TAG Oil pro­duces 1,151 boe/d in fis­cal Q2 2018

Stockwatch Daily - - ENERGY - Mr. Chris Belt­gens re­ports

TAG OIL Ltd. has re­leased its sec­ond quar­ter re­sults for the in­terim pe­riod ended Sept. 30, 2017, high­lighted by an 11per-cent in­crease in rev­enues and a 34per-cent in­crease in oper­at­ing net­backs from the pre­vi­ous quar­ter. TAG Oil also added 809 gross acres to its petroleum min­ing per­mit port­fo­lio with PMP 60291, which has been sec­tioned off from its ex­ist­ing Cheal East per­mit (PEP 54877).

Toby Pierce, TAG Oil’s CEO, com­mented “The Com­pany had a busy fis­cal quar­ter in which we con­tin­ued to lay the ground work for growth with the re­cov­ery in oil prices. We are ea­gerly await­ing re­sults from our 3D seis­mic ac­qui­si­tion at PL17 and in­creased pro­duc­tion from our on­go­ing wa­ter­flood pro­gram. As­sum­ing a con­tin­ued im­prove­ment in Brent oil prices, we ex­pect that our rev­enue oper­at­ing cash­flow and net­backs will con­tinue to grow into cal­en­dar 2018. Fi­nally, our fo­cus for the re­main­der of the year will be on in­creas­ing our pro­duc­tion and con­tin­u­ing to pre­pare for drilling op­por­tu­ni­ties.”


At Septem­ber 30, 2017, the Com­pany had $2.7 mil­lion (June 30, 2017: $12.2 mil­lion) in cash and cash equiv­a­lents and $8.7 mil­lion (June 30, 2017: $15.2 mil­lion) in work­ing cap­i­tal.

Av­er­age net daily pro­duc­tion de­creased by 2% for the quar­ter ended Septem­ber 30, 2017 to 1,151 boe/d (78% oil) from 1,169 boe/d (77% oil) for the quar­ter ended June 30, 2017. A break­down of net pro­duc­tion is as fol­lows:

Av­er­age net daily oil pro­duc­tion in­creased by less than 1% to 897 bbl/d com­pared with 895 bbl/d for the quar­ter ended June 30, 2017, which is pri­mar­ily a re­sult of the in­clu­sion of PL17 oil pro­duc­tion, Cheal-B1 stay­ing on­line for the en­tire quar­ter, and in­creased plant up­time af­ter the planned full shut­down at the Cheal pro­duc­tion fa­cil­ity for eight days in the prior quar­ter for statu­tory in­spec­tion pur­poses. This was partly off­set by Cheal-A12 com­ing off­line for most of Septem­ber 2017 due to a parted pump.

Av­er­age net daily gas pro­duc­tion de­creased by 7% to 1.5 MMcf/d com­pared with 1.6 MMcf/d for the quar­ter ended June 30, 2017, which is mainly due to Cheal-A12, and re­duced gas pro­duc­tion from Cheal-E8 as the well comes off flush pro­duc­tion and nat­u­ral de­cline. This was partly off­set by in­creased pro­duc­tion up­time at the Cheal pro­duc­tion fa­cil­ity.

Rev­enues gen­er­ated from oil and gas sales in­creased by 11% for the quar­ter ended Septem­ber 30, 2017 to $6.0 mil­lion from $5.4 mil­lion for the quar­ter ended June 30, 2017, which is due to a 19% in­crease in av­er­age Brent oil prices and less than 1% in­crease in av­er­age net daily oil pro­duc­tion, partly off­set by an 7% de­crease in gas vol­ume.

Oper­at­ing net­backs in­creased by 34% for the quar­ter ended Septem­ber 30, 2017 to $30.95 per boe com­pared with $23.09 per boe for the quar­ter ended June 30, 2017, which is also at­trib­ut­able to a 19% in­crease in av­er­age Brent oil prices and less than 1% in­crease in av­er­age net daily oil pro­duc­tion.

Cap­i­tal ex­pen­di­tures to­talled $6.8 mil­lion for the quar­ter ended Septem­ber 30, 2017 com­pared to $9.8 mil­lion for the quar­ter ended June 30, 2017. The ma­jor­ity of the ex­pen­di­ture in Q2 2018 re­lated to per­ma­nent tie-in of the Cheal-E8 well, drilling and test­ing the Cheal-D1 well, the Pukatea site up­grade, and the seis­mic ac­qui­si­tion at PL17.

