VANCOUVER, April 16, 2015 /PRNewswire/ - TAG Oil Ltd. (TSX:
TAO and OTCQX: TAOIF): Mr. Alex
Guidi, founder and Interim CEO of Canadian-based
New Zealand operator TAG Oil Ltd.,
respectfully is providing the following update on the Company's
Taranaki Basin oil and gas production, operations, and coming
drilling activity.
TAG's near-term focus is on low-expenditure, in-field production
optimization opportunities which have been identified to lift
production. In addition, an extensive geotechnical and engineering
review is being completed over TAG Oil's Taranaki development and
exploration acreage with a view to initiate the next round of
drilling on the Company's operated Cheal and Sidewinder Exploration
and Development acreage later this year.
Oil and Gas Production
Average production (primarily
from the Cheal oil field) for the first 15 days of April, 2015, was
2,252-BOE/d (gross) or 1,970 BOE/d (net), an increase of 116-BOE/d
(gross) and 127 BOE/d (net) over March production. Fiscal
year-to-date, up to March 31, 2015
production is estimated to have averaged 2,118 BOE/d (gross) or
1,856 BOE/d (net). TAG's average per barrel operating cost is
approximately US$26 per BOE, and the
Company's oil is sold on the premium Brent oil index.
Cheal Oil Field Production & Development
The
Cheal oil field continues to provide TAG with a stable,
high-netback production base and long-life reserves, with revenue
capable of funding drilling costs while building production and
reserves.
TAG plans to fully develop the 100%-controlled Cheal oil and gas
field, which has been substantially de-risked by the 36 wells
drilled to date across the field. Permit-wide 3D seismic coverage
indicates the entire Cheal permit area is target rich, with more
than 70 development drilling locations that have been identified
and high graded. Encouraging results continue to be achieved at
Cheal including in the Cheal East area, where the naturally free
flowing Cheal-E1 well (TAG: 70%) has been producing gross volumes
of 500 to 600 boe/d (82% oil) on choke for 16 months. With drilling
and completion costs of under US$3
million per well, it gives an indication of the unrecognized
upside and robust economic potential that exists within TAG's
acreage.
Cardiff Gas Discovery
TAG's 100% controlled mining
permit, PMP 38156, where the Company's Cheal oil field is
located, also contains the large Cardiff structure of the deeper Kapuni Group
formations, which is on trend and geologically similar to the large
legacy deep gas condensate fields that have been discovered in the
Taranaki Basin.
In December 2013, TAG completed
drilling of the Cardiff-3 well,
which was drilled to a total depth of 4,863 meters and intercepted
230 meters of gas and condensate bearing sands in three target
zones within the Kapuni Group. The deepest of the three zones, the
K3E was perforated and hydraulically fractured. It produced
gas and condensate with no formation water, but at sub-commercial
rates. Independent expert analysis of the results has concluded
that either the fracture stimulation was ineffective because of a
poor cement bond over the K3E interval, or skin damage must exist
in the near wellbore area, restricting flow. As a result TAG is
completing engineering, design and associated planning to
recomplete and fracture stimulate a series of other Kapuni group
(deep) formations identified within the wellbore.
Sidewinder Field
The Sidewinder acreage provides TAG
with the opportunity to potentially develop another field similar
to Cheal and the adjacent the Ngatoro/ Kaimiro field, which is a
60-million barrel oil field and is a close analogue to the
potential contained within TAG's Sidewinder acreage and TAG's Cheal
field. TAG has now assembled a 22,000-acre exploration play area
around its Sidewinder gas discovery and plans to commence drilling
of the SW-1B and SW-2B wells later in the year. Both wells
will target oil-prone prospects in the Miocene-aged, Mt. Messenger
formation at approximately ~2000 meters depth. To date, TAG has
drilled seven shallow gas wells on the Sidewinder A site, however
these new wells will target the oil potential identified within the
Sidewinder B area.
TAG Oil Ltd.
TAG Oil Ltd. (http://www.tagoil.com/) is
a Canadian-based, development-stage oil and gas company with
extensive operations—including production infrastructure—in the
Taranaki region of New Zealand. As
one of New Zealand's leading
operators, TAG is positioned with attractive exploration activities
in the lightly explored Taranaki Basin production fairway, and
poised for reserve-based growth. As a low cost, high netback oil
and gas producer, TAG is debt-free and reinvests its cash flow into
development and step-out drilling along trend with the Company's
existing production.
BOEs:
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 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. Such statements can be generally, but not always, be
identified by words such as "expects", "plans", "anticipates",
"intends", "estimates", "forecasts", "guidance", "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, forecasts, guidance, production rates, test rates,
optimization, timing of operations, increased pace of drilling,
statements regarding prospects being drill ready and/or future
plans with respect to the drilling and field optimization work in
the Taranaki Basin 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 and production, geological
risks, marketing and transportation, availability of adequate
funding, volatility of commodity prices, environmental risks,
competition from other producers, and changes in the regulatory and
taxation environment. 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 would 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 NI 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.