TAG Oil Blog

TAG Oil closes bought-deal offering

We know there's been more financial news than drilling photos from the field lately, but it's all in the running of an oil and gas business.

TAG Oil has closed its bought-deal offering of common shares (at $10.45 per common share for gross proceeds of $46,345,750).

We plan to invest the proceeds to:

- Accelerate exploration and development program in the Cheal, Sidewinder and Kaheru permits in the Taranaki Basin;

- Identify and pursue new business opportunities including future land acquisitions in the Taranaki Basin; 

- Fund general corporate projects.

The underwriters, who have agreed to purchase 4,170,000 common shares on a bought deal basis, include: Dundee Securities Ltd. (Bookrunner and Co-Lead Underwriter), Casimir Capital Ltd. (Co-Lead Underwriter), Cormark Securities Inc., GMP Securities L.P., Mackie Research Capital Corporation and M Partners Inc.  

TAG Oil a Top Pick on Business News Network

A nice bit of press at BNN (Business News Network) Canada, picking TAG Oil as a top stock pick recently. There's a short ad, but at about minute 1:23 you'll see TAG Oil selected as Robert McWhirter's (of Selective Asset Management) first Top Pick: http://ow.ly/azkxS

We'll forgive them for mis-classifying us as a Venezuelan company, since the rest of the profile is spot on.

 

 

 

 

Dundee Securities now covering TAG

Alexander Klein of Dundee Securities Ltd. is now among the analysts covering TAG Oil.

Please see all the analysts with investment coverage on TAG Oil here.

TAG Oil gets some love from “The Street”

TAG Oil was in some pretty nice company in a recent Frank Byrt piece in The Street. For the whole article link here, http://ow.ly/9FcGr, and for an excerpt, read on.

Boston | Frank Byrt | The Street | 3/12/12

10 Best-Performing Stocks in Three-Year Bull Market

"…In order to find the best of the last group, I screened Morningstar data for companies with solid financial fundamentals, a market value of at least $250 million and a three-year average annual return of 200% or better.

Surprisingly, there is only one technology company in the group, and the rest are a smorgasbord, including a yoga-wear retailer, a Las Vegas casino developer and a Canadian oil driller that went all the way to New Zealand to get at black-gold deposits….The 10 stocks we found are summarized below…”

10. TAG Oil (TAOIF)

TAG Oil, with a market value of $547 million, is a Canadian company producing and exploring for oil and natural gas in oil shale in New Zealand…. Its shares are up 43% this year and have a three-year, average annual return of 318%. No U.S. analyst coverage is available, but hedge fund manager Elliott Associates, with $15 billion in assets, is the biggest stakeholder at 12%, followed by Fidelity and Fidelity Canada, with a combined 7%. Tag Oil said today that it upped its capital expenditures by $66 million to expand oil and gas drilling at its company-owned fields in New Zealand, because its efforts have been so successful.

9. Dollar Thrifty Auto Group (DTG )

Dollar Thrifty, with a market value of $2 billion, owns, operates and franchises car rental operations throughout the U.S., Canada and abroad. 

8. Pharmacyclics (PCYC)

Pharmacyclics, with a market value of $1.8 billion, is a developer of pharmaceuticals used to treat certain cancers and cardiovascular disease. 

7. Mitek Systems (MITK)

Mitek, with a market value of $302 million, is the developer of software used for image recognition, used in check and document processing, and forgery detection.

6. Jazz Pharmaceuticals (JAZZ)

Jazz Pharmaceuticals, with a market value of $2.8 billion, is a specialty-pharmaceutical company that develops and markets medical products in the fields of neurology and psychiatry. 

5. Select Comfort (SCSS)

Select Comfort, with a market value of $1.8 billion, makes air beds and other sleep-related products. The company's mattresses have adjustable firmness levels and range in prices up to $2,600. 

4. Keryx Biopharmaceuticals (KERX)

Company profile: Keryx, with a market value of $299 million, acquires and develops products for the treatment of diseases, including diabetes and cancer. 

3. Pier 1 Imports (PIR)

Pier 1 Imports, with a market value of $1.9 billion, is a retailer of decorative accessories, furniture, housewares, and seasonal items imported from more than 50 countries. Pier 1 has over 1,000 stores.

2. Lululemon Athletica (LULU)

Lululemon Athletica, with a market value of $8 billion, is a specialty retailer and designer of upscale athletic apparel for women, with a focus on yoga-inspired merchandise.

1. Las Vegas Sands (LVS)

Las Vegas Sands, with a market value of $40 billion, is the world's largest operator of integrated resorts encapsulating casinos, hotels, entertainment, food and beverage, retail, and convention center operations.

Content copyright of The Street, Inc. 14 Wall Street, 15th Floor, New York, New York 10005. For the whole article, link here: http://ow.ly/9FcGr.

Tracking TAG Oil’s production, development and infrastructure

We put together a simple table to bring you up to speed on TAG’s Taranaki Basin oil and gas producing and drilling activity. The table includes producing oil and gas wells, wells in development (some awaiting workover operations as well as improvements in production infrastructure, to bring additional production that’s currently sitting behind pipe, on-stream), and our next condensate targets to be drilled. Status will change quickly, but here’s a snapshot of how TAG Oil's drilling and workover program stands now.

