company generated a net profit for the quarter of $2.64 million
(nine months: $9.40 million) before
deducting $2,004,076 (nine
months:
$4,344,751) non-cash share-based
compensation;
TAG remains debt free with approximately $72
million in cash at the date
of this report;
TAG sold 86,687 barrels of oil during the last quarter (nine
months:
256,745) at an average price of $109.97 per barrel (nine months:
$108.80 per barrel);
TAG sold 47,104 BOE of gas during the quarter (nine months: 159,775
BOE)
at an average price of $4.79 per mcf
(nine months: $4.55 per
mcf);
Production infrastructure expansion is on track for completion by
March
31, 2013 as planned, to allow unrestricted production from
25 wells and
any future wells;
Commenced a 13-well Taranaki Basin drilling campaign, starting with
the
Sidewinder-5, Sidewinder-A6, Sidewinder-A7 wells;
Secured rig to drill the Cardiff
prospect, a large liquids'-rich gas
target in the Kapuni Formation with independent mid range
resource
potential estimated by Sproule International of 214.5 Bcf and
12.8
million barrels of associated condensate;
TAG Oil was awarded four attractive onshore Taranaki exploration
blocks
all within proximity of our Cheal and Sidewinder
infrastructure;
TAG retains a 100% interest in its East Coast Basin permits and
receives
cash payment through an early termination of the farm-out
agreement
with Apache Corporation.
Liquidity and Financial Summary
At the date of this report, TAG is debt free with approximately
$72
million in cash on the balance sheet. Production revenue for
the
quarter was $10.85 million (nine
months: $32.29 million) compared
to
$12.98 million (nine months:
$26.21 million) for the comparable
quarter
last year, and the Company generated a net profit for the quarter
of
$2.64 million (nine months:
$9.4 million) before deducting
$2,004,076
(nine months: $4,344,751) non-cash
share-based compensation.
TAG currently has 59,637,623 common shares outstanding and
63,267,386
common shares outstanding on a fully diluted basis.
Taranaki Basin Operations
TAG finished Q3-2013 with Sidewinder-5 encountering approximately
6
meters of net pay to start off calendar 2013's Taranaki
drilling
program. SW-5 has been completed for production and will be tied in
to
the Sidewinder production facility in early March, after
Sidewinder-6
and 7 have been drilled.
Summary of TAG well status
Site
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Producing *
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Behind pipe
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Cheal A
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A3, A7, A9, A10, A11, A12
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A1, A4, A8
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Cheal B
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B3, B4ST, B6, B8
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B1, B2, BH1, B5, B7
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Cheal C
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C1, C2, C3, C4**
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Sidewinder
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SW-A2, SW-A3, SW-A4
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SW-A1, SW-A5**
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*Cheal-A7 and A12 and Cheal-A9, A10, A11 and A12 are all producing
into
small diameter temporary production lines that inhibit optimal
production. Back pressure testing on the individual wells indicate
these
wells will produce more optimally using their own production
pipelines
upon completion of the Cheal infrastructure upgrades.
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** Re-completed and/or awaiting production test
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TAG's infrastructure project is scheduled to be completed on
March 31,
2013 allowing the Company to become completely
self-sufficient in
producing, processing and marketing all oil and gas it produces.
TAG
can then initiate production on all oil and gas wells that have
been
drilled but are not yet producing, along with any additional
production
arising from future successful wells drilled.
Cheal Oil and Gas Field - 100% Interest
TAG expects continued growth through the following
activities:
Continued exploration and development drilling: pre-emptive right
on the
Nova-1 drilling rig ensures access to services;
Infrastructure enhancement project and new gas pipeline at Cheal
ensures
maximum value is achieved from all discoveries, making TAG
completely
self-sufficient for oil and gas production, processing and
marketing;
Drilling the Cardiff liquids-rich
deep gas target: 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 mid-C2013; and
A detailed geotechnical evaluation of all untested zones in the
Cheal
area: Many TAG wells drilled in the last two years encountered
multiple
pay horizons. Good production practice dictates depleting one zone
at a
time in these multi-zone wells, and the study will determine if
an
accelerated infill drilling program is economically justified
to
maximize value of these to-date untested zones.
