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 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.
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, 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."
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, Cheal-C1, Cheal-C2 and Cheal-A8 as well as 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.