TAG Oil Ltd. (TSX: TAO) and (OTCQX: TAOIF) is pleased to announce that development, appraisal and step-out drilling, and field optimization work has resumed at the Company's Taranaki oil and gas fields. Located in the main production fairway of the Taranaki Basin on the North Island, New Zealand, TAG is pursuing significant reserve growth through developing and exploiting its lightly explored discovery acreage in the shallow and high impact deep formations.
TAG anticipates that this next wave of low risk development work — focused on oil production growth in the proven Mt. Messenger (~2000m) and Urenui (~1400m) Formations — provides considerable potential for the Company to increase its high netback oil production and add new reserves for many years ahead.
As at March 31, 2014, TAG had a proved and probable reserve base in the Mt. Messenger and Urenui Formations of 5.9 million barrels of oil equivalent and approximately 477 bcf & 45 mmbls of undiscovered resource potential identified in Taranaki.(1). In October, 2014 TAG achieved record monthly production of 1,990 BOE (76% oil) per day.
Near-term anticipated schedule for Taranaki operations
TAG kicks off this Taranaki drilling campaign with the Cheal-E-JV-6 well (TAG 70%), and the Cheal-E7 well (TAG 100%).
The Cheal-E site is a new pool oil discovery of particular interest, as strong production performance continues from TAG's Cheal-E1, Cheal-E4, and Cheal-E5 wells. These wells continue to flow oil naturally from E-1 and E-4 and under artificial lift at E-5, making future development of the Cheal-E site area, as well as future drilling on TAG's 100%-controlled Cheal acreage, prospective for additional high productivity wells.
Following the Cheal-E site wells, the Nova-1 drill rig is planned to move to TAG's 100%-controlled Sidewinder oil and gas field to drill step out wells. These wells will target the oil potential identified from oil shows encountered in the six Sidewinder gas wells.
The Sidewinder discovery acreage borders the Taranaki Basin's original Mt. Messenger oil field, the Ngatoro/ Kaimiro field, a close analogy to TAG's Cheal and Sidewinder discoveries. In contrast to Cheal and Sidewinder which have been on full time production for seven and three years respectively, the Kaimiro/Ngatoro field has been producing for 31 years, and still has 7 million BOE's of recoverable reserves remaining from a 22 million BOE ultimate recovery total.(2)
Cardiff-3 Uphole Completion Update
Also in the Taranaki Basin, TAG controls 100% interest in several deep, high-impact drilling opportunities, which hold substantial resource potential in the Kapuni Group Formation. Recently, TAG successfully drilled and cased the Cardiff-3 well to total depth of 4,853m (15,900 ft) and encountered oil-and-gas-bearing tight sands, as expected, across three separate potential pay zones. The fracture stimulation of the first zone tested, the lower K3E zone, returned gas and condensate, but at uneconomic rates. After further technical analysis, TAG will now production test the primary uphole zones, the McKee and K1A Formations which are both producing formations in large fields along trend to the Cardiff prospect.
In other news, TAG announces that Dr. Douglas Ellenor has joined the board of directors of the Company, replacing Mr. Ronald Bertuzzi who is retiring. Dr. Ellenor holds a PhD in Geology and has a proven track record of finding oil as well as managing large capital programs, including major acquisitions and divestments over the course of his career. Dr. Ellenor brings to TAG extensive international experience, including 25 years with Shell Petroleum, with duties ranging from his early years working as a Junior Geologist, to becoming Head of Exploration and New Ventures, and ending with four years as President and CEO of the Shell Companies of Colombia.
"On behalf of TAG, I would like to personally extend my sincere appreciation to Ron for his many years of dedicated service to TAG Oil, starting back from the Company's formative years. Ron has been an enthusiastic and valuable contributor, and I wish him the best in retirement," commented Alex Guidi, founder and Chairman of TAG Oil. "I also welcome Doug to our board and look forward to working closely with him and our board to help guide TAG and leverage our strong corporate position."