Flow testing at TAG wells confirms significant oil and gas discoveries

Source: TAG Oil Ltd.

TAG Oil Ltd. (TSX: TAO) and (OTCQX: TAOIF), is pleased to report that TAG's Cheal-C1, Cheal-C2 and Cheal-A8 wells have now been flow tested. Of particular significance is the result from Cheal-C2, which flow tested 14 million cubic feet of gas per day (~2,333 BOE per day). All of these wells are located within TAG's 100%-owned Cheal oil and gas field, located in Petroleum Mining Permit 38156 in the Taranaki Basin, New Zealand .

The Cheal-C1 and C2 wells are important step-out wells as they are located approximately 3.5 km's to the northwest of TAG's recently announced Cheal-B5 well and they significantly extend the known oil-and-gas saturation area within the Cheal permit. The success of Cheal-C1 and Cheal-C2 also adds a number of additional high-impact targets to TAG's prospect portfolio in the Mt. Messenger and Urenui formations.

Cheal-C1 Well
Cheal-C1 is now on production with oil being trucked to the Cheal Production Station and then sold. Cheal-C1 encountered 15 meters of net oil-and-gas pay within the Urenui and Mt. Messenger Formation and approximately 9 meters of pay was perforated within the primary Mt. Messenger Formation target. After a 10-day testing period, Cheal-C1 has produced an average of 240 barrels of light oil per day along with approximately 100mcf/day of gas for a total of 256 BOE per day.

Cheal-C2 Well
A 4-Point Isochronal test achieved stabilized flow rates of approximately 14 million cubic feet per day (~2,333 BOE per day) on a 48/64" choke, with associated condensate production increasing during testing. Cheal-C2 encountered more than 12 meters of net pay within the primary Mt. Messenger Formation target, all of which was perforated. Cheal-C2 is now shut-in for an extended pressure build-up test, after which facility plans can be initiated to commercialize this high-rate gas/condensate discovery.

Cheal-A8 Well
Cheal-A8, located in the original Cheal-A development area targeted the Urenui Formation and the well encountered 15 meters of oil-and-gas pay. Cheal-A8 flow tested approximately 50 barrels of oil per day and 3.4 million cubic feet per day of gas for a total of 616 BOE per day.

TAG CEO Garth Johnson commented, "Given these strong results, particularly from the recent Cheal-B5 and the Cheal-C2 wells, TAG is now planning the next stage of operations accordingly, following the recent approval for another 18 Cheal wells. Our drilling success continues to give credence to the value and significant upside potential I believe our Cheal field will continue to provide. As well as the continuous drilling program we expect through 2012, we now look forward to expanding our gas processing and transportation infrastructure in the Cheal area to commercialize these high deliverability gas / condensate discoveries while continuing to ramp up our production."

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