TAG Oil Blog

Q2 2014 continues exciting times for TAG

Posted by Denise della Santina on Nov 21, 2013 6:46:00 AM

Here’s an excerpt from TAG Oil’s Q2 conference call, conducted by Chief Executive Officer Garth Johnson and New Zealand Country Manager Randy Toone on November 14th. You can listen to the full podcast and see the Q2 financials here, or here's a highlight for those of you who don’t want to listen to the whole recording. 

The transcript is from Thompson Reuters.

In which normally unflappable CEO Garth Johnson, allows himself to get a little bit excited…

describe the image“I don't believe that there is a peer company out there that could compare to TAG’s potential. We are creating value right now. We are fully funded to achieve our goals with over $70 million in the bank. We have no debt. We have strong cash flow from daily production. Cash flow is expected to keep growing over many years with the program we have under way. In early results we announced today at our Cheal-E site, the testing program continues to build our confidence.

Taking an optimistic view of what's in front of us at TAG is an exciting thing right now because we have a fully funded drilling program underway. With the resource potential being targeted, in the next 12 months, a 477 Bcf and 49 million barrels of oil and condensate on p50 basis. That includes prospects ranging from shallow Taranaki, deep Taranaki and shallow offshore Taranaki.

It's an amazing program for TAG. And added to that is the advancement of the East Coast unconventional play that has the potential to eclipse everything else combined if we prove it to be a commercial play. We have a lot of work to do in the East Coast but it's underway….

TAG’s always been a first-mover. We are confident we can continue to safely achieve our goals. And that will create significant value for our employees, our community, and of course our shareholders as we strive to unlock New Zealand's potential and become the number one oil and gas producer in New Zealand. 

At the same time, we have a duty to all our stakeholders to consider all potential outcomes of our programs underway. We expect success and we have the people to make it happen. But what TAG offers now that other companies our size can't do is we could also mitigate downside risk. We can do so with our reliable and growing shallow oil reserves. We have reliable and growing cash flow and we have a low risk shallow prospect inventory that can allow drilling to continue in the Taranaki production fairway for the next five to 10 years, while also combining this lower risk drilling activity with numerous potentially game-changing wells being drilled when it's smart for us to do so.

This is what we've strived to achieve for TAG for many years, that's why we remained committed to New Zealand. And recently I have been speaking to many of our shareholders and a common opinion from those discussions became apparent. And that is that for an investor it doesn't get much better than owning TAG right now, with the fully funded, potentially game-changing opportunity to participate in major upside potential while also having downside risk being mitigated.”

Topics: Financials

Plant news: Lifters lag, but Cheal E up and running in record time

Posted by Denise della Santina on Nov 20, 2013 9:28:00 AM

TAG committed to its Cheal E facility after drilling the E1 well, and less than two months later, the new oil-handling facility is in place: designed, constructed and commissioned in record time…and we’re flowing oil through this new facility today. All successful E site wells can now be tied straight into this permanent plant. 

In the past, New Zealand companies would use temporary interruptible test facilities for two to three years before committing to a permanent facility. But we now have the track record and data to understand the technical and economical aspects of these plays to know when it’s economical to commit to a permanent facility. In fact, based on the E1 well alone, we’re already adding additional oil storage facilities, and restricting the well with a 1/4” choke until they’re in.

Image 8   describe the image

Lagging Oil Lifters: Working well now, but we're always looking for improvements

Over at the original Cheal A facility we had some reliability issues with our new power fluid pump system that resulted in reduced production rates last quarter.

We’ve got those taken care of and are back on track, but because of the importance of the oil lift pumps, we're testing some alternate production methods to reduce reliance on power fluid lift. When a pump going down can lead to a loss of five to seven wells’ worth of production, it’s good to look at other long-term backup solutions. Results to date are encouraging, but we continue to test. And we've now got a team in place that's always looking to optimize production. 

Topics: Cheal Production Facility, Cheal Oil Field, oil and gas production

Cheal-E individual well testing underway

Posted by Denise della Santina on Nov 18, 2013 9:41:00 AM

Cheal-E continues to provide good news, with three wells cased as potential oil wells – one of which is being flow tested – and Cheal-E 4 now drilling ahead.

Image 4To ensure more reliable production forecasting on future wells, we’re following a protocol of initially testing each well individually: with each flowing for approximately 15 days, and then shut in temporarily to conduct pressure and temperature analysis. During this shut-in period, the next well will be placed on a 15-day production test until all new wells at the site have been individually tested and build-up analysis completed.

During its initial 5-day flush period Cheal-E1 was testing at 600 BOEs a day, about 90% of that oil, flowing naturally without the aid of artificial lift. We know that will settle down to a more typical Mt. Messenger well average over the course of the next year, but considering the fact that Cheal E represents a substantial extension of our known oil saturation area at Cheal, we’re fully pleased with the results, and happy to be getting the proceeds from the sale of all that oil.

Topics: Mt. Messenger, Taranaki, Cheal Oil Field, drilling

Cardiff-3 deep gas drilling: One zone at a time, so far so good...

Posted by Denise della Santina on Nov 15, 2013 10:28:00 AM

Patience is the watchword with Cardiff-3, which hit 4,300 meters this morning. 

We've got strong gas shows in the target formations penetrated to date – as expected – with strong mudlog shows of up to 85% total gas readings in the top sections of the Kapuni Formation. But we need to be patient with this play, and are moving ahead slow and steady, trusting our experienced team as we drill through the lower K2 formation towards our final target at about 4,700m.

We're looking at three separate zones that may warrant completion: we're well into two of them so far, but still headed for the K3E Sands, our primary target. Then we’ll decide if interpreted data supports completing and production testing the well. Each zone will be evaluated independently and analyzed to determine if commercial production is a reality, starting with un-stimulated testing for a minimum 30-day flow period, then shut in for a pressure / temperature build-up, and then maybe a fracture stimulation of the well in early 2014.

This play has the potential to increase TAG’s corporate NPV by three to four times if we're successful, so as New Zealand Country Manager Randy Toone says, “We're not going to hurry anything just to try and create market excitement.” One step at a time, so far so good!