When most of us think of a mid-December festival, we envision frost, hot apple cider, mittens, and short days with long nights. In New Zealand, however, the annual New Plymouth Festival of Lights kicks off on December 14th to celebrate the southern hemisphere’s summer season.
Summer Scene, sponsored by TAG Oil and Horizon Energy Services, is the daytime events' portion of the greater Festival, specially planned for children and families. It includes a scavenger hunt, a big beach dig, craft-making and a craft sale, magician shows, picnics, the return of the popular futsal court, where families and friends challenge one another to five-a-side football matches, and much more.
Melissa Devine-Collins, New Plymouth District Council events manager, told The Taranaki Daily News, "Having these companies on board will make it easier for us to deliver an exciting programme of events for children and adults this summer."
The entire event was voted the “Best Established Community Event in New Zealand,” by the New Zealand Association of Event Professionals, and we’re proud to be taking part! To learn more and keep an eye on the schedule of activities, go to the Festival of Lights website.
For those of you who missed our conference call and press release, we began the process of plugging and abandoning the Waitangi Valley-1 well. This job follows a methodical, carefully planned process, starting with getting the drilling equipment that’s no longer necessary out of the way and back to Taranaki. That takes a couple weeks, then we move in the equipment to P&A the well, which is expected to happen shortly.
There are no guarantees in any business, but based on the amount of homework we do, we always aim for good results. And we always take a safety-first approach to all our operations, regardless of the outcome.
One key point made by COO Drew Cadenhead in our call a few weeks ago bears repeating: “The first thing I want to make perfectly clear…is Waitangi Valley-1 is not a dry hole, it is anything but a dry hole…the indications to date are actually quite positive. “
He went on to say: “We've clearly identified that the hydrocarbon kitchen is definitely working in the Waitangi Valley area. There's no doubt about that. We've also confirmed the over-pressured nature of this part of the basin…. We have very high quality, 50 degree API oil. We've got a naturally fractured reservoir down there. And we have extreme pressures trying to push this stuff out.”
So why abandon? Again in Drew’s words:
“The problem…is that we have encountered extremely high-pressure hydrocarbon zones at very shallow depths, unprecedented in the world … at such shallow depths according to the mud experts that have been working on the East Coast with us…. So we're going to need a concerted effort from all of our TAG guys, and from a number of worldwide experts that we've involved in our process here to reengineer that well.”
The details Drew shares about the challenges of capping a well with such intense pressures, and why the multiple casings needed to protect the integrity of the hole in that type of over-pressured situation would have made critical data collection impossible, is fascinating. For anyone who wants to hear a recording of the call or read a transcript you can access it here.
From a financial and business point of view, CEO Garth Johnson opened the call reminding shareholders that TAG hadn’t forecasted any production or cash flow contributions as coming from Waitangi Valley, and the higher risk profile of this type of unconventional exploration is precisely why the Company so carefully manages the balance of its portfolio, and its drilling and exploration program.
“We conduct these operations knowing the challenges, and with the knowledge that we need to take a long-term approach to these opportunities. Companies exploring in the unproven, unconventional basin need to have the staying power and be prepared to drill a number of wells over many years to truly understand the possibility for commercial success.
To have the staying power you need to build a foundation of reserves, production and cash flow, which we've done, and over the years we need to grow that foundation. This is what we continue to do and that allows our team at TAG to take a few shots each year at some potential game changers.”
We’ll be back to the East Coast when we can once again tackle it on our own terms. But for now, it’s back to our bread-and-butter play, where we have more than 50 new prospects lined up, and many more being added to the list for exploration and development, in Taranaki where oil production continues to be strong.
Tough Kid 2014, sponsored by TAG Oil and hosted by Sport Taranaki, is all set for its third year with a whopping 1,450 sold-out competitors.
These primary schoolers will compete in an obstacle course that includes a water slide, tire scramble and much more, around the back fields of Yarrow Stadium.
The event is designed to teach children how to overcome challenges, and to promote health and physical activity in a fun way.
TAG is proud to partner with Sport Taranaki, a community-focused organization dedicated to the promotion of sport and physical recreation, to make this event happen. And it’s truly a community event: The local police are on board as volunteers, and the fire department will help maintain the giant water slide.
Be safe, have a blast, and to our minds, everyone who competes is a winner.
The 11th NZCT AIMS Games – possibly New Zealand's biggest sporting event – launched this week in Tauranga.
TAG Oil sponsored the sports bags for the Oakura Primary Football team, who have joined 7,500 other athletes from around New Zealand to participate in the AIMs games.
This year’s athletes come from 228 schools participating in 17 sports, and more than 10,000 attendees are expected to descend upon Tauranga, on the east coast of the North Island.
The boys are playing well and are having a great week, and we wish good luck to all the athletes!
Following a rigorous judging process, TAG Oil was delighted to be a finalist in the prestigious Deloitte Energy Excellence Awards, as one of just four companies in the Overall Energy Company of the Year category.
Chairman of the Judging Panel Richard Westlake said the caliber of entries was extremely high and the finalist selection process had been a tough one. The finalists were:
- Meridian Energy
- TAG Oil
- Shell New Zealand
- Mighty River Power
Although TAG Oil was edged out by global “supermajor” Shell (Shell New Zealand), we got great feedback and support, and are pleased with what we’ve accomplished in New Zealand to date. Said Judge Westlake, "The judging panel was impressed by the depth and quality of the entries and our task certainly hasn't been easy. Some of the entries this year were the best the panel has seen."
|Representing TAG Oil at the blacktie gala were, left to right: Ryan Brown, Carey Davis, Chris Ferguson, Shane Hamnett and Drew Cadenhead.
