VANCOUVER, July 24, 2014 /PRNewswire/ - TAG Oil Ltd. (TSX:
TAO) and (OTCQX: TAOIF) is pleased to announce commencement of
drilling operations at the Company's 100%-controlled Waitangi
Valley-1 exploration well in Petroleum Exploration Permit 38348,
located in New Zealand's East
Coast Basin. The Waitangi Valley-1 well spudded on July 23, 2014 and will be drilled to a total
depth of approximately 3,600 meters (11,800 feet).
Waitangi Valley-1 is situated 250 kilometers north of TAG's
Ngapaeruru-1 unconventional well, and is the Company's second high
impact exploration well targeting the Waipawa Black Shale and
Whangai Formation source rocks. Waitangi Valley-1 is interpreted
with proprietary seismic data to potentially intersect stacked,
repeated sections of these naturally fractured, over-pressured
oil-and-gas-rich source rocks as well as conventional oil and gas
bearing sands in the Miocene section at depths between 250 to 2000
meters.
Independent assessments on TAG's acreage have estimated, on a
mid-range (P50) basis, an undiscovered resource potential of
approximately 14 billion barrels of oil initially in place within
less than 20% of the Company's East Coast Basin acreage. These
resource estimates were prepared by Sproule International Limited
with an effective date of September 30,
2007, and by AJM Petroleum Consultants with an effective
date of September 1, 2008. Each is a
qualified reserves evaluator in accordance with National Instrument
51-101 and the Canadian Oil and Gas Evaluation Handbook.
The Waipawa Black Shale and Whangai Formations are the source of
the high quality (50-degree API) light oil found in nearby oil
seeps, core sampling, and shallow drilling in the Waitangi area.
These source rocks are comparable in both total organic carbon
content (TOC) and maturity levels to successful unconventional oil
and gas plays such as the Bakken Shale of North America's Williston Basin and the Eagle
Ford shale in South Texas.
"Waitangi Valley-1 will provide TAG with the opportunity to
acquire additional sub-surface data on this major exploration
prospect, as well as potentially establish the first unconventional
production in the East Coast Basin. The Company has previously
confirmed that these source rocks are responsible for the oil
seeping to the surface just 5 km from the Waitangi Valley-1
location, so this well may give us the chance to produce oil
directly from the source," commented TAG Oil's Chief Operating
Officer Drew Cadenhead. "Our team
has done a great job in safely preparing our lease, mobilizing the
drilling rig and other necessary equipment into a remote location
ahead of schedule with no incidents or complaints from local
stakeholders. We intend to continue that track record throughout
the drilling process and we're confident we will execute the
Waitangi Valley operations as safely and diligently as we have all
our New Zealand operations."
TAG Oil Ltd.
TAG Oil Ltd. (http://www.tagoil.com/) is
a Canadian-based production and exploration company with operations
focused exclusively in New
Zealand. With 100% ownership over all its core assets,
including extensive oil and gas production infrastructure, TAG is
enjoying significant organic value creation through exploration
success and ongoing development and appraisal drilling of several
light oil and gas discoveries. As New
Zealand's leading explorer, TAG actively drills high-impact
conventional and unconventional exploration prospects identified in
the Taranaki Basin, East Coast Basin and Canterbury Basin that covers 2.8 million net
acres of land, prospective for major discovery in New
Zealand.
Resource Estimates:
Best Estimate is
considered to be the best estimate of the in-place volumes that
will actually be present. It is equally likely that the actual
in-place volumes will be greater or less than the best estimate. If
probabilistic methods are used, there should be at least a 50
percent probability (P50) that the in-place volumes will equal or
exceed the best estimate.
Undiscovered Resources and
BOEs:
TAG Oil has adopted the standard of six
thousand cubic feet of gas to equal one barrel of oil when
converting natural gas to "BOEs." 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.
Undiscovered Oil Initially-In-Place (equivalent to
undiscovered resources) is that quantity of petroleum that is
estimated, on a given date, to be contained in accumulations yet to
be discovered. The recoverable portion of undiscovered petroleum
initially in place is referred to as "prospective resources," the
remainder as "unrecoverable."
Prospective resources are those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
undiscovered accumulations by application of future development
projects. Prospective resources have both an associated
chance of discovery and a chance of development. There is no
certainty that any portion of the resources will be
discovered. If discovered, there is no certainty that it will
be commercially viable to produce any portion of the
resources.
Exploration for hydrocarbons is a speculative venture
necessarily involving substantial risk. TAG's future success in
exploiting and increasing its current reserve base will depend on
its ability to develop its current properties and on its ability to
discover and acquire properties or prospects that are capable of
commercial production. However, there is no assurance that TAG's
future exploration and development efforts will result in the
discovery or development of additional commercial accumulations of
oil and natural gas. In addition, even if further hydrocarbons are
discovered, the costs of extracting and delivering the hydrocarbons
to market and variations in the market price may render uneconomic
any discovered deposit. Geological conditions are variable
and unpredictable. Even if production is commenced from a well, the
quantity of hydrocarbons produced inevitably will decline over
time, and production may be adversely affected or may have to be
terminated altogether if TAG encounters unforeseen geological
conditions. TAG is subject to uncertainties related to the
proximity of any reserves that it may discover to pipelines and
processing facilities. It expects that its operational costs will
increase proportionally to the remoteness of, and any restrictions
on access to, the properties on which any such reserves may be
found. Adverse climatic conditions at such properties may also
hinder TAG's ability to carry on exploration or production
activities continuously throughout any given year.
The significant positive factors that are relevant to the
resource estimate are:
- Proven production in close
proximity;
- Proven commercial quality reservoirs in
close proximity; and
- Oil and gas shows while drilling wells
nearby.
The significant negative factors that are relevant to the
resource estimate are:
- Tectonically complex geology could
compromise seal potential; and
- Seismic attribute mapping in the two,
deep, liquids'-rich gas plays can be indicative but not certain in
identifying proven resource.
Analogous Information:
Certain information in this
news release may constitute "analogous information" as defined in
NI 51-101, including, but not limited to, information relating to
areas with similar geological characteristics to the lands
held by TAG. Such information is derived from a variety of
publicly available information from government sources, regulatory
agencies, public databases or other industry participants (as at
the date stated therein) that TAG believes are predominantly
independent in nature. TAG believes this information is relevant as
it helps to define the reservoir characteristics in which TAG may
hold an interest. TAG is unable to confirm that the analogous
information was prepared by a qualified reserves evaluator or
auditor and in accordance with the Canadian Oil and Gas Evaluation
Handbook. Such information is not an estimate of the reserves or
resources attributable to lands held or to be held by TAG and there
is no certainty that the reservoir data and economics information
for the lands held by TAG will be similar to the information
presented therein. The reader is cautioned that the data relied
upon by TAG may be in error and/or may not be analogous to TAG's
land holdings.
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. Such
statements can be generally, but not always, 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. All estimates and
statements that describe the Company's objectives, goals,
production rates, test rates, hydraulic fracture operations,
optimization, infrastructure capacity, timing of operations,
work-over results, and or future plans with respect to the drilling
in the Taranaki and East Coast Basins 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
and production, geological risks, marketing and transportation,
availability of adequate funding, volatility of commodity
prices, environmental risks, competition from other
producers, and changes in the regulatory and taxation environment.
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 would be the same in whole or
in part as those presented herein.
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 NI 51-101, which can be found
under TAG's SEDAR profile at www.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.
SOURCE TAG Oil Ltd.