VANCOUVER, March 1 /PRNewswire-FirstCall/ - TAG Oil Ltd., a
New Zealand-focused oil production
and exploration company listed on the TSX Venture Exchange in
Canada (trading symbol "TAO"), is
pleased to provide an operational update, and to advise that the
Company has filed its third-quarter financial report for the period
ended December 31, 2010. All figures
are in Canadian dollars unless otherwise noted.
TAG Oil Recent Highlights:
- Q3 production revenue of $3.85
million, up 60% over last quarter (nine months: $8.08 million up 71% from same period last
year)
- Net operating profit of $2.1
million, more than double over last quarter (9 months:
$3.8 million up 64% from same period
last year)
- $74.3 million in working capital,
no debt
- Sidewinder-1 discovery well achieves strong flow rates of 1300
to 1600 barrels of oil equivalent per day
- Strong results achieved from the Cheal-BH-1 horizontal well of
400 to 500 barrels of oil equivalent per day
- TAG completes acquisition of 20% interest in the Kaheru
Prospect with significant resource potential led by a subsidiary of
Australian-based Roc Oil Company Limited
- Aggressive Taranaki Basin drilling campaign underway, targeting
near-term reserve and production growth
Taranaki Basin Operations
Following the strong results achieved with the Sidewinder-1 oil
and gas discovery and the Cheal-BH-1 horizontal well, TAG Oil has
initiated an aggressive drilling campaign that will further exploit
these prolific shallower formations identified across the Company's
Taranaki Basin acreage. These wells will target both the main
producing Mt. Messenger (~1800m) and the shallower Urenui (~1400m)
formations. TAG's goal with this drilling campaign is to build
near-term reserves and cash flow prior to drilling operations on
the deeper Taranaki targets, such as the condensate-rich
Cardiff gas discovery.
Cheal Oil and Gas Field - 100% Interest
The Cheal field is continuing to perform as anticipated,
producing approximately 840 barrels of oil equivalent (BOE) per
day. Production capabilities are being intentionally "choked back"
for the time being, to facilitate drilling operations underway
within the field.
The production test continues on Cheal-BH-1, the first
horizontal well drilled into the Mt. Messenger Formation in
New Zealand. Initial testing,
using a conservative range of low draw-down configurations,
achieved production rates ranging from 400 to 500 BOE per day
(predominantly oil with no water). TAG recently re-entered the
Cheal-BH-1 and perforated an additional 225 meters of pay and
wireline work, conducted after the perforation confirmed production
flow from the lateral section was being constrained by fracture
sand and perforation-gun debris. A routine coiled tubing workover
has been scheduled to clean out the debris within the production
tubing and further production capabilities from the Cheal-BH-1 will
be assessed upon completion of the workover.
Sidewinder Oil and Gas Field - 100% Interest
TAG Oil's Sidewinder-1 discovery well is expected to commence
first production by mid-2011, with estimated initial production of
8 to 10 million cubic feet of gas per day (1300 to 1600 barrels of
oil equivalent per day). Construction of the Sidewinder Production
Station, including a 3-km pipeline link into New Zealand's main gas transmission grid is
underway: This new facility will accommodate oil and gas production
from Sidewinder-1, as well as future Sidewinder wells and any new
exploration successes arising from the active drilling campaign
underway in the Sidewinder permit area.
Please see
http://tagoil.com/20101103-TAG-Oil-Announces-Strong-Results-at-Sidewinder-1-Flow-T.asp
for more information on the Sidewinder-1 discovery.
East Coast Basin - 100% Interest
TAG continues to move towards an exploration drilling campaign
on the North Island's east coast, targeting widespread fractured
oil shale prospects and conventional targets at depths ranging from
250 to 2000 meters. Several shallow stratigraphic core wells are
being drilled to help further define depths and optimal drilling
locations where the Waipawa Black Shale and Whangai Shale
formations will be intersected. These oil-rich, naturally fractured
formations compare favorably to fractured shale formations such as
the Bakken Shale in the Williston Basin, and have been
independently assessed to have significant undiscovered resource
potential.
To learn more on TAG's fractured shale prospects, please
visit:
http://www.tagoil.com/fractured-shale.asp
Summary of Third-Quarter Results
The Company recorded production revenue of $3.85 million (nine months: $8.08 million) and a net loss for the three-month
period of $260,240 (nine month loss:
$649,624). Expenditures on the
Company's oil and gas properties during the quarter totaled
$7 million (nine months: $12.3 million) relating primarily to drilling,
testing and completing the Sidewinder-1 and Cheal-BH-1 wells.
Liquidity and Capital Resources
The Company ended the third quarter of the 2011 fiscal year with
49,457,841 shares outstanding (57,066,060 fully diluted) with no
debt, $74.38 million in cash and
$74.3 million in working capital.
This news release summarizes the Company's 2011 third-quarter
results of operations and financial condition and should be read in
conjunction with its Quarterly Report, which contains unaudited
consolidated financial statements and Management's Discussion and
Analysis. Copies of these documents can be obtained electronically
at: www.sedar.com or through the Company's website
http://www.tagoil.com/financial-reports.asp.
Important Information:
Undiscovered Hydrocarbon-In-Place (equivalent to undiscovered
resources) is that quantity of petroleum that is estimated, on a
given date, to be contained in accumulations yet to be discovered.
There is no certainty that any portion of the undiscovered
resources will be discovered or that, if discovered, it will be
economically viable or technically feasible to produce them.
"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 Anticipated Results and
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.
These statements are based on certain factors and assumptions
including those relating to TAG Oil's successful 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, oil and gas price assumptions
and fluctuations, foreign exchange rates, expected growth, results
of operations, performance, prospects, evaluations and
opportunities and effective income tax rates. 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 Oil Field and Sidewinder-1 project area—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.
But, 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 could cause actual results to differ from those
contained in the forward-looking statements related to upcoming
operations, production forecast modeling and other items that are
set forth in, but are not limited to, filings that the TAG Oil and
its independent evaluator have made, including the TAG Oil's most
recent reports in Canada under
National Instrument 51-101.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE TAG Oil Ltd.