Now in their fifth year, the Excellence Awards provide an opportunity to recognize excellence and achievement across the electricity, oil, gas and petroleum industries.
“Whether it’s providing New Zealand homes and businesses with a reliable energy supply or exploring the country’s underdeveloped resources, this sector provides exciting opportunities for innovation and investment.
The Deloitte Energy Excellence Awards have been formed to recognise and celebrate excellence across the many disciplines that comprise the sector. “
--- Hon Simon Bridges, Minister of Energy and Resources
As announced last week, shallow development drilling and production in the Taranaki are averaging about 1,959 barrels of oil equivalent (“boe”) per day, 80% of which is oil. So we're on track with the estimates CEO Garth Johnson and COO Drew Cadenhead gave in TAG Oil's last quarterly call. With continued success via the drill bit, the Company expects to meet its May 2014 forecast of an average daily production rate of 2,000 boe per day and cash flow generated from operations of $40 million for FY 2015.
Almost all of the current production comes from TAG Oil’s lightly explored Cheal and Greater Cheal oil and gas fields. When we include our Sidewinder field, we have another 50 shallow, drill-ready prospects identified, and we expect more to come as work continues over the years ahead.
After a drop in gas production in Q3/Q4 2014, daily production rates for the last three quarters have stabilized, with high-net-back oil steadily growing to 78% of the daily production. Growing oil production generates stronger revenues, as seen in Q4/14 and Q1/15: increased oil production has resulted in netbacks increasing from $49 per BOE in Q1/14 to more than $70 per BOE in Q1/15.
Here are a few pictures of our Cheal South permit (TAG Oil: 50% interest), during initial testing of the Cheal-G1 well that may prove to be economic.
As announced back in May, in a 50-50 joint venture with East West Petroleum, TAG drilled four shallow exploration wells and one exploration sidetrack well within the Cheal South and Southern Cross areas. While the other wells on this site were plugged and abandoned, the Cheal-G1 well is currently undergoing production testing as a new discovery.
Site setup for G1 well testing - flare tank (center) lineheater (middle) test separator (right) power fluid (left).
G1 power fluid pump and temporary tanks.
G1 temporary wellhead hookup.
Flaring off excess G1 gas during testing, the only time it’s necessary anymore.
Self-contained well test separator complete with gas, water, and hydrocarbon measurement.
As we bid goodbye to Randy Toone, who returns to North America, we’re happy to welcome, effective September 1, 2014, Max Murray to the TAG Oil team as our New Zealand Country Manager.
Max is a 30-year oil and gas industry veteran with a deep understanding of the New Zealand oil and gas landscape. He’s an excellent person to help TAG continue its evolution from a junior explorer to the busiest integrated explorer and producer of oil and gas in New Zealand.
Over six years with Origin Energy, Max was most recently Manager of Production Upstream E&P and Senior In-Country Manager, accountable for the safe and efficient operation of all producing assets across Australia and New Zealand. Max previously held senior positions with Swift Energy New Zealand, Ras Laffan Liquefied Natural Gas Co. Ltd., and Methanex New Zealand.
What goes into the building of a drill site? When it’s in the undeveloped East Coast Basin, even a small well pad nestled in the hills can take some infrastructure work. As always though, TAG Oil is careful to work within the landscape and keep a small footprint. Here are some photos from the field of our soon-to-be-spud Waitangi
A couple of locals supervise our team.
Prepping the well pad site for the big rig en route.
We built a small bridge over a seasonal stream…
…That flooded from record winter rains. No harm done.
Conductor Pilot Hole Opener assembly, drills 17.5” hole down to a depth of 42m. Later a conductor hole is drilled to 26” size.
Welding a “20” conductor casing that will be cemented in the 26” hole to a depth of 42m.
Taking in the view in the winter sun, enjoying the new fence we built.
What better way to bookend TAG Oil’s 2014 fiscal year than with great panoramic shots of two exploration drill sites: above is the Taranaki Basin at Southern Cross, and below is our upcoming Waitangi Valley-1 well drilling pad in the East Coast Basin.
It was a good year at TAG, with active step-out drilling and approximately 893,000 BOE of new gross reserves to date. New discovery area production has been consistent and that success has opened up several new, promising, development drilling locations.
On the other side of the island is the Waitangi Valley-1 drill site. This exploration prospect is TAG's second unconventional well, this time targeting the source rocks in a deeper basinal setting than the Ngapaeruru-1 well. It also includes possible conventional discovery potential, as we drill through a number of Miocene-age sands similar to what we produce from in Taranaki.
At Cardiff-3 we are planning an uphole completion once the drilling data has been further analyzed and our team has determined the best way to complete the well.
Meanwhile, sticking to plan and equipment availability, we move on to development drilling within TAG’s 100%-owned, proven Cheal field, the newly discovered Greater Cheal area, and two new step-out wells targeting the oil potential in our lightly explored Sidewinder field acreage, neighbor to the successful Ngatoro field, which has been producing high netback oil for more than 25 years.
Company finances remain strong, and so does our commitment to the community, as we fund a Stratford High School scholarship (hats off to this year’s winner Anna England, who will be studying Geology at Victoria University), sponsoring the Taranaki Rugby Football Union, the New Plymouth Surf Life Saving Club, donating a new kitchen to the Ngaere School, and much more.
There’s much to do and we’re all energized!