Strong initial flow test results were achieved, with each individual well having the capability to initially produce approximately 200 barrels of light oil per day, plus associated gas from high-quality reservoir sands.
Permit-wide 3-D seismic interpretation, including data from pre-existing wells which all intersected Urenui pay, indicates that the Urenui Formation has been deposited as a blanket sand, and is prospective for oil discovery across the Cheal permit.
The Cheal-B6, Cheal-A9 and Cheal-A10 wells will be placed on full-time production, along with other established production, once the enhancements to Cheal’s artificial lift capabilities have been completed. These upgrades will allow TAG Oil to produce all existing and future wells simultaneously, and are expected to be complete within the next three months.
TAG Oil CEO Garth Johnson commented,“These results continue to demonstrate the significant upside potential at Cheal, and they open a new widespread oil play across the permit. Based on these consistent results, we will now integrate the Urenui oil play into our overall development and exploration strategy, which will also include Mt. Messenger wells and the deeper liquids-rich Kapuni Formation gas play.”
TAG also reports that the new VR500 drill rig, which the Company has under exclusive contract, has been mobilized to the Cheal-C site discovery area in preparation to spud the Cheal-C3 and Cheal-C4 wells. The Cheal-C3 and Cheal-C4 wells are follow-on wells to the Cheal C site discoveries, including the Cheal-C2 gas condensate discovery well, primarily targeting the Mt. Messenger Formation. The Cheal-C2 well achieved stabilized flow rates of approximately 14 million cubic feet gas per day (~2,333 barrels of oil equivalent per day) on a 48/64” choke, with associated condensate production, which was increasing during the 10-day flow test.
The 100%-TAG-owned Cheal oil and gas field is located in the Taranaki Basin of New Zealand.
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 Corporation 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.
“BOEs” 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 Anticipated Results and 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. Such statements can generally, but not always, be identified by words such as “expects,” “plans,” “anticipates,” “intends,” “estimates,” “forecasts,” “schedules,” “prepares,” “potential” and similar expressions, or that events or conditions “will,” “would,”,“may,” “could” or “should” occur. These statements are based on certain factors and assumptions including:
A. all estimates and statements that describe the Company’s objectives, goals, or future plans relating to the seismic, testing and drilling programs in Taranaki 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, including factors and assumptions regarding the management’s views on the oil and gas potential in the Permits, well performance, the success of any operations, completing infrastructure and the costs necessary to complete the operations; and
B. those relating to TAG Oil’s successful exploration and development of its oil and gas properties within the Cheal and Sidewinder project areas, the production and establishment of additional production of oil and gas in accordance with TAG Oil’s expectations at Cheal and Sidewinder, well performance, the completion of new infrastructure at Cheal and Sidewinder, the increase of cash flow from new production, oil and gas price assumptions and fluctuations, foreign exchange rates, expected growth, results of operations, performance, prospects, evaluations and opportunities and effective income tax rates. While TAG Oil considers these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect. Actual results may vary materially from the information provided in this release, and there is no representation by TAG Oil that the actual results realized in the future will be the same in whole or in part as those presented herein.
TAG Oil is involved in the exploration for and production of hydrocarbons, and its property holdings with the exception of the Cheal and Sidewinder project areas are in the grass roots or primary exploration stage. Exploration for hydrocarbons is a speculative venture necessarily involving substantial risk. There is no certainty that the expenditures incurred on TAG Oil’s exploration properties will result in discoveries of commercial quantities of hydrocarbons. TAG Oil’s future success in exploiting and increasing its current reserve base will depend on TAG Oil’s ability to develop its current properties and on its ability to discover and acquire properties or prospects that are producing. But, there is no assurance that TAG Oil’s future exploration and development efforts will result in the discovery or development of additional commercial accumulations of oil and natural gas.
Other factors that could cause actual results to differ from those contained in the forward-looking statements are also set forth in filings that TAG and its independent evaluator have made, including TAG’s most recently filed reports in Canada under National Instrument 51-101, which can be found under TAG’s SEDAR profile at sedar.com/.
TAG undertakes no obligation, except as otherwise required by law, to update these forward-looking statements in the event that management’s beliefs, estimates or opinions, or other factors change.