Company achieves 62% increase in production revenue
New infrastructure build on track plus four new wells drilled
with excellent results.
VANCOUVER, Nov. 15, 2012 /PRNewswire/ - TAG Oil Ltd. (TSX:
TAO) and (OTCQX: TAOIF), today announced its financial results for
the quarter ended September 2012.
Q2-2013 and Recent Operating Highlights
- Production revenue increased 62% to $21.44 million for the six months ended
September 30, 2012, compared to
$13.23 million in the comparable
period last year;
- Production revenue increased to $9.62
million during Q2-2013 compared to $7.38 million for Q2-2012;
- Net operating cash inflow increased to $5.81 million (six months: $14.98 million) for the quarter compared to
$5.34 million (six months:
$7.11) for Q2-2012;
- TAG sold 68,178 (six months: 170,058) barrels of oil during
quarter at an average price of $109.97 per barrel (six months: $108.41 per barrel);
- TAG sold 80,592 boe (six months: 112,728 boe) of gas during the
quarter at an average price of $4.38
per mcf (six months: $4.44 per
mcf);
- Infrastructure build ontrack to allow production of 3000 boe
p/d of behind pipe production to come online;
- Successfully drilled Cheal-A12, bringing the total to 19
straight successful wells in Taranaki;
- Currently drilling Cheal-B8 with 26 meters of net pay being
identified on electric logs to date;
- Acquired three high-impact frontier exploration permits located
in the East Coast and Canterbury Basins of New Zealand;
- All work carried out to the highest health and safety and
environmental standards.
Liquidity and Financial Summary
At the date of this report, TAG is debt free with approximately
$86 million in cash on the balance
sheet. Production revenue for the quarter was $9.62 million (six months: $21.44 million) compared to $7.38 million (six months: $13.23 million) for the comparable quarter last
year and the Company generated a net profit for the quarter of
$1.20 million (six months:
$6.76 million) before deducting
$1,499,954 (six months: $2,340,675) for non-cash share-based
compensation.
TAG currently has 59,773,923 common shares outstanding and
63,481,186 common shares outstanding on a fully diluted basis.
Taranaki Basin Operations
TAG finished Q2-2013 with excellent drilling results, and an
ongoing Taranaki program underway with electric logs indicating
economic oil-and-gas pay in recent drilling as follows:
- Cheal-C4 recorded a total of 17.5 meters of pay
- Cheal-A11 recorded a total of 30 meters of pay
- Cheal-A12 recorded a total of 23 meters of pay
- Cheal-B8 recorded a total of 26 meters of pay to date with
drilling continuing at the reporting date
Summary of TAG well status
Site |
Producing |
Behind
pipe |
Cheal A |
A10, A11 |
A1, A3, A7, A8, A9,
A12 |
Cheal B |
BH-1, B3, B5 |
B1, B2, B4ST, B6, B7, B8 |
Cheal C |
|
C1, C2, C3, C4* |
Sidewinder |
SW1, SW2, SW3,
SW4 |
|
* Drilled and awaiting/undergoing production test
TAG has drilled 19 consecutive successful wells in Taranaki,
which have necessitated the infrastructure upgrades now underway,
and expected to be complete on schedule by March 31, 2013.
TAG's infrastructure project will allow the Company to become
completely self-sufficient in producing, processing and marketing
all oil and gas. Once completed, TAG can initiate production on all
oil and gas wells that have been drilled but are not yet producing
(behind pipe) and any additional production arising from further
successful wells drilled.
Cheal Oil and Gas Field - 100% Interest
Successful drilling throughout 2011/2012 and now Q2-2013 within
the Cheal field has resulted in a material increase to the
Company's forecasts. TAG expects continued growth through the
following activity:
- Continued exploration and development drilling: pre-emptive
right on the Nova-1 drilling rig ensures access to services;
- Infrastructure enhancement project underway at Cheal ensures
maximum value is achieved from behind-pipe production and new
discoveries making TAG completely self-sufficient for oil and gas
production, processing and marketing;
- Cheal's new planned pipeline now has all landowner agreements
signed and consent has been received with construction now
underway;
- Drilling the liquids-rich deep gas target such as Cardiff and Hellfire; 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 Q2 of fiscal
2014;
- Completion of Cheal's secondary recovery scheme, which is
forecast to cost-effectively increase recovery factors within the
Cheal A pool's proved and probable oil reserves.
Sidewinder Oil and Gas Field - 100% Interest
On June 6, 2012, TAG received
consent to drill four new wells within the Sidewinder permit, which
was subsequently appealed by one opposing party. Progress has been
made and TAG expects the appeal to be dismissed and drilling
operations to resume as planned. A successful resolution is
expected in Q3 of fiscal 2013.
TAG has planned a new multi-well drilling program using its
proprietary 3D seismic, combined with new 2D seismic that was
acquired during fiscal 2012. The Sidewinder Permit is lightly
explored, where only 2.5% of TAG's acreage has been drilled to
date. Significant exploration potential remain in both shallow and
deeper targets within the Permit area. Near-term operations are as
follows:
- Drill a minimum of four new exploration wells;
- 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.
East Coast Basin Operations
The farmout agreement with Apache Corp in Q1 2012 was completed
to explore and potentially develop oil and natural gas resources in
the East Coast Basin of New
Zealand. Apache Corp has agreed to spend up to $100 million to conduct a multi-phased
exploration, appraisal and potential development program within
TAG's East Coast Basin Petroleum Exploration Permits PEP 38348, PEP
38349 and PEP 50940 (the "Permits").
TAG and Apache Corp have completed their 2D seismic program
within the Permits and the TAG / Apache JV are continuing an
extensive consultation process relating to the upcoming drilling of
four vertical wells targeting the Whangai and Waipawa source rocks.
During the quarter, construction and surface lease access consents
were awarded. Upon receipt of the necessary drilling consents from
district and regional councils being obtained in a timely manner,
TAG and Apache anticipate well-site construction to begin in the
first quarter of calendar 2013 followed shortly by drilling
operations.
In addition to East Coast Basin permits noted above that form
the TAG/Apache JV, TAG completed the acquisitions of a 100%
interest in two additional permits during the quarter: PEP 53674
and PEP 52676.
Canterbury Basin Operations
During the quarter, TAG Oil also acquired a new frontier
exploration permit ("PEP 52589") in the Canterbury Basin, situated both offshore and
onshore in New Zealand. At the
date of this report, TAG has initiated the acquisition of 80 km's
of new 2D seismic over certain leads identified within the permit.
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 Q2
of the 2013 fiscal year amounted to approximately $22.1 million, primarily invested in the
Company's Taranaki operations for drilling, testing, workovers and
infrastructure as follows:
Cheal Field |
|
|
|
|
$18.6 million |
Sidewinder Field |
|
|
|
|
$1.5 million |
East Coast, Taranaki Offshore, Canterbury |
|
|
|
|
$2.0 million |
The East Coast Joint Venture invested approximately $0.8 million during the quarter.
TAG Oil has filed its second quarter September 30, 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 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.