TAG Oil Ltd, is pleased to report the Cheal-B5 discovery well is naturally flowing at an average rate of 1,870 barrels of oil equivalent per day, consisting of 1,700 barrels of oil and 1.0 million cubic feet of gas per day flowing through a 40/64" choke over a five-day test period.
TAG perforated and flow tested 20 meters of continuous oil-and-gas pay in the Cheal-B5 well within the 35 meters of net pay intercepted within the primary Mt. Messenger Formation (~1800m) target. This is the most extensive pay interval ever recorded by a Cheal well, and includes record porosities of up to 30% (averaging over 25%) and a record 60% total gas kick encountered while drilling.
The Cheal-B5 well is the third well in the current 10-well drilling campaign, and it was drilled, tested and placed on full-time production in less than 30 days, with capital payback anticipated in less than 14 days. TAG is now making preparations to drill the Cheal-B6 and the Cheal-B7 wells.
"Given the success of our drilling campaigns and the excellent result from Cheal-B5, results indicate substantially more upside potential in the Cheal field than originally anticipated." commented TAG CEO Garth Johnson. "This result has once again exceeded our expectations and could prove to be a game-changer for TAG's asset valuation and the scope of the Company."
The Cheal-B5 well is situated in close proximity to TAG's Cheal Production Facility and existing infrastructure. As a result, TAG was immediately able to place the well on full-time production. With this latest discovery, the Cheal Facility is now producing approximately 2,700 barrels of oil equivalent-predominately oil-per day.
Once the current 10-well campaign is complete, TAG plans to commence the next drilling campaign following approvals for another 18 wells within the Company's 100%-owned Cheal oil and gas field, located in Petroleum Mining Permit 38156 in the Taranaki Basin New Zealand. For further information on the Cheal oil and gas field please visit tagoil.com/operations.asp.
About TAG Oil Ltd.
TAG Oil Ltd. (tagoil.com)is a Canadian-based production and exploration company with operations focused exclusively in New Zealand. With 100% control over all its core assets, including oil and gas production infrastructure, TAG is anticipating 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 1,300 sections of land in the onshore Taranaki and East Coast Basins of New Zealand's North Island.
In the East Coast Basin, TAG has entered into a farm-out agreement with Apache Corp to explore and potentially develop the major unconventional resource potential estimated 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.
"BOE"s 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. All estimates and statements that describe Cheal-B5 and daily production at Cheal or TAG's objectives, goals, or future plans, including the drilling, completion and flow testing plans related to the Company's ten well program at Cheal and Sidewinder located in the Taranaki Basin of New Zealand, 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. Consequently, the Company's actual results may vary materially from the information provided in this release and there is no representation by TAG Oil that actual results realized in the future would be the same in whole or in part as those presented herein.
Additional risk factors and uncertainties that could cause actual results to differ from those contained in the forward-looking statements are set forth in, but are not limited to, filings that the Company and its independent evaluator have made, including the Company's Annual Information Form and its most recent reports in Canada under National Instrument 51-101.