We realize that we post a lot of pictures of our oil and gas permit sites here on the blog, and write press releases about our drilling process, the status of different exploration sites, production numbers, and estimated potential. Further, we talk a fair bit about how we use the safest, most environmentally conscious techniques, many of which we’re the first to bring to New Zealand.
But talking about it isn’t the same as showing it.
So talented New Zealand video firm buildmedia recently put together a few videos that bring TAG Oil’s work to life. This first one is particularly exciting, as it shows TAG’s process from scoping to siting to drilling to production, all within the context of the actual landscape…above ground and below!
Over the next few weeks, we’ll release the other two videos, which you’ll also find posted to our website. Hopefully, you’ll enjoy and learn simultaneously. As buildmedia’s tagline says, “seeing is believing.”
Thanks to all of you who dropped by the TAG Oil booth at the Hong Kong Mines and Money conference last week. IR Director Seth Kay and Exploration Geologist David Loretto reported that the gathering was energizing and informative, with speakers and attendees from around the world.
“Being one of the few oil and gas exploration and production companies exhibiting at the mining conference, we definitely stood out and attracted a lot of attention," said Seth Kay. "This was a great step in raising awareness and increasing our exposure in this part of the world. As a result, TAG Oil is starting to generate more interest from the Asian investment community, and we’ve established some valuable relationships to explore going forward.”
What did people find to be so compelling about TAG? "With very strong fundamentals, an ambitious exploration campaign underway, potentially major near-term catalysts, and a share price currently trading near four-year lows, this is the time to get TAG Oil’s story out in front of as many people as possible.”
Here's a snapshot we took out of TAG Oil's New Plymouth board-room window yesterday. It's the Ensco-107 Jack-up rig we'll eventually be using to drill Kaheru, in transit, sitting off Port Taranaki.
The Kaheru is a prospect in shallow waters -- about 22 meters deep -- and just eight miles offshore, on the same thrust belt play fairway as several of Taranaki's successful oil and gas fields. 2D and 3D seismic show this to be an offshore extension of the producing, Miocene-aged discovery trend, and we're excited about the discovery potential of this prospect. Not to mention...how cool is this?
We're joining mining companies from around the world over the next few days at the Hong Kong Mines & Money show, which is in its seventh year and attracts thousands of investors. Since HK is closer to where we operate in New Zealand, we thought it was a good chance to meet some investors closer to the source.
With TAG's revenue up 19% for the three months to December 31 (to $12.9 million), and net income more than quadrupled compared to the prior year period, this is a good time to be out and about with the TAG Oil story. And with operating netbacks of $78 / barrel of oil during the latest period, which is once again substantially higher than what's being achieved in North America, it's a great time to be operating in close proximity to Asia.
This five-day event runs from 24-28 March at the Hong Kong Convention and Exhibition Centre, with a good line-up of speakers. If you happen to be in the area, drop by and chat with our IR Director Seth Kay, and pick up some materials that are hot off the presses.
Bill Mathews, editor of the investment newsletter The Cheap Investor, featured TAG Oil in the March 2014 issue.
Citing TAG's excellent balance sheet, increasing revenues and earnings, and undervalued stock price, the editors, "believe TAG Oil has the potential to move at least 50 to 100% over the next year."
They also suggested that TAG list on the NASDAQ or NYSE MKT Exchange in addition to the Toronto Stock Exchange and OTC, for better exposure and a greater institutional following in the U.S.
Bill, we'll let you know if we take your advice!
The CHEAP Investor has a stellar track record of picking winning stocks. Their philosophy is based on hard work, researching hundreds of stocks in order to find the ones that are undervalued, and selling at a good low price. For the 56 months ending June 2013 (their last accounting), they've recommended 265 winning stocks out of 268 chosen, with average gains of 179%.
TAG Oil set out to establish a strong foundation (both operationally and financially) on its Taranaki shallow oil and gas opportunities, and with 31 successful wells in just a few years, we're pretty happy with how that's gone. But those of you who have been with us for awhile, know that we've also had an eye on prospects with even greater potential, such as the East Coast Basin's unconventional oil, and the Taranaki Basin's deep Eocene-level oil and gas.
In the current quarter, TAG successfully drilled, logged and cased its first deep Eocene well, Cardiff-3, which went to 4,863 meters depth, and intersected 45 meters (148 feet) of potential pay in the successful Kapuni Sands Formation. (We say "successful" because the Kapuni is a proven, strong producer elsewhere in the Taranaki, and its discovery by BP Shell Todd launched a new energy era for New Zealand a few decades ago.) And in the hopes of launching the next era in New Zealand energy, we're prepping to test Cardiff-3 in the near future.
