Q3-2013 and Recent Operating Highlights
- TAG Oil's production revenue increased 23% to $32.29 million for the nine months ended December 31, 2012, compared to $26.21 million in the comparable period last year;
- During Q3-2013 TAG produced an average of 1,727 BOE per day with a production revenue increase by 13% to $10.85 million compared to $9.62 million in Q2-2013;
- The Company generated a net profit for the quarter of $2.64 million (nine months: $9.40 million) before deducting $2,004,076 (nine months: $4,344,751) non-cash share-based compensation;
- TAG remains debt free with approximately $72 million in cash at the date of this report;
- TAG sold 86,687 barrels of oil during the last quarter (nine months: 256,745) at an average price of $109.97 per barrel (nine months: $108.80 per barrel);
- TAG sold 47,104 BOE of gas during the quarter (nine months: 159,775 BOE) at an average price of $4.79 per mcf (nine months: $4.55 per mcf);
- Production infrastructure expansion is on track for completion by March 31, 2013 as planned, to allow unrestricted production from 25 wells and any future wells;
- Commenced a 13-well Taranaki Basin drilling campaign, starting with the Sidewinder-5, Sidewinder-A6, Sidewinder-A7 wells;
- Secured rig to drill the Cardiff prospect, a large liquids'-rich gas target in the Kapuni Formation with independent mid range resource potential estimated by Sproule International of 214.5 Bcf and 12.8 million barrels of associated condensate;
- TAG Oil was awarded four attractive onshore Taranaki exploration blocks all within proximity of our Cheal and Sidewinder infrastructure;
- TAG retains a 100% interest in its East Coast Basin permits and receives cash payment through an early termination of the farm-out agreement with Apache Corporation.
Liquidity and Financial Summary
At the date of this report, TAG is debt free with approximately $72 million in cash on the balance sheet. Production revenue for the quarter was $10.85 million (nine months: $32.29 million) compared to $12.98 million (nine months: $26.21 million) for the comparable quarter last year, and the Company generated a net profit for the quarter of $2.64 million (nine months: $9.4 million) before deducting $2,004,076 (nine months: $4,344,751) non-cash share-based compensation.
TAG currently has 59,637,623 common shares outstanding and 63,267,386 common shares outstanding on a fully diluted basis.
Taranaki Basin Operations
TAG finished Q3-2013 with Sidewinder-5 encountering approximately 6 meters of net pay to start off calendar 2013's Taranaki drilling program. SW-5 has been completed for production and will be tied in to the Sidewinder production facility in early March, after Sidewinder-6 and 7 have been drilled.
Summary of TAG well status
| Site || Producing * || Behind pipe |
| Cheal A || A3, A7, A9, A10, A11, A12 || A1, A4, A8 |
| Cheal B || B3, B4ST, B6, B8 || B1, B2, BH1, B5, B7 |
| Cheal C || || C1, C2, C3, C4** |
| Sidewinder || SW-A2, SW-A3, SW-A4 || SW-A1, SW-A5** |
| *Cheal-A7 and A12 and Cheal-A9, A10, A11 and A12 are all producing into small diameter temporary production lines that inhibit optimal |
production. Back pressure testing on the individual wells indicate these wells will produce more optimally using their own production pipelines
upon completion of the Cheal infrastructure upgrades.
| ** Re-completed and/or awaiting production test |
TAG's infrastructure project is scheduled to be completed on March 31, 2013 allowing the Company to become completely self-sufficient in producing, processing and marketing all oil and gas it produces. TAG can then initiate production on all oil and gas wells that have been drilled but are not yet producing, along with any additional production arising from future successful wells drilled.
Cheal Oil and Gas Field - 100% Interest
TAG expects continued growth through the following activities:
- Continued exploration and development drilling: pre-emptive right on the Nova-1 drilling rig ensures access to services;
- Infrastructure enhancement project and new gas pipeline at Cheal ensures maximum value is achieved from all discoveries, making TAG completely self-sufficient for oil and gas production, processing and marketing;
- Drilling the Cardiff liquids-rich deep gas target: Cardiff has an independent resource potential estimated by Sproule International of 214.5 Bcf and 12.8 million barrels of associated condensate and the Company anticipates drilling Cardiff in mid-C2013; and
- A detailed geotechnical evaluation of all untested zones in the Cheal area: Many TAG wells drilled in the last two years encountered multiple pay horizons. Good production practice dictates depleting one zone at a time in these multi-zone wells, and the study will determine if an accelerated infill drilling program is economically justified to maximize value of these to-date untested zones.
Sidewinder Oil and Gas Field - 100% Interest
During the quarter, the Company was granted consent by the New Plymouth District Council allowing TAG to drill up to four new wells within the Sidewinder Oil and Gas Field. TAG immediately completed site construction, and to the date of this report, has drilled the Sidewinder-A5 well and spudded Sidewinder-A6.
This article is for information and discussion purposes only and does not form a recommendation
to invest or otherwise. The value of an investment may fall. The investments referred to in this
article may not be suitable for all investors, and if in doubt, an investor should seek advice from
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