Taranaki Shallow Drilling and Workover Program

Cheal A	A1	Behind pipe awaiting infrastructure expansion
	A2	Waterflood workover
	A3X	Producing
	A4	Waterflood workover
	A7	Behind pipe awaiting workover
	A8	Behind pipe awaiting infrastructure expansion,
	A9	Drilled, awaiting test
	A10	Drilled, awaiting test
	A11	To be drilled
	A12	To be drilled
Cheal B	BH1	Producing
	B1	Behind pipe awaiting workover to initiate Urenui Production
	B2	Behind pipe awaiting workover to initiate Urenui Production
	B3	Producing
	B4ST	Producing
	B5	Flowing 800 to 1300 bbls/day
	B6	Testing
	B7	Flowing 800 to 1075 bbls/day
Cheal C	C1	Producing; oil being trucked to the Cheal Production Station
	C2	Excellent flow test results, behind pipe awaiting workover
	C3	To be drilled
	C4	To be drilled
Sidewinder	SW1 - SW4	Producing 2 to 3 million cubic feet of gas per day (350–500 boe/day), and 30 to 50 barrels of light oil / day. Permanent tie-in completed. Anticipate 8 to 10 million cubic feet of gas per day once compression installed.
	SW5	To be drilled
	SW6	To be drilled

Keeping infrastructure apace with oil and gas discoveries

TAG Oil’s drilling success has surpassed its facility capabilities, so we’re investing in infrastructure expansion to help us bring all production on stream. The expansion will also help to commercialize future discoveries without delay.

After drilling 14 successful oil and gas wells in a row, combined with our ongoing Taranaki drilling program, it became necessary to expand Cheal’s infrastructure, including:

• Triple oil-lifting capacity;
• Triple gas compression capacity;
• Build a gas plant at Cheal capable of stripping LPG and liquid hydrocarbons from Cheal gas;
• Build the Cheal-C site oil battery to establish permanent production from recent Cheal-C discoveries, as well as allow for future development;
• Add new pipelines to tie the Cheal-C site to the Cheal-A site and add a new 6,000 meter pipeline from Cheal to New Zealand’s open access gas transmission line to maximize marketability of TAG’s gas production;
• Establish TAG as a third-party gas processor in Taranaki.

Average BOE production costs go down, as oil and gas production increases

Here’s a compelling set of figures to come out of TAG Oil’s third quarter financials.

Production revenue increased to:	$12,976,714 for the quarter (nine months: $26,206,992)	compared to	$3,851,621 (nine months: $8,078,684) in Q3 of FY2011
Per barrel production, storage and transport costs reduced to:	$6.94 per boe for the quarter (nine months: $10.73)	compared to	$16.57 per boe (nine months: $18.15) in Q3 of FY2011

Meanwhile,

TAG sold light oil:

	94,545 barrels (nine months: 209,130) in the quarter	at an average price of:	$113.11 per barrel
TAG sold gas:	92,112 boe (nine months: 105,659 boe)	at an average price of:	$4.02 per mcf

TAG Oil CEO & Controller visit the field

On a recent trip to Taranaki New Zealand, TAG Oil CEO Garth Johnson and Controller Dan Brown snapped some photos for the blog. They were down under for meetings with the technical team and local community leaders, and of course, to experience the new developments at TAG's Cheal and Sidewinder oil and gas discovery areas first-hand.  The Ensign Rig getting set up to drill Cheal -B7, TAG's follow-up to the highly successful B5 well. Cheal-B5 had the most extensive pay interval ever recorded by a Cheal well, and the highest flow rate recorded from from a Mt. Messenger well.

TAG Controller Dan Brown stands proudly in front of the Cheal-B5 wellhead. As announced December 5th, TAG perforated and flow tested 20 meters of continuous oil-and-gas pay in the Cheal-B5 well, in the 35 meters of net pay intercepted within the primary Mt. Messenger Formation. Today it’s still going strong.

Lead engineer Jack Doyle and CEO Garth Johnson, in front of the Cheal-C2 discovery well. This important step-out well in TAG's C-block discovery area flow tested ~14 million cubic feet per day (~2,333 BOE/day) on a 48/64" choke, with associated condensate production increasing during testing. Located about 3.5 km's NW of TAG's Cheal-B5 well, it significantly extends the known oil-and-gas saturation area within TAG’s Cheal permit. The success of Cheal-C2 also adds another high-impact target to TAG's prospect portfolio in the Mt. Messenger and Urenui formations.

A shot of the loading arm at the Sidewinder Facility: used to fill the oil tank in the background with oil produced from TAG’s successful Sidewinder exploration wells drilled in late 2011.

TAG Oil Double Vision

A tanker of TAG’s crude oil drives past the TAG offices, en route from the Omata Tank Farm on the outskirts of New Plymouth, where our oil gets delivered from the Cheal field. 

Cheal-B5 discovery well perf photos

This has been a busy and exciting couple of weeks for TAG at our Cheal permit: in less than 30 days we tested Cheal-B5 (the third well in our current 10-well drilling campaign) and got it on full time production.

We didn’t know what the results would be at the time of these photos, but after perforation we flow tested 20 meters of continuous oil-and-gas pay within the 35 meters of net pay intercepted in the primary Mt. Messenger target. This is the most extensive pay interval ever recorded by a Cheal well, and includes record porosities of up to 30% and a record 60% total gas kick encountered while drilling.

Over the five-day test period, the discovery well was naturally flowing at an average rate of 1,870 barrels of oil equivalent a day, that’s 1,700 barrels of oil and 1.0 million cubic feet of gas per day flowing through a 40/64" choke. These shots are of perfing day.

TAG's Carey Davis kisses the firing bar for luck.	Dropped the bar...
Everyone grabs something metal on the rig to feel the shots fire. It took nearly a minute-and-a-half for the firing bar to drop the 1700m.	Guns just fired…no immediate pressure response. Big gas wells almost always give immediate pressure response. Could it be oil?
Waiting nervously for pressure response…and a minute after perforation the pressure starts to build. We knew then the news would be good.	B-Site expansion: making room for more B wells.