VANCOUVER, June 25, 2012 /PRNewswire/ - TAG Oil Ltd. (TSX: TAO and OTCQX: TAOIF), is pleased to provide a Taranaki Basin drilling and operations update. This update is being provided prior to TAG's year-end results, which will include an independent assessment on proven, probable and possible reserves, and is expected to be announced on June 29, 2012.
Taranaki Basin Production
Current daily production is approximately 2,600 to 2,800 barrels of oil equivalent per day ("BOE"). The split between oil and natural gas is currently approximately 57% oil to 43% gas until such time as the enhancements to Cheal's artificial lift capabilities are completed, allowing oil currently held behind-pipe to flow.
There are currently 18 wells at the Cheal oil and gas field that are capable of production, eight of which are currently on-stream. In addition, TAG has two of the four commercial wells currently on-stream at Sidewinder. Once infrastructure upgrades have been fully completed, a minimum of ten more Cheal wells and two additional Sidewinder wells will be placed into full-time production. In addition, results from TAG's ongoing drilling program and a number of workover operations are expected to contribute to future increases in production.Because of the lightly explored nature of TAG's Taranaki Basin fields, it is difficult to accurately estimate future daily production. TAG is confident however, that with twelve successful wells already drilled with behind-pipe production awaiting tie-in, daily oil and gas production will increase to more than 5000 BOE per day over the next six to nine months, with potential to exceed that estimate depending on well performance, the outcome of additional development drilling, exploration drilling and workover operations. Sidewinder and Cheal Drilling Program Cheal-C3: Electric logs indicate economic oil-and-gas pay in the recently drilled Cheal-C3 well consistent with other wells drilled in the Cheal "C" block. Cheal-C3 recorded a total of 17.5 meters of pay including 6.5 meters of pay within the Urenui Formation and 11 meters of pay in the Mt. Messenger Formation. It is important to note that Cheal-C3 was drilled updip of the Cheal-C2 gas/condensate discovery, and continues to extend the known oil and gas saturation area in this new discovery site. The Cheal-C2 discovery well achieved initial flow rates of approximately 14 million cubic feet of gas per day (~2,333 BOE per day), and with associated condensate production. Completion and testing operations of Cheal-C3 will be conducted in the near future. Cheal-C4: Drilling is presently underway at the Cheal-C4 location, which is the first down-dip follow-up well to the Cheal-C1 oil discovery announced on December 8, 2011. It is estimated that Cheal-C4 will reach total depth on or about June 27, 2012. Cheal-A11 and Cheal-A12: TAG intends to drill the Cheal-A11 and A12 wells at the Cheal-A site as follow-ups to the recent success of the Cheal-A8, Cheal-A9 and Cheal-A10 wells. These wells will be drilled back-to-back once TAG and Webster Drilling's VR500 Nova-1 rig has been released from drilling the Cheal-C4 well. Sidewinder-5 and Sidewinder-6: On June 6, 2012 TAG received consent from the New Plymouth District Council (NPDC) to drill four new wells within TAG's 100%-owned Sidewinder Oil and Gas Field in New Zealand. The final decision granting consent in support of TAG's drilling operations was handed down after affected landowners requested a hearing. The consent grant is subject to an appeal process however if an appeal is not filed, TAG plans to resume drilling operations at Sidewinder. This drilling at Sidewinder will represent the first wells drilled since the four Sidewinder oil and gas discovery wells were drilled in 2010 and 2011. In the event these Sidewinder wells become temporarily delayed due to an appeal, TAG plans to move the Nova-1 drill rig to the Cheal-B site and spud the Cheal-B8 well which would be the third well drilled targeting similar geological characteristics as the high-deliverability Cheal-B5 and Cheal-B7 oil wells.
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