Our team is happy to report that our Ngapaeruru-1 exploration well successfully drilled through the Waipawa and Whangai source rock formations in permit 38349, an area we call Boar Hill. Early mud-log analysis returned predominantly wet gas and oil indications – meaning the presence of gas zones or soluble gas in oil – which is incredibly exciting.
This was our first unconventional target in the East Coast Basin, and New Zealand’s first test directly targeting the naturally fractured Waipawa and Whangai formation source rocks, which have been estimated to contain a significant oil and gas resource. While we encountered tricky drilling conditions, everything went smoothly.
Now on to analysis.
During drilling we cut and recovered sidewall cores over several intervals within the 155 meters of potential unconventional oil and gas pay, sampled total organic content (TOC) and acquired gas analysis at depth. Our team, as well as independent labratories, are now undergoing a detailed evaluation and analysis to determine source rock quality, fracture identification, geochemistry, and more. This data will not only help us better understand the long term feasibility of our East Coast Basin opportunity, but it will guide our technical team to the best completion method and production testing of the well.
We’ll keep you updated!
Sunset over the groundbreaking Ngapaeruru-1 exploration well.
Here's one of the first photos to come in from TAG Oil's Ngapaeruru-1 wellsite, spudded on April 22nd. Our exploration team is targeting the Waipawa Black Shale and Whangai source rock formations at an anticipated depth of 1,800 meters to test the unconventional discovery potential in this portion of New Zealand's East Coast Basin.
This is another step in TAG's long-term strategic plan: to leverage the success -- and cash flow -- of the Company's lower risk conventional assets in the Taranaki Basin, in order to intelligently pursue higher impact exploration opportunities elsewhere in New Zealand.
The Waipawa Black Shale and Whangai formations are oil-and gas-rich source rocks present throughout most of TAG's million-acre East Coast Basin land holdings. Oil sampled from seeps on TAG's East Coast permits proved to be from the Waipawa Black Shale and Whangai formations, and high-quality live oil recovered from shallow wells drilled in 2011 was also confirmed to be generated from these source rocks.
Extensive geotechnical work on TAG's East Coast acreage, including proprietary 2D and 3D seismic, have confirmed that the source rock parameters compare favorably to commercial unconventional tight oil and gas plays throughout the world, comparable in total organic carbon content and oil and gas maturity levels, for example, to North Dakota's Bakken shale.
TAG geologist and geotechnical specialist Alexandra Johansen took a tour of Sidewinder and the newly completed Cheal oil and gas processing facility with a few other members of the team. We think you’ll agree, these shots are a far cry from the bare patch of land we shared back in August.
Great job to the team for their hard work freeing up our behind pipe oil and gas. But as ever, the work continues: Our engineers are busy tying the remaining wells into the plant, and over the next several weeks they’ll be fine tuning to make sure we get the flow optimized.
Overview of the gas plant looking towards Rival #1 on Cheal A-11: complete, and fully running right on time!
Shane Hamnett, Alex Johansen and Jack Doyle in the middle of the gas plant.
The vector meter skid at the Cheal C site. It may not look like much but it was the last piece of work before we turned Cheal gas on to the sales line.
Pig (pipeline inspection gauges) launchers to maintain the pipelines from C-to-A, A-to-C, and C-to-Vector, without having to interrupt the flow of hydrocarbons.
9 5/8" casing awaiting intermediate casing point on Sidewinder A-7HF. We normally run 8 1/2" casing, but this hole will be going to 4000m.
Shane and Alex at the Cheal A-Site, with the Rival Rig #1 in the background for workover.
Gas-to-gas exchanger with the de-ethanizer tower in the background, on a beautiful New Zealand fall day.
We're pleased to announce that David Popowich of Macquarie Capital Markets Canada has initiated coverage on TAG Oil.
Please see the full list of analysts here.
TAG Oil has experienced heavy trading activity recently, with over 13 million shares traded in January. This is due in part to the news that Apache has exited our East Coast Basin joint venture as part of their global corporate repositioning.