Our shallow drilling program is still intrinsic to TAG's short and long-term success, but the goal with deep drilling is to capture reserves many times larger than what's possible with shallow Miocene drilling. An independent assessment by Sproule International Limited (effective 7/31/13) estimated the undiscovered resource potential on the Cardiff prospect on a P50 basis at 160 billion cubic feet gas and 5.59 million barrels of natural gas liquids.* Time will tell!
For past posts on the Cardiff deep gas well:
December 10, 2013, A quick update on Cardiff's deep gas / condensate well
November 15, 2013, Cardiff-3 Deep Gas Drilling: One zone at a time, so far so good...
October 25, 2013, 30-Days' Deep on Cardiff-3
September 19, 2013, Drilling Deep in the Taranaki Basin
** Footnote **
Sproule is a qualified reserves evaluator in accordance with NI 51-101 and the Canadian Oil and Gas Evaluations Handbook. 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 Petroleum 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.
Some combinations, like the ones in our title, are tried and true classics. While others need a little extra encouragement.
So TAG Oil and its Kaheru joint venture partners Beach Energy and New Zealand Oil and Gas are harnessing kids’ love of dinosaurs – and their unlimited imaginations – to bring science to life outside of the classroom.
We’re in the business of fossil hunting, and we think there’s a great story to tell right under the feet of New Zealand’s kids that will ignite their interest in geology and the sciences in general.
So the JV is sponsoring “What Lives Down Under,” to teach and engage online and in a traveling roadshow. It’s fun for us to get in touch with our inner kid once in awhile, too.
We've been not so patiently awaiting the results of the independently conducted Reservoir Characterization Study (RCS) on TAG Oil's East Coast Basin, unconventional Ngapaeruru-1 well, and it has finally arrived.
This RCS study provides the first true unconventional data set ever acquired in the East Coast Basin, and the quality of this state-of-the-art data set provides the first specialized interpretation necessary to unlock the major oil and gas potential of TAG's East Coast Basin unconventional play.
As our team had hoped, the study confirms that oil is being generated in the Whangai source rocks, as well as a number of critical positives showing the Whangai to be a viable unconventional oil target. Not that it's a surprise to us, but independent confirmation is always good. (This is a studio shot of our oil-rich Whangai shale, above.)
A few highlights include:
- Analysis places the Whangai source rocks in the oil/condensate window, correlating well with the 50-degree API oil seeps in the basin
- The hydrocarbon-filled porosity exceeds the minimum standard thresholds for unconventional reservoirs
- Permeabilities exceed standard unconventional reservoir thresholds
- The Whangai Formation has very low clay content, indicating fracture stimulation can be highly effective
In order to prove the viability of moveable hydrocarbons from within these source rocks and the economic viability of this unconventional play, TAG can now move on scheduling perforation and production testing of Ngapaeruru-1.
For more detailed information, see our recent Q3 press release. And stay tuned for what happens next!
Noted Canadian investment bank, M Partners, just released its Top Five Picks for 2014, and TAG Oil made the cut. The report highlights the up and comers on the firm’s investment radar for the year ahead, and each of the five companies profiled is expected "to lead their respective universe of coverage over the course of the year."
So, what do they like about TAG Oil?
They appreciate TAG's strategy of establishing its cash-flowing production base in Taranaki to fund the search for higher impact, deep gas plays with considerable upside potential.
And that the production income from our shallow, producing Taranaki fields has led to a solid balance sheet which also "de-risks" the enormous unconventional resource potential in TAG's East Coast Basin permits, plans for which are advancing in 2014.
They report that TAG shares currently trade at 2.2x EV/EBITDA (calendar 2014), which is a significant discount to its Southeast Asian/Australasian comps at 2.9x.
In their words, "Underlying our Buy rating is the attractive valuation and significant production growth trajectory, driven by the high-impact deep gas Taranaki program now underway and funded by the solid balance sheet and cash flow from its shallow Taranaki production base."
We couldn't have said it better ourselves.
The Cheal sites have been active these past few months, and we've finally gotten some photos in from the field. From Cheal A to G, we're making improvements, loading oil, and preparing to tie in more wells.
To start with the wider view before going micro with the shots below, here's one that shows TAG living harmoniously with its bovine neighbors.
A 400 bbl oil tank at the Cheal E site:
a second identical tank will be placed
beside it soon.
And over at the Cheal A site, oil tankers fill up with our product: a beautiful sight!
The five wells at the E-Site. The plant is permanently built, and two of the five wells are permanently tied in. Shows how low profile these sites are once we're producing.
Awaiting commission of the Thermal Combustion Chamber (hidden on the right), which will contain the flare at the E-Site.
Breaking it all down at the Cheal E Site.
A tidy G site with the G-1 well now underway.