VANCOUVER, Oct. 26 /PRNewswire-FirstCall/ - TAG Oil Ltd. (TSX-V: TAO)
announced today that the Company has completed its acquisition of the
remaining 69.5% interest in Petroleum Mining Permit 38156-S ("Cheal") and
Petroleum Exploration Permit 38738-01 ("Greater Cheal") located in the
Taranaki Basin, New Zealand. The Company now has 100% control over the
7,487-acre Cheal Production License, which encompasses the Cheal oil
discovery, the Cheal Treatment and Production Facility, and an additional
7,988 net acres granted under exploration rights along trend.
Pursuant to a binding agreement between the Company and the Receivers for
Austral Pacific Energy Ltd., TAG, through a wholly-owned subsidiary, has
purchased these interests for consideration of US$2,000,000 in cash, a 25% net
oil revenue royalty on the first 500,000 barrels produced after the effective
date of June 1, 2009, then reducing to 7.5% for the life of the Cheal pool,
and making certain permit work commitments, including optimization and
drilling operations, within 30 months of completion.
TAG's initial program includes an optimization plan consisting of work-overs,
hydraulic fracturing and down-hole heating within six producing Cheal oil
wells. The wells are already tied into the 100%-owned Cheal Production
Facility, which was completed in 2006 and was designed to handle up to 2000
barrels per day of throughput. This initial program is expected to result in a
material increase to current oil production of approximately 325 barrels per
day.
Garth Johnson, TAG CEO, commented, "The completion of this acquisition
represents an important milestone in TAG's long history of exploration in New
Zealand. With 100% control of Cheal, TAG can now initiate the long-awaited
development of the Cheal pool and further exploration in this exciting new
discovery area." Mr. Johnson then elaborated on TAG's plans, "With a strong
working capital position and the anticipated increase in production revenue
from our optimization program, TAG will initiate development drilling into the
Cheal pool while exploiting our portfolio of high-impact, drill-ready 3-D
defined prospects in the discovery fairway with Cheal and other Taranaki
discoveries."
The Taranaki Basin is an emerging oil, gas and condensate province located on
the North Island of New Zealand. The basin is underexplored compared to
similar rift complex basins of its size and potential. Although the Taranaki
Basin covers an area of about 100,000 sq km, only 125 wildcats have been
drilled since 1955. To date proved oil reserves of 528 million barrels and
proved gas reserves of 6.9 trillion cubic feet have been discovered within the
Taranaki Basin. Last year the basin averaged 387 million cubic feet of net
natural gas production per day, as well as 58,400 barrels of oil per day. This
high-quality, low-sulfur oil sells at a premium to West Texas Intermediate due
to its low sulfur content, and is sold primarily to Japan, Korea and
Australia. (Source: New Zealand Ministry of Economic Development
http://www.crownminerals.govt.nz/cms/petroleum/facts-and-figures.) The source
of the information was independent; however, the Company was unable to confirm
that this information was prepared by a qualified reserves evaluator or
auditor in accordance with the COGE Handbook.
TAG also reports that its announced business combination with Trans-Orient
Petroleum Ltd. (TSX-V: TOZ, OTCBB: TOPLF) is progressing on schedule and is
expected to be complete by December 15, 2009. On October 26, 2009,
Trans-Orient announced an update on its East Coast Basin exploration activity,
including completion of the first section of the Boar Hill-1 wildcat well
targeting the Waipawa Black Shale and Whangai Formation fractured oil-shale
source-rocks at an anticipated depth of 1600m (5,250ft).
Trans-Orient also reported that planning is underway to drill three shallow
test wells in order to gather stratigraphic core data in and around the
historical Waitangi Hill shallow oil discovery. Drilling in the early part of
the last century (1912) reported ongoing production of high-quality (50 API)
crude oil from a depth of approximately 200m (650 ft). The Waitangi Hill area
is both a conventional and unconventional target, located in the 530,000-acre
Petroleum Exploration Permit 38348 in the East Coast Basin.
Two North American-based engineering firms have independently reviewed the
conventional and unconventional potential of Trans-Orient's 2.2 million-acre
exploration area. In reviewing these properties, Sproule International Ltd.
http://www.sproule.com and AJM Petroleum Consultants
http://www.ajmpetroleumconsultants.com recognized the Waipawa Black Shale and
Whangai Formations as viable shale source-rocks, rich in Total Organic Carbon,
that have generated and continue generating oil and gas within these fractured
shale formations.
Copies of these reports have been filed on the System for Electronic Document
Analysis and Retrieval ("Sedar") and can be found on Trans-Orient's website.
http://www.transorient.com/reports.asp
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. Actual results may vary materially from the
information provided in this release. As a result 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. Actual results may differ
materially from the results predicted, and reported results should not be
considered as an indication of future performance. Factors 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 most recent
reports in Canada under National Instrument 51-102.
Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE TAG Oil Ltd.
Garth Johnson, CEO, TAG Oil Ltd., (604) 682-6496, Website:
http://www.tagoil.com
