Substantial Production Increase & Strong Production Testing Announced by TAG Oil
VANCOUVER, Oct. 23, 2012 /PRNewswire/ - TAG Oil Ltd. (TSX: TAO and OTCQX: TAOIF), is pleased to announce the following production guidance and test results from its 100%-owned Taranaki Basin, New Zealand oil and gas fields.
Taranaki Basin Production Increase
TAG operates two lightly-explored new field discovery areas, the Cheal and Sidewinder oil and gas fields, which are both owned 100% by the Company. There are currently 19 wells at the Cheal field capable of production, eight of which are currently on-stream. The Sidewinder field has four wells, all currently on-stream.
The Company provides the following guidance toward anticipated "average" quarterly production rates (March 31 fiscal year-end) assuming timelines for infrastructure completion are met:
|Third Quarter:||3,000 BOE per day|
|Fourth Quarter:||4,000 BOE per day|
|First Quarter:||5,000 BOE per day|
These production forecasts do not consider any future success, and are based on TAG's existing successful wells as well as a modest amount of success for the recently spudded Cheal-B8 well.
TAG has now drilled 19 consecutive successful wells thus far and given this success, the Company is confident that production will continue to grow. In addition, higher-impact oil prospects and liquids-rich resource plays prospective for large reserves in the deeper formations are yet to be exploited, which could have significant impact on future Taranaki production rates and reserves.
Production Testing: Cheal-A11 and Cheal-C3
Production test rates encountered from the recently tested Cheal-A11 and Cheal-C3 wells over 14 days of production time averaged combined production rates exceeding 1,000 barrels of oil equivalent (BOE) per day (80% light oil). This recent production testing of the Cheal-A11 and Cheal-C3 wells continue to demonstrate the significant upside potential remaining within TAG's lightly-explored Taranaki Basin acreage.
Natural Gas Production and Infrastructure Upgrades
TAG's infrastructure expansion program continues to proceed on time with Phase One production increases anticipated shortly. Final completion is forecast for March 31, 2013 as planned. By that time, all present shut-in production will be on stream, including the establishment of TAG Oil as a natural gas and liquids producer and third-party processor in the thriving Taranaki region's natural gas market.
TAG Oil CEO Garth Johnson, commented, "Corresponding increases in cash flow are soon to be realized as we begin commissioning these material facility expansions. Based only on already known successful wells coming onstream, we expect production revenues from Taranaki to reach $120 million in fiscal 2014 (March 31 year-end), with good potential to grow revenues substantially through further shallow drilling as well as our other exploration efforts across more than 2.9 million acres."
For further information on TAG's Taranaki Basin fields, please visit the Company's blog at http://blog.tagoil.com/ to view the progress being made.
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 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 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.