Sidewinder Oil and Gas Field - 100% Interest
During the quarter, the Company was granted consent by the New
Plymouth
District Council allowing TAG to drill up to four new wells within
the
Sidewinder Oil and Gas Field. TAG immediately completed site
construction, and to the date of this report, has drilled the
Sidewinder-A5 well and spudded Sidewinder-A6.
TAG intends to also drill Sidewinder-A7 and Sidewinder-A8 using
its
proprietary 3D seismic, combined with new 2D seismic that was
acquired
during fiscal 2012. The Sidewinder Permit is lightly explored
and
significant exploration potential remains in both shallow and
deeper
targets located within the Permit area. Planned operations are
as
follows:
Drill 4 new exploration wells, inclusive of Sidewinder-5 that
has
already been drilled during the quarter; and
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.
Taranaki Blocks Offer Permits - Shallow Drilling
TAG Oil, along with its joint venture partner East West Petroleum,
will
utilize the extensive 2D and 3D seismic coverage to drill a minimum
of
nine wells in C2013 on the three joint ventured permits as
follows:
Permit Number
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Permit
Name/Interest
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# of Wells
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Target
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PEP 54877
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East Cheal (TAG 70%)
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5
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Miocene 2500m
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PEP 54879
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South Cheal (TAG 50%)
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3
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Miocene 2500m
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PEP 54876
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North Cheal (TAG 50%)
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1
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Miocene 2500m
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Taranaki Blocks Offer Permits - Deep Drilling
Heatseeker is a 3D defined, drill ready deep gas and condensate
prospect
that has similar geological features to the adjacent landmark
Kapuni
gas/condensate field. Heatseeker is anticipated to be drilled late
in
calendar 2013.
Permit Number
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Permit Name/Interest
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# of Wells
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Target
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PEP 54873
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Heatseeker (TAG 100%)
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1
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Eocene > 4000m
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East Coast Basin Operations
On January 31, 2013, TAG Oil and
Apache Corp. concluded an agreement for
early termination of the Farmout Agreement related to PEP's
38348,
38349 and 50940. The main highlights of the agreement are:
Apache paid TAG a lump sum payment to satisfy its obligations
related to
funding Phase 1 operations under the Farmout Agreement;
TAG will retain all assets developed under the agreement, including
all
seismic and technical work completed by the Joint Venture; and
TAG retains a 100% interest in the above mentioned East Coast
Basin
permits.
The Company continues to focus on consultation and engagement
while
progressing its operational planning for upcoming drilling
activities.
The Company anticipates beginning drilling the first two wells of
the
Phase I drilling program in April
2013. These wells will test several
high-impact play objectives including the Waipawa and Whangai
source
rocks, utilizing conventional vertical drilling techniques similar
to
those used by TAG over many years in its successful Taranaki
Basin
operations.
In addition, TAG is currently preparing to drill one shallow
stratigraphic well on PEP 50940 as part of its work program
commitments
in the East Coast Basin. The stratigraphic slim-hole well is
similar in
design and operations to a farmers water well. The 450 meter
planned
depth will facilitate the gathering of geological rock data
before
being plugged and abandoned.
Canterbury Basin Operations
During the quarter, TAG acquired and processed an 80 kilometre
2D
seismic survey within the Company's new frontier exploration
permit
("PEP 52589") situated both offshore and onshore the Canterbury Basin,
South Island, New Zealand.
Interpretation of the seismic data is
underway to identify potential well locations. 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
wells.
Capital Expenditure
Expenditures on the Company's oil and gas properties during Q3 of
the
2013 fiscal year amounted to approximately $21 million, primarily
invested in the Company's Taranaki operations for drilling,
testing,
workovers and infrastructure as follows:
Cheal Field
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$19.54 million
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Sidewinder Field
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$0.29 million
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East Coast, Taranaki Offshore, Canterbury
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$1.17 million
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TAG Oil has filed its third quarter December
31, 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 will 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
including;
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
the Taranaki and East Coast Basins; 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.
All such statements 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,
availability of financing 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.
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.