VANCOUVER, Sept. 2, 2011 /PRNewswire/ - TAG Oil Ltd. (TSX: TAO and OTCQX: TAOIF) is pleased to report that it has entered into a farmout agreement ("Agreement") with Apache Corporation ("Apache") to explore and potentially develop oil and natural gas resources in the East Coast Basin of New Zealand.
Apache has agreed to conduct a multi-phased exploration, appraisal and potential development program within TAG's East Coast Basin exploration permits PEP 38348, PEP 38349 and PEP 50940 ("the Permits"). The Permits comprise in excess of one million prospective acres of onshore oil and gas opportunities located on the southeast portion of the North Island. TAG currently holds a 100% working interest in the properties.
Apache has agreed to pay for a portion of TAG's direct costs incurred to date, as well as providing TAG a full carry on three phases of operations to a maximum agreed cost in each phase. If the agreed cost is exceeded in any phase, or if additional operations are conducted, Apache will pay a majority share of any drilling or seismic costs in the specified percentages set out in the Agreement.
Each phase of operations will include an aggressive program of both 2D / 3D seismic and drilling with Apache earning an increasing interest in the Permits as follows:Phase 1: Apache will earn a 50% interest in 5,120 acres of the Permits after operations are conducted and by committing to Phase 2. Phase 2: Apache will earn a 25% interest in the Permits after operations are conducted and by committing to Phase 3. Phase 3: Apache will earn a 50% interest in the Permits after operations are conducted and by committing to Phase 4 operations. Subject to certain conditions, the planned exploration work program will be conducted over the next four years. Seismic operations will start in 2011 with drilling to commence in 2012.