TAG Oil to Drill Back-to-Back Wells in Cheal Oil Field, Settles Dispute

VANCOUVER, May 27  /PRNewswire-FirstCall/ -- TAG Oil Ltd. (TSX-V: TAO and OTCBB: TAGOF) is pleased to announce the upcoming drilling of the A6 and A7 wells in the Cheal Oil Field, Taranaki Basin, New Zealand. The first well is scheduled to commence drilling on or about June 9, 2008.

These new wells will be directionally drilled from the Cheal "A" Site which is the location of the Cheal Production Station, and will target the same oil producing Mt Messenger sands that are currently generating substantial revenue for TAG. It is anticipated that the existing infrastructure will facilitate immediate tie-in of all incremental oil production.

The agreement to drill the A6 and A7 wells is part of an arrangement between the Cheal Joint Venture partners TAG 30.5% and operator Austral Pacific Energy Ltd. 69.5% to resolve the dispute related to the construction of the Cheal Production Station. The agreement includes a full and final settlement of all claims, a commitment to drill the A6 and A7 wells, a comprehensive Cheal technical study program and a best efforts approach to creating a production Joint Venture Operating Agreement to guide future work programs.

The agreement also includes Austral issuing 2.273 million common shares to TAG, subject to TSX-V approval, with anti-dilutive protection provided for a period of six months and in return TAG has agreed not to dispose of these shares for a period of twelve months. In addition, Austral has agreed to pay TAG NZ$300,000 and TAG has agreed to pay its share of the remaining Cheal facilities costs estimated at NZ$563,000 that were withheld pending a resolution to the dispute. Furthermore, in the event Cheal A7 is successfully completed for production, TAG will receive an additional US$250,000 payable in equal instalments over twelve months.

"I am pleased to bring resolution to this matter and more importantly, we can now move forward on further development of the Cheal Oil and Gas Field and exploration in the offsetting Greater Cheal acreage where there is good potential for additional new pool discoveries." explained TAG Oil's Chief Executive Officer, Garth Johnson.

TAG Oil is a well funded and debt free new oil and gas producer with a near-term focus of adding value through full development of Cheal and exploration opportunities within the Company's onshore Taranaki Basin portfolio.

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. Actual results may vary materially from the information provided in this release. As a result 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. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. Factors that could cause actual results to differ from those contained in the forward-looking statements, are set forth in, but are not limited to, filings that the Company and its independent evaluator have made, including the Company's most recent reports in Canada under National Instrument 51-102 and in the United States under Forms 20-F and 6K.

  The TSX Venture Exchange has not reviewed and does not accept
  responsibility for the adequacy or accuracy of this release.




CONTACT: Garth Johnson, CEO, [phone], Website: http://www.tagoil.com/ 

DATASOURCE: TAG Oil Ltd.



CONTACT: Garth Johnson, CEO, [phone], Website:

http://www.tagoil.com/

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