We have strong support from analysts following TAG, and the entire TAG team including large shareholders are delighted to take back 100% control of the project, sending out positive feedback to the investment community.
We're happy to move forward with the strong technical work that TAG and Apache accomplished together in the East Coast Basin, and are ready to begin exploration drilling in this frontier blanketed with conventional and unconventional oil and gas opportunities.
Says MPartners, "We view the quick, cash settlement with Apache positively."
Says Credit Suisse, "We maintain our Outperform rating and raise our TP to $9.50."
Says Casimir Capital, "TAG back in the driver's seat...Recommendation: Strong Buy."
Says National Bank Financial, "Reiterate Outperform Rating...We continue to like the stock at these levels."
One way TAG Oil is pleased to support our community is by helping to refurbish Ngaere School’s Lowgarth Hall with a $5,000 a year award for the next five years. This year’s grant went towards upgrading the lighting and heating systems. Though New Zealand is in the midst of summer, they’re looking ahead, and this work will make the Hall much more comfortable for the many groups that use it year-round. In addition, the upgrades will reduce the amount of energy used, and the school’s power bills.
In other community news, TAG awarded its first annual scholarship to Matt Simpson, a senior at Stratford High School. Matt was selected to receive the scholarship out of a worthy field of candidates based on his impressive academic career as well as his interest in pursuing an engineering or sciences degree. He’s spending his summer working at TAG Oil’s Cheal A site, gaining some first-hand oil and gas experience prior to going to the University of Canterbury.
Whether you’re rounding the bend towards shorter nights and warmer days, or celebrating your longest day of the year in the southern hemisphere, happy holidays and all the best for your new year.
A very pleased Garth Johnson (TAG Oil CEO) poses for a photo with New Zealand Minister of Energy and Resources Phil Heatley at the 2012 Block Offer awards ceremony.
At the ceremony, TAG Oil was awarded four onshore Taranaki Basin exploration blocks, expanding our acreage by another 37,000 gross acres. More importantly, it’s acreage that sits in the main Taranaki oil and gas discovery trend. TAG has extensive 2D and proprietary 3D seismic over much of the acreage, which indicates several new prospects that we look forward to drilling. The awards initially add at least 10 drilling prospects plus the numerous leads in close proximity to the producing Cheal oil field and infrastructure.
TAG will operate the new permits and JV partner East West Petroleum will fund four wells within PEP 54876, 54877 and 54879 in 2013, earning East West a 50% interest in PEP 54876 and PEP 54879 and a 30% interest in PEP 54877.
PEP 54873 (100% TAG) provides several shallow drilling leads along with significant exploration upside via a drill-ready deep gas and condensate prospect that has similar geological features to the adjacent Kapuni gas/condensate field.
We’ve kept you up-to-date with photos of our infrastructure upgrades, but we also wanted to keep the word out that drilling and exploration continue, even amidst the important infrastructure upgrades underway to free up behind-pipe oil and gas production.
Operationally, this year’s results have exceeded expectations, with 19 Taranaki wells drilled in a row, while simultaneously maintaining testing operations, optimization, infrastructure build, geoscience and even more drilling.
Current production is approximately 2,100 barrels of oil equivalent per day (boe), and we expect this to grow to exit fiscal year yeard (March 31) at approximately 4,000 boe. And although drilling plans need to remain flexible during our heavy infrastructure activity, the Nova-1 drill rig has spud the Cheal-B8 well, potentially followed by Sidewinder-5 and Sidewinder-6, to finish calendar 2012 strong. Cheal-B8 will be the third well drilled targeting similar geological characteristics as the high-deliverability Cheal-B5 and Cheal-B7 oil and gas wells.
And of course the ever-important infrastructure upgrades: We’re looking forward to having those fully completed in March 2013, at which point all Cheal and Sidewinder wells will be placed into full-time production. Now it’s back to work!