On Au­gust 4, 2017, New Zealand Petroleum and Min­er­als (“NZP&M”) ap­proved the sur­ren­der of the Com­pany’s 50% work­ing in­ter­est of the Cheal South per­mit (PEP 54879). All aso­ci­ated costs re­lated to the per­mit have been ex­pensed as at Septem­ber 30, 2017.

On Septem­ber 5, 2017, TAG Oil an­nounced the com­ple­tion of drilling and test­ing op­er­a­tions at the Cheal-D1 ex­plo­ration well, which is lo­cated near the north­ern por­tion of TAG’s 70% work­ing in­ter­est and op­er­ated PEP 54877. TAG Oil drilled and com­pleted the Cheal-D1 well ap­prox­i­mately five days ahead of schedule to a to­tal mea­sured depth of 2,400 m. The Com­pany per­fo­rated an 18 m sec­tion of gas bear­ing sands in the Urenui for­ma­tion and fol­low­ing ex­ten­sive test­ing it was de­ter­mined that gas was present, but not in suf­fi­cient quan­ti­ties to pro­duce as an eco­nomic dis­cov­ery. The well has been sus­pended with a plan to po­ten­tially re-en­ter in the fu­ture.

On Septem­ber 15, 2017, NZP&M ap­proved the petroleum min­ing per­mit ap­pli­ca­tion for the Com­pany’s 70% work­ing in­ter­est of PMP 60291. The per­mit has been carved out of the ex­ist­ing PEP 54877 and part of the re­main­ing ac­er­age has been in­cluded in an ap­pli­ca­tion to ex­tend the du­ra­tion of PEP 54877, which was sub­mit­ted on Septem­ber 14, 2017.


Prepa­ra­tion for the Pukatea-1 well, lo­cated on­shore in New Zealand within the Puka per­mit (PEP 51153), con­tin­ues from the ex­ist­ing pro­duc­tion pad where three wells have pre­vi­ously been drilled.

Fur­ther, TAG Oil is about to com­mence a workover cam­paign tar­get­ing pro­duc­tion im­prove­ments and re­in­state­ment of wells off­line. Up to six wells will be ini­tially tar­geted over the next few months. Based on con­ser­va­tive

es­ti­mates, it is an­tic­i­pated that at least 200 boe/d of pro­duc­tion can po­ten­tially be added with pay­backs achieved from these ac­tiv­i­ties in un­der a year.

Go­ing for­ward , man­age­ment will con­tinue to em­ploy its dis­ci­plined ap­proach and re­main fo­cused on pro­duc­tion, ap­praisal and ex­plo­ration op­por­tu­ni­ties, and TAG will con­tinue to work towards achiev­ing the fol­low­ing goals:

Max­i­miz­ing the value of its op­er­a­tions in its pro­duc­ing fields by main­tain­ing en­hanced oil and gas re­cov­ery tech­niques to op­ti­mize pro­duc­tion and lower per bar­rel pro­duc­tion costs;

En­hanc­ing the devel­op­ment of its ex­plo­ration pro­gram through care­ful eval­u­a­tion of its ex­plo­ration prospects;

Estab­lish­ing ad­di­tional proved re­serves and com­mer­cial­iz­ing its oil and gas ex­plo­ration prop­er­ties;

Re­view­ing po­ten­tial ac­qui­si­tions of over­looked/undervalued op­por­tu­ni­ties in New Zealand and Aus­tralia; and

Man­ag­ing its oper­at­ing cash flows and bal­ance sheet as ef­fec­tively as pos­si­ble to min­i­mize costs while fo­cus­ing on share­holder re­turns. About TAG Oil Ltd. TAG Oil is an in­ter­na­tional oil and gas ex­plorer with es­tab­lished high net­back pro­duc­tion, devel­op­ment and ex­plo­ration as­sets, in­clud­ing pro­duc­tion in­fra­struc­ture in New Zealand and Aus­tralia. TAG Oil is poised for sig­nif­i­cant reserve and pro­duc­tion growth with sev­eral oil and gas fields un­der devel­op­ment and high-im­pact ex­plo­ration in proven oil and gas fair­ways. TAG Oil is debt-free and cur­rently has 85,282,252 shares out­stand­ing.

We seek Safe Har­bor.

David John Bennett, Alex Paul Guidi, Keith Charles Hill, Brad Hol­land, Toby Robert Pierce, Ken­neth Ebenes Vi­dalin

(TAO) Shares: 85,